The Insurance Times 2020, The Insurance Times November 2020

HOPE AND HYPE IS DRIVING ONLINE SALE OF INSURANCE PRODUCTS

General insurance companies are tweaking their processes to show the difference in pricing for buying its products online. During the year 2020, the global spread of the coronavirus disease (COVID-19) has created a new set of challenges for the global economy.

India has managed to contain the spread of the disease to a certain extent with the enforcement of large-scale lockdowns and restrictions on the movement of its citizens. However, the pandemic is causing a severe economic impact in the country.

This has created some new challenges for the insurance industry in India. The insurance industry in India has begun to push its sales towards the online sales channel directly from the websites of insurance companies and through third party online sales platforms.

The increasing internet and mobile usage has a major influence on changing customer preferences, as the customers are getting used to researching products online. While the traditional model of buying insurance is still the most sought in India, it was found that online research on insurance has been observing an increasing trend.

Digital insurance in India is set to become massive, supported by developments like mobility to drive Internet growth, move over natives, the migrants are in full force and move over metros. The number of internet users in India is expected to grow from 200 million today to nearly 330 million by 2016, thanks to improving infrastructure, the spread of mobile phones to the most far–flung rural areas and affordable internet facilities.

Today, the overall influence of internet on insurance product purchase in India is already 6x and growing rapidly. Insurance companies in India are still lagging behind the consumers and have not invested enough to create digital assets to engage the mature consumers online

Though the traditional channels, like agency and third-party distribution, have a market share of more than 80%, the online distribution channel is evolving as the preferred mode of purchasing insurance. Additionally, studies show that a typical online customer is well aware of his/her needs and has been taking informed decisions.

Online life insurance sales are expected to grow at approximately 5% of the individual annualized new business premium by 2020, whereas the non-life insurance sales are expected to grow at more than 15% of non-life retail insurance business.

This growth trend, expected to grow stronger in future, is primarily attributed to the increase in smart phone usage and internet penetration. Health insurance has seen a jump of 35-40 per cent on its platform, while life insurance registered a 20 per cent growth during this period.

Digital players aside, the trend is opposite for traditional insurers, who sell their products primarily via insurance agents. Although, on an average only 10-20 per cent business comes digitally for traditional players, they have realised the need to push it forward.

Insurers such as HDFC Ergo Health Insurance, Religare, Max Bupa, HDFC life, Max Life and Tata AIA are working with Policybazaar to ramp up the tele-medical services. Health and term life insurance now can be bought through Policybazaar without physical medical check-up to ease the burden on medical centers.

Meanwhile, Star Health has expanded its digital operations to on-board customers 100 per cent digitally. Insurance products are complex in design, so difficult for people to understand. On the online platform, they will have to make sense of the policy by themselves. This is why we never attempted for 100 per cent digital on-boarding process. The current situation is forcing insurers to go through a painful but a positive reform.

BARRIERS & SOLUTIONS FOR INSURERS:

While online on-boarding may involve low-cost and convenience, divulging any inaccurate information may catch you by surprise when you settle a claim. If the customer disclosure is incorrect and it gets proven during the investigation then the Insurance company holds every right to completely decline the claim.

In many ways, India faces the same challenges as many other parts of the world when it comes to responding to the issues presented by covid-19. Halting the spread of the virus requires testing and tracking to be implemented on a large scale.

Additionally, social distancing requirements have locked down most of the country to slow the spread of the disease through our densely packed population of 1.3 billion people. The lockdown has helped curb the rate of growth of the virus, but it has come at a great economic cost.

Lack of physical engagement has hampered all business sectors. It is now necessary to accept that social distancing is not going to end soon. Travel will likely not be as easy and convenient as it used to be. There will be fewer in-person meetings and more remote connections.

For some, the days of going to work in a crowded office may be over.  The new realities will require Indian insurance companies to innovate in all aspects. Business processes and client servicing will have to be recalibrated in order to respond to changes in consumer behavior.

Effectively, this will mean accelerating the digital transformation that has been talked about for years but has not yet been widely embraced. Current situation has taken customer expectations for online service to an even higher level. In a time of stringent social distancing, advisors can no longer meet face-to-face with clients.

Clients can’t visit their local branch to make policy changes. In India, this presents bigger challenges than in some other countries since the vast majority of insurance sales are still being made face-to-face—perhaps around 90% of them.  That creates a big potential challenge.

Generating new business premiums is heavily dependent on the in-person efforts of the agency and bancassurance sales forces. But how will those sales be made when advisors can no longer meet prospects in their homes or receive them in their offices? What happens when consumers can’t enter a bank branch to discuss a new policy? First year premiums are the engine of growth for insurance industry. Without them, what are insurers going to do?

 

OFFLINE SALES MODEL: 

The insurance industry in India largely relies on an offline sales model which involves the use of agents and brokers

to garner more than 64% of the total insurance policy sales in both the life and general insurance category. The lockdowns have resulted in a short-term impact on the sales volume of new policies.

The total presence in online sales of new policies forms a share of less than 2% in the total volume which can result in near term weakness in the new policy sales of insurance companies. The economic impact of the virus pandemic is being felt across all sectors in the economy and the resultant effect has been industry wide pay cuts along with job losses.

The Government of India has also provided a grace period towards those citizens who are unable to meet their insurance premium obligations during the lockdown period in the country. This is expected to create a short-term pressure on both, the new premium business and the renewal premiums.

The virus pandemic is expected to result in delayed filing, assessment and payouts of claims. This can impact the liability matching techniques used by the industry that ensure cash flow stability is maintained in each successive quarter.

Companies that sell remote work tools and video conferencing platforms are doing well. Insurers are doing their best to ensure seamless services and support their policyholders. Insurers are encouraging their customers to use digital assets for any assistance regarding policy renewal, claims settlement and other necessary information.

The chatbot is helping customers to renew policies, generate claim status, send policy packs and tax receipts. With the actual physical movement being hampered, customers have become more reliant on e-commerce companies for their insurance requirements. This has meant that digital insurance players have seen a spurt in sales. The companies are ensuring end-to-end digital delivery of insurance products as they ramp up their digital presence. Considering the present scenario, we can say that the offline sales have taken a backseat as of now.

 

NEW AGE REALITIES & TRANSFORMATION ASPECTS:

Digital transformation, and specifically Policy Administration System (PAS) modernization, was always a consideration—something that had to happen, someday. CIOs have spent years working to maintain their aging infrastructure and create patches that enable their business to continue to compete.

The new reality creates a bigger burden for them.  If they could, everyone would have preferred to modernize already. While modernization is not an overnight event, the decision-making process that can get you started on the journey can be started today.

It can become a part of corporate strategy and BCP that helps ease current hardships and offset those that may come.  That is the opportunity within the difficult times we’re moving through—to enable underwriters, claims and other staff to effectively continue to do their jobs remotely to reduce reliance on IT and put control in the hands of the business units.

With the country bracing for an extension of lockdown in some zones and social distancing becoming the new normal, the life insurance industry will have to adopt digital engagement activities rapidly. This would help fill the void created by lack of physical meetings in insurer and bank branches, and other establishments of distribution.

Although insurance has been slow to deliver on those expectations—a new wave of digital offerings is starting to redefine how the industry interacts with consumers. Insurance companies are waking to the growing customer need for online solutions.

Insurers are developing new tools with innovative features to deliver the value their clients are seeking. Although most insurance customers in India still prefer to purchase from an intermediary viz. an agent, bank or broker, the evolution of digital sales and service offerings is remaking the map of the industry.

Consumer distrust of technology is being replaced by an expectation for the accelerated, highly personalized digital experiences they have every day. Whether it’s one-click shopping on Amazon or getting movie recommendations on Netflix, customers have come to expect instant fulfillment and service that is tailored to them.

Although insurance has been slow to deliver on those expectations—a new wave of digital offerings is starting to redefine how the industry interacts with consumers.

 

ONLINE PAYMET COMPANY TO ACQUIRE INSURER:

Paytm, an e-commerce payment system and FinTech company, has announced that it is set to acquire Mumbai based private sector general insurer Raheja QBE, a move which would be its entry into the Indian general insurance market.

Paytm has agreed to buy the entire stake of Prism Johnson in the company, translating to 51% of the paid-up equity share capital of Raheja QBE, for INR2896.8m ($38.8m). Raheja QBE, which started its operations in 2009, is a joint venture between Prism Johnson and QBE Insurance Group.

Paytm will also acquire the remaining 49% stake, which is held by QBE Australia. The acquisition is through QorQl, a technology company as the majority shareholder and the remaining stake held by Paytm. The deal is subject to approval from the IRDAI.

Paytm says the acquisition is in furtherance of its mission of driving financial inclusion for over 500m Indians. Paytm will use its large consumer base and merchant ecosystem to innovate insurance products and services to accelerate its reach and adoption.

 

MEDIA GROUP TAKES OVER INSURANCE AGGREGATOR:

MyInsuranceClub, an IRDAI-licensed insurance web aggregator has been among the earliest entrants into the insurance comparison business in India. The original founders of MyInsuranceClub, will continue to run and operate the business under the new shareholders of Indian Express Group.

As an insurance web aggregator, selling both life and non-life insurance products, MyInsuranceClub is expected to benefit from the reach of the Indian Express Group, which is one of the world’s largest digital news groups reaching over 140m users a month across the world in six languages.

While MyInsuranceClub has been focussing on selling term insurance and health insurance plans, it will now also focus on the other retail plans like motor and travel insurance. The Indian Express Group saw synergies with their media business which now reaches more than 140m unique users a month.

With low insurance penetration in India, this space offers huge opportunity for growth. As a media and marketing organisation their skills in building a strong and trusted brand will work to the advantage of MyInsuranceClub to enable it to become a significant player in this business, and be a first step for us to diversify our revenue streams beyond advertising.

ELECTRONIC GIANT OFFERS INSURANCE COVER FOR CUSTOMERS:

Electronics and appliances major LG Electronics has tied up with Cholamandalam MS General Insurance to offer COVID-19 insurance cover alongside purchases of select home appliances. The COVID-19 insurance scheme will be available in three slabs – INR 50,000 ($654), INR30,000 ($392), and INR10,000 ($131), depending on the category of the appliance purchased.

This insurance offer is a part of a larger effort by LG to help in the fight against the COVID-19 pandemic and provide better access to medical services to its customers in these difficult times. Only Indian citizens aged between three months to 65 years can avail of the insurance scheme and they should have no foreign travel history over the past three months.

The insurer shall not be liable for any claim arising from coronavirus for a period of 16 days from the policy commencement date and insurance cover will be provided only to the person on whose name the product has been purchased.

The policy will be valid for one year and claims, if any, can be pursued through the LG dealers. There is likely to be a shift in consumer behaviour due to the coronavirus crisis going ahead. A major part of the business will shift to e-commerce.

This shift will make it inevitable for business organisations to modify their operation models and opt for technological advancement for their survival in the post-pandemic economy. Additionally, awareness of health products will increase

AMAZON MAKES DEBUT IN INSURANCE SECTOR:

The experience of buying insurance has been made easy by providing a simple and easy to understand purchase journey that facilitates customers to buy insurance effortlessly in a few easy steps. This is coupled with services like hassle-free claims with zero paperwork, one-hour pick-up, 3-day assured claim servicing and one-year repair warranty in select cities, as well as an option for instant cash settlements for low value claims.

Amazon Pay, which allows online payments on and off Amazon.in has marked its foray in the insurance space by offering two and four-wheeler insurance policies, in partnership with InsurTech company, Acko General Insurance. Customers can now purchase insurance in less than two minutes with no paperwork.

Customers can buy auto Insurance from the Amazon Pay page or just search for it. They can get a quote for their car or bike’s insurance in a few simple steps by providing basic details. Additionally, they can select from a list of add-ons like zero-depreciation, engine protection, and more.

Customers can pay using Amazon Pay balance, UPI, or any saved card and the policy will be in their email inbox in less than two minutes. A copy of the policy can also be downloaded. The vision is to make Amazon Pay the most, trusted, convenient and rewarding way to pay for the customers.

There has been a growing demand for more services. The company is  excited to launch an auto insurance product that is affordable, convenient, and provides a seamless claims experience. Acko, an InsurTech company, executes primarily through a digital platform with no offline hassles. Amazon is an investor in Acko.

DIGITAL INVESTMENTS MAKING INSURERS RESILIENT:

This is the opportunity within the difficult times insurers are moving through—to enable underwriters, claims and other staff to effectively continue to do their jobs remotely. To reduce reliance on IT and put control in the hands of the business units, To accelerate innovation so that new products and services can be more easily created and launched to respond to dynamic markets and new regulation.

The covid-19 pandemic has disrupted businesses like never before, but has also created an opportunity to invest in digital solutions that will build resilience in the long-term. The demand for digital solutions across cloud services, consumer-facing businesses, and education, among others, has gone up significantly during the pandemic.

However, businesses are first and foremost investing on keeping track of their workforce and operations functional. Traditionally, sectors outside of new age businesses, banking and financial services have not turned wholeheartedly towards automation solutions yet.

The lockdown has clearly demonstrated how technologically-enabled businesses have thrived during the crisis, but many businesses are still figuring out where they want to start their automation journey in the new normal. The entire focus of enterprises during the lockdown has gone from automation for cost optimization to business continuity and resilience.

The kind of solutions that businesses are looking at to build resilience through automation is Multifoods. As businesses started moving to the unlock phase in addition to workforce safety, they wanted to know how they could engage with employees, customers and partners better through digital solutions.

Smaller companies are much more agile in the context of such change and are taking the leap in such engagements, be it in terms of creating apps for their sales teams or to track employee distribution for better visibility of how their resources are being used.

Amid crisis, the focus has been solely on the digital platform. The insurance buying has been no different when it comes to the delivery of general insurance products like health insurance, which are significantly moving online in a big way.

Integrated digital front-end solutions are required to bridge the social distance gap. Advisors need to be able to connect with clients remotely—through Skype or similar tools, even by phone—and walk through a digital Financial Needs Analysis and online illustrations.

In order to remotely onboard customers, tools like e-Applications, e-Signature capability, online advisor and client service portals will become essential.  Comprehensive digital strategies can make business continuity planning a much easier and more reliable process.

Integrated back-office and front-end solutions can make Working-From-Home a more effective and attractive proposition. Modern digital tools like e-Applications and client portals enable all industry stakeholders to stay connected.

Customers will receive the accelerated, highly personal care they desire. Advisors will be able to meet with prospects and clients either in person or at a distance. These integrated systems will go a long way towards reducing the strain on the bottom-line and make it easier for us all to stay safe and prosper in the years ahead.

For the insurance industry, Work-From-Home presents a unique and significant challenge. Many industries are ahead of Insurance in their digitalization journeys. Digital tools make it fairly straightforward for them to adapt to remote work.

In our industry, in India, the reality is much different. The decade old legacy Policy Administration System that most companies rely on to run many aspects of the business—everything from customer on boarding, underwriting, billing, claims and more—have always been a weak link.

But almost overnight, they have become an impediment to conducting business as usual.  These aging systems make remote connections difficult because data is hard to access. Increased availability of bandwidth, cheap data plans, and increased awareness driven by government programs seem to have rapidly bridged the digital gap between urban and rural India.

Consequently, the internet penetration in rural India increased from 9% in 2015 to 25% in 2018. Customers today are looking for instant resolution.

They want their enquiries answered immediately and they expect that the solutions they are offered will be tailored to their specific needs. The adoption of app-based sales tools and client portals now allow potential customers to view, compare, evaluate and buy policies at the click of a button.

Unsurprisingly, the pandemic has fuelled awareness about health insurance policies with people sharing their nightmarish experiences of the difficulties in getting timely medical attention and skyrocketing medical bills. People are warming up to the idea that sound health policies can go a long way in ensuring accessibility of good medical care facilities and maintaining one’s financial health.

When products are offered through digital channels—with no agent interaction and automated approvals and policy processing—insurer’s costs are greatly reduced. No commissions must be paid. Few staffs are needed to manage the policy lifecycle.

And these savings, especially in the Direct-to-Consumer (D2C) channel, can be passed to clients in the form of lower product prices. Digital improvements to traditional industry processes have added value to the entire chain.

Automation is eliminating many manual steps in all insurance workflows and enhancing the quality of those processes. Less need for manual data entry has led to reduced human error. Onboarding, underwriting and claims are all accelerated when Robotic Business Processing (RBP) and Straight-Through-Processing (STP) are introduced.

The bottom line for insurers is that implementation of the right technology can revolutionize the way they conduct business—it brings back-office operations into the 21stcentury and enables the creation of real-time, highly personalized digital experiences for all customers.

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