Insurance Article, The Insurance Times 2022, The Insurance Times December 2022


I narrate my personal experience in Japan…not recently but way back in 1998 when I was working in Osaka. I was driving down the highway and suddenly the windscreen cracked, possibly caused by a ricocheting highway debris. I stopped by the service area, called my insurer. He advised me to read the motor certificate number and informs me to drop the car to the nearest Toyota repair station. It was around 8 am and I soon dropped the car off in the Toyota workshop which was fortunately a 5 min walk from my office.

At around 2 pm I got a call from the workshop to come and collect the car. The car was ready, with windscreen replaced, washed and cleaned with a chocolate for my son on the seat, with a label “we are sorry for the incident and your loss of precious time. But we care for you”.

My friends in the industry…how much time will this same claim take to settle outside Japan? A couple of weeks/few days/or few hours?? In reality why do we not see such fast claim settlements? What prevents us from offering world class services? Is there any company hurdle? And mind you.. this was circa 1998 !!

The answer my friends is perhaps, TRUST……we have managed to lose trust in the insurance industry. Unless we reinvent or reinfuse TRUST we can never match the developed markets in Europe/USA or Japan.Even Africa is catching up. From my personal experiences , the African market will outstrip penetration of insurance in India sooner than we think !! Second…there is a FEAR element in the mind of employees. A fixed mind-set.

You may have also heard of Lemonade , the New York based insurer , now making waves in personal lines, issuing policies in 5 minutes and settling claims in a world record 4 seconds.!! How was this possible you might think? Well…they have simply put in technology and removed the human factor. Instead of Mr X, the claims manager processing the file, there would be AI (Artificial Intelligence) processing the same information in milliseconds. And the AI bot never gets tired, no leave, no breaks, no lethargy.

In future claims, the insured would no longer be harassed with a long list of required documents and explanations but a general query from the insurer on the lines of “ Mr X, I hope you are ok? Do you need help?” Additionally, he would be updated with real-time status of his claim with full transparency.

The future is blowing in the wind…first make insurance purchase convenient and second pay claims quickly or perish. In a recent survey it was found that 60% customers change service providers due to ease of purchase. Data collection is done in a jiffy through apps/data mining and policies issued under 5 minutes. Of course complex risks cannot be written in a short time like projects/large industries but surely nothing stops us in personal lines of insurance (motor/travel/domestic package/health/all risks for valuables).

Insurance Laws need to change with changing times. Insurance is a mutual concept but where is the mutuality in India? Does an individual or a garage or a service provider care about the damage to the central pool while inflating estimates for claims? Everyone is out to make his big bucks. You have a situation where there are discounts and cash-backs and underwriting caution is thrown to the winds. Little wonder therefore, that only a handful of insurers make profits , and I mean true underwriting profits. Further insurers mindset of “how to avoid claims “ rather than “ how to pay claims” enhance the present industry cocktail.  After all, why should a person take out insurance? Only because he feels that in case of something unfortunate , he will be back on his feet at the earliest.In developed insurance markets, delays are viewed seriously since every delay in settlement of claim earns interest each day in addition to an apologetic carrier and a red tick in the claims team’s records. In India , few take pride in settling claims. There is just no willingness to settle claims.

If the insurer throws a borderline claim to the legal team , it only ends up paying twice the amount after a protracted legal battle. An average consumer court case takes three to five years for fruition. What is frustration for the common man is fodder for the legal fraternity.

There has to be a change in mindset and this is possible only through vigorous training programmes which is passe. Back in the 70’s and 80’s, there were excellent minds who never hesitated to share their rich vein of knowledge. Those of us in the PSU’s those days will know what I am talking about. Training is not a cost but an investment in the minds of the current crop of millennials who are spread in the insurance world. They will take Indian insurance industry to the next level as underwriters/brokers/claims managers/customer care managers.

 Technology is a tool that should be used to the fullest, remember technology should not rule us! Intermediaries will continue to be a part of the industry eco-system as it forms an important part of distribution which is the biggest challenge of an enterprising carrier. Drones are now being used for survey work in case of motor claims /life insurance claims and AOG claims. AI (artificial intelligence) is used for detecting leakages at homes and factories. AI is also used in security systems to prevent burglary. Data is shared between underwriters to assess the physical and moral hazards of a prospect.

In future a huge change will be seen due to IOT (Internet of things). Through sensors, we will know the cause of damage or loss in every asset we insure, from a refrigerator to a cell-phone, from a car to a container in high seas. Policies have already been digitised and stored in your free E-locker..this saves paper and the environment. Did you know that on an average we cut 40 trees to produce a single A4 paper. How ruthless are we? Don’t we have a responsibility towards the environment; to leave the world a better place for our children/grandchildren?

Like it or not, the future is scary as the very existence of insurers is threatened due to the “big five” (Apple/Microsoft/Google/Facebook/Amazon). Do not be surprised if these brands start selling insurance tomorrow. The world’s largest insurer Allianz is in the 17th place as a brand value compared to the top 5.

Friends….the future is already here. Either we change our thinking or risk extinction !

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