Digitization in Insurance Sector

Casparus Kromhout, Managing Director and CEO, Shriram Life Insurance CompanyThe Indian market often quoted as the 'most fascinating markets for the internet on the planet' has garnered great interest in the digital circles. The number of internet users in India has grown over 28 percent in 2016 with an internet penetration still low at 27 percent. Thanks to the Jio phenomenon the data costs in India have come down by about 50 percent and the consumption of data has risen nine times over the previous year. The revolution has been strongly aligned with the increase of smartphones within the country. With nearly 290 million smartphone users today and a projection of an additional 180 million by 2021, India is next poised on a smartphone revolution. It is estimated that the mobile data usage per smartphone is estimated to increase five times by 2023. Powered by low data costs, increased data consumption and the enhanced spread of the digital medium, the insurance sector also finds itself at an infliction point. So far the best known digital innovation in insurance has been the development of web aggregators. Though, percentage wise the online sales are believed to be only two percent of the offline sales, their numbers have shown exponential year-on-year growth. But the capabilities offered by digital can be endless and deployed at every stage of insurance production and service.

A sustained stimulus to the use of digital in the insurance sector has come from the government’s Digital India initiatives. The financial inclusion schemes like the Jan Dhan Yojana and PMJJY have been a huge success. Coupled with demonetization, these efforts of the government have ensured a faster adaptation of digital enabled financial services among customers. Also, the Unique Identification (UID) project and it subsequent linking to KYC has enabled easy reach and simplified processes for the insurance sector. The regulator is also allied with the need to evolve the industry. The industry has for long been plagued by the least ‘ease of purchase’ processes as compared to other financial sectors. The regulator has taken note of the seriousness and extended support towards new products, channel innovations and process transformations. Shriram Life Insurance Company(SLIC)has been working zealously for over a decade towards its purpose of bringing life insurance to a customer segment that is generally overlooked by the mainstream banks and insurers. We operate in a segment that is unique. In many cases the Shriram policy
is the only protection and savings instrument the family has. The magnitude of our duty towards this family becomes multifold, as their future aspirations are linked to us. Our main customer segment is the common man residing in the non-urban towns and villages, with over 50 percent of our policies sourced from the rural segment. Working with this 'mass market' has demanded various operational and product innovations.

Digital with its capabilities like chatbots and social media mining enables real time communication and assimilation of customer sentiments.

This customer segment is evolving rapidly with increase in income and educational levels and access to financial services. The growth in the Indian insurance sector though phenomenal over the last and current year has surprisingly not caught-up with the growth in this segment as is evident from the protection gap displayed by the stagnant low life insurance penetration and density rates when compared to the world averages. The insurance market today requires innovation on various levels to meet the existing and the evolving needs of these consumers. We need to place ourselves in the customer’s spot, understand his life journey and predict his needs at every stage. The data sources and analytical technology needed to adjust and adapt our products to meet the customer needs at these 'spots' are already present. We need to adopt it before it is too late. Considering the capabilities of the search engines, emerging e-commerce platforms and cutting edge fin-tech companies with their vast resources of customer data to disrupt the insurance sector; a scenario similar to the 'Banks vs. fin-techs/e-wallets' is probable for the insurance industry as well. The insurance industry’s best bet would be to disrupt itself by means of discovering new markets, products and bringing analytics and artificial intelligence driven innovation to every step of the value chain. A lot of companies have already put in efforts and we are witnessing innovative products and processes introduced regularly.

Digital technology has acted and will continue to act as a catalyst for propagation of customer centricity. Though the needs and service requirements of customers are diverging into smaller sub-segments requiring the design of diverse products and processes, there has been a strong concurrence in their need for best customer experiences. Digital with its capabilities like chatbots and social media mining enables real time communication and assimilation of customer sentiments. These capabilities will become more relevant as digital broadens its functionality and influence amongst customers. SLIC has adopted the strategy of driving 'customer centricity' through digital. We have set up various processes; run on analytics platforms; like claim disbursement within 48hrs after requirements received, live investigations for detecting fraudulent cases and using simple yet novel techniques like customer ‘selfies’ to facilitate the underwriting process. Our upcoming Mobile OTC application focuses on ease of purchase for the consumer with on the spot policy issuance that reduces our issuance turn-around time from seven days to seven minutes. We have set up an innovation team that would help us identify serviceable gaps in the market and consequently design new products and processes. We have also engaged with various international insure-tech companies to find unique and innovative ways to extend insurance to the masses. The Shriram group being an entrepreneurial group has always supported new and innovative ideas. We are also been open and keen to work with young tech - entrepreneurs with a vision for financial inclusion and reach to the rural ‘aam admi’. In conclusion, the avenues that digital can open up for the insurance sector if applied in a systematic and scientific manner coupled with the vision of providing risk protection to all Indians, where the loss of the breadwinner will bring severe financial stress to the family, has the potential to bring about a new era for the insurance industry and social reform in the country.