Insurance is a vital financial services product for each of us. However, we Indians are yet to learn this lesson. For a matter of fact, a lot of us don’t even consider insurance as an investment but rather take it as an expense.
Additionally, the product overall is too complicated to sell. Which is why, the industry’s penetration level in the country has been poor, which according to IRDA, was 3.69 per cent in 2017.
This is a massive opportunity for both new and traditional insurance company. And this is what the Dhirendra Mahyavanshi and Anand Prabhudesai were looking to tap.
While working together at the classifieds company Quickr, the duo was looking to do something in this space. During this time, they realized that a very small per cent of insurance is sold online. And this prompted them to start Turtlemint.
In a conversation with Entrepreneur India, Anand Prabhudesai, Co-founder of Turtlemint says, “Internet can make some of the things easier. The transactions can be done digitally. The user experience can be improved and better literacy information can be provided to the customer.”
But when it comes to insurance, there were some fundamental problems in consumer behaviour - first, it is a low involvement category. Second, the confidence or the financial to understand the product is hardly there. Prabhudesai shares how Turtlemint approached this problem.
Getting the Advisory Model
Soon after starting the company with the direct to consumer model, the Prabhudesai and Mahyavanshi were unhappy looking at the data and realized there is much more to do in the insurance sector.
Prabhudesai says, “It was quite depressing to see the kind of poor demand that is there online and we had questions like whether we could build out online business.”
This instigated them to revisit their business model and partner with agents across the country to sell insurance products.
“A lot of insurtechs are trying to sell insurance online assuming that people will do self-service online. But ultimately, they end up having a call centre person talk as people are not able to do to that. So, essentially they are following a telecalling model whereas we are working on advisory-model in the neighbourhood,” he says while adding that, “Insurance will be a mix of technology and human touch and that the premise of our business model. Most people are not ready to take the step to buy insurance and there is a little bit of convincing need which can be done through a human to human interaction - it could be any from family or friends to your financial manager.
Setting up the new outlook was equally challenging for the insurance technology company as it was a niche space. In fact, the company even struggled to raise funds in 2016.
“However we were able to show some traction on the model. The model hadn't scaled but we were able to convince investors that it could scale. What we had working for us was economics. Our model is fairly cost efficient compared to an online model where the cost of acquisition is higher,” he added.
Going Forward
Earlier this year, the Turtlemint raised $25 million funding round from Sequoia Capital Nexus Venture Partners and Blume Ventures. The startup plans to invest these funds in image and voice recognition technology. So, all this scanning and processing becomes faster. It was eyeing to invest in data analytics to support the whole decision-making process.
It is also looking to grow its agent network ten times over the next 18 months. Presently, the company has about 30,000 advisors all over the country.
On asking about breaking even, Prabhudesai noted that “We are trending towards profitability but are looking to invest in technology. We think in 18-24 months, we should be able to breakeven.”
British businessman Philip Green has very rightly said, “Good, bad or indifferent, if you are not investing in new technology, you are going to be left behind.”
Innovation through new technologies is steadily becoming a norm in human lives, simplifying their needs and wants and catering to their convenience.
We never imagined making payments would be so simplified unless the Fintech revolution. Financial sector didn't remain aloof to notice the benefits of adopting technology and soon Fintech became the buzzword it is today. Like how Fintech is disrupting the traditional financial services market, Insurtech industry too is waiting to bloom and revolutionize the insurance industry. Forward-looking players in the insurance industry are taking note and working towards making Insurtech more mainstream so that they are able to cater to customers better and are also able to create operational efficiencies within their organizations.
An Ernst & Young study states that in insurance specifically, 24per cent of global respondents have adopted Insurtech with India leading the charge on 47per cent adoption followed by the UK (43per cent) and China (38per cent). These are sure signs of good.
Insurtech in India for sure has been making steady strides in both innovation and premium growth. The key for industry players would be to become more customer-centric and offer more competitive pricing. However, the question that arises is - Are insurance players catering to the needs of evolving consumers, who have become more knowledgeable, are tech-savvy and seek customized solutions? How are the insurance players ensuring that consumers are discovering them when they are being sought?
The fundamental solution is to adopt digitization with force and optimize it to suit the needs of consumers – who may be largely researching, comparing and buying products mostly through mobile channels. What insurers need to bear in mind as a long term success strategy is that going the digital way is not the formula only to be discovered by customers at the right time and not miss out on leads but also the formula of success in retaining those leads through enabling better communication with stakeholders.
Insurers Should be Pressing Hard on Adoption of Technology
Cloud, Blockchain, IoT, ML are all waiting to disrupt the insurance sector. Cloud has seen a faster and better adoption and appears to be a more likeable choice among insurers. This is owing to its cost-efficiency and scalability. These factors will continue to drive its adoption.
A Deloitte study on ‘2019 Insurance Industry Outlook’ states that Insurance CIOs, who are under pressure to deliver digital capabilities, are looking at developing applications on the cloud as a faster alternative to on-premises deployments. Beyond that, evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.
The study also suggests the technology such as Blockchain will still have to wait for another year to witness more impactful blockchain initiatives by industry leaders.
This, however, cements the fact that the future surely lies in staying abreast with the ever-changing tech trends for the industry players.
Challenges
The key challenges hindering the growth of the Insurtech industry could be primarily classified into three – first would be customer-related challenges; second the pace of technology adoption in the sector and dilemmas that come with it for the players and third the regulatory challenges.
Customer-related challenges could be related to the demography of the consumers. There are some who are still wary of the new ways of business. These potential users may not necessarily be on top of the evolving rules of the business and require a lot of education on Insurance, let alone on the evolved products that the sector may offer to their benefits. The other set of consumers are well versed with industry developments, they are clear of what to buy and when but face a roadblock if they want a highly customized solution for their investments. Here, the key lies with the Insurers to up their game and cater efficiently to this category of potential consumers.
According to McKinsey, nine out of ten insurance companies identified legacy software and infrastructure as barriers for digitalization. Insurtech players are now ought to use new business models that are enabled by a variety of technologies. To be bluntly put, this means that they need to be fast at adopting and implementing automation, data analytics, machine learning and leveraging connected devices to build holistic policies for consumers as per their demands.
Last but not least, to further encourage the growth of Insurtech industry in the country, all stakeholders need to further push the collaboration between the startups and the age-old players in the space. Each has to learn much from each other. This is only possible when there is seamless regulatory support. Right now, while on one hand the traditional insurance industry is being weighed down by strict norms, on the other hand, the startups in the sector are also facing challenges owing to the ambiguity around the regulations, which permit automation of activities.
Leveraging Insurtech Solutions
For traditional insurance players to transform into disruptive Insurtech companies, rapid adoption of disruptive Insurtech solutions is the only way to survival. There is a steady rise of tech-savvy players entering the insurance sector who are ready to challenge the traditional players and revamp the market dynamics. Like Fintechs, Insurtech players too are extending innovation throughout the sector, creating threats and challenging incumbent players to rethink their strategy. The good observation is startups offering disruptive insurance solutions are more than willing to collaborate with tradition players to catapult the industry on a speedy growth. Experts also state that while Insurtech startups are yet to dive deep into the sector, they are growing fast and may soon capture a meaningful share of the market within a few years.
The term Insurance or the Insurance industry as a whole has been termed as dull and monotonous. But with the course of time, even the insurance industry has geared up and associated itself with the technology to keep up the pace with ever-growing and ever-changing world. History itself has presented us with the examples of those who did not adapt themselves with the change have perished away with time. Evolution is not just a theory but a fact which we all have come to realise with time and time tells tales. One such example we all witnessed was that of Kodak who failed to foresee the power of technology and digitisation and hung on to the concept of using Films. The result was a major setback in the industry and among the competitors.
Evolution
When it comes to Insurance, we have already evolved ourselves from the traditional paperwork and human approach to the laptop lifestyle. We all come to the office and as a part of our daily routine; we open our laptop and start with everyday tasks. Observing today’s scenario insurance is now majorly handled from backend and rest of the information is offered to the customer through a platform which provides him with every detail needed at the moment. Be it Cloud Computing or our CRM’s, digitisation has managed to renovate this ordinary industry into an exciting one. However, there is still a gap of 30per cent-40per cent where technology can still play a major role in changing the entire aspect of this industry.
Value Chain
To understand the future let us understand the value chain of Insurance in its easiest form. A person buys a policy > Pays premium > Claims > Gets coverage. But in this entire chain, one thing is constant that is the manual effort which in-turn involves a huge cost. Even a process as basic as selling involves considerable expenditure. Now think of a scenario where a customer claiming car accident gets hold of a claim within hours after the accident. How? Imagine the person has crashed his car and is now claiming for the insurance he took. The insurance company or the insurance aggregator company simply sit back and let the virtual process do the job where a social ecosystem is created by way of technology and within seconds of receiving a claim it verifies through its ecosystem of the accident and processes the claim. We all have been accustomed by the use of GPS and Tracking systems which is a technological boon that can be implemented here and can be used at the time of verification by identifying the people connected in that social ecosystem.
Artificial Intelligence
Every facet of the insurance value chain will be impacted by digitization, from interactions with customers to underwriting and claims management. The key to reducing the cost is moving towards the no-touch claim method also serving in reducing the fraud and allowing risk managers to better engage with customers rather than spending time behind paperwork.
Giving Real-time access to the customers is to give real power to them thus nullifying the effect of human error in the entire process. Artificial Intelligence is the future we all behold. We have already seen some significant development in this are with the invention of Chat Bots which has virtually taken over the most basic function of human species which is his ability to communicate. One other such example is of Siri, where almost all our everyday tasks are managed by a virtual identity.
Soon people will begin to expect an insurer to access their data and to do something tailored specifically for them with it. Social networks will help people with mutually aligned interests and common risk factors to form peer-to-peer insurance pools. Knowledge gained from consumer genetics tests or much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability. The future is customer-centric and will be shaped by behavioural science, with social and peer-to-peer networking and smart devices all playing a part.
The term Insurance or the Insurance industry as a whole has been termed as dull and monotonous. But with the course of time, even the insurance industry has geared up and associated itself with the technology to keep up the pace with ever-growing and ever-changing world. History itself has presented us with the examples of those who did not adapt themselves with the change have perished away with time. Evolution is not just a theory but a fact which we all have come to realise with time and time tells tales. One such example we all witnessed was that of Kodak who failed to foresee the power of technology and digitisation and hung on to the concept of using Films. The result was a major setback in the industry and among the competitors.
Changes in the Pattern
When it comes to Insurance, we have already evolved ourselves from the traditional paperwork and human approach to the laptop lifestyle. We all come to the office and as a part of our daily routine; we open our laptop and start with everyday tasks. Observing today’s scenario insurance is now majorly handled from backend and rest of the information is offered to the customer through a platform which provides him with every detail needed at the moment. Be it Cloud Computing or our CRM’s, digitisation has managed to renovate this ordinary industry into an exciting one. However, there is still a gap of 30 to 40per cent where technology can still play a major role in changing the entire aspect of this industry.
Value Chain
To understand the future let us understand the value chain of Insurance in its easiest form. A person buys a policy > Pays premium > Claims > Gets coverage. But in this entire chain, one thing is constant that is the manual effort which in-turn involves a huge cost. Even a process as basic as selling involves considerable expenditure. Now think of a scenario where a customer claiming car accident gets hold of a claim within hours after the accident. How? Imagine the person has crashed his car and is now claiming for the insurance he took. The insurance company or the insurance aggregator company simply sit back and let the virtual process do the job where a social ecosystem is created by way of technology and within seconds of receiving a claim it verifies through its ecosystem of the accident and processes the claim. We all have been accustomed by the use of GPS and Tracking systems which is a technological boon that can be implemented here and can be used at the time of verification by identifying the people connected in that social ecosystem.
Value Chain and Digitization
Every facet of the insurance value chain will be impacted by digitization, from interactions with customers to underwriting and claims management. The key to reducing the cost is moving towards the no-touch claim method also serving in reducing the fraud and allowing risk managers to better engage with customers rather than spending time behind paperwork.
Giving Real-time access to the customers is to give real power to them thus nullifying the effect of human error in the entire process. Artificial Intelligence is the future we all behold. We have already seen some significant development in this are with the invention of Chat Bots which has virtually taken over the most basic function of human species which is his ability to communicate. One other such example is of Siri, where almost all our everyday tasks are managed by a virtual identity.
Soon people will begin to expect an insurer to access their data and to do something tailored specifically for them with it. Social networks will help people with mutually aligned interests and common risk factors to form peer-to-peer insurance pools. Knowledge gained from consumer genetics tests or much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability. The future is customer-centric and will be shaped by behavioural science, with social and peer-to-peer networking and smart devices all playing a part.
It is a known fact that India is poised to be the world’s youngest country by 2020. There is a significant part of this population that has so far been excluded and underserved. Change is coming, however, as this segment, the largest cohort in history, shifts to an online world via mobile phones. Today 3 of 4 adults have a mobile phone and it’s expected that over 500 million first-time internet users will come online within the next five years; this group is the Next Half Billion.
Where is the Next Half Billion Coming From?
This population, poised to be digitally-driven, will lead to purposeful business innovation as the need to remain relevant rises. Two important components ensure services being realistically able to shift to an online model: affordability of data and the uptick of digital payments.
The lowering cost of data has narrowed the internet usage gap between different segments of society. Today data usage of a college student visa vie a rickshaw driver are comparable. Secondly, online transactions have been made simple and secure. This has enabled new pockets of the Indian diaspora to confidently conduct economic activities in a digital format. While almost 90% of all new businesses are basis an online model, even traditional industries need to go through a necessary disruption to adapt to an online outreach. Insurance is one such industry.
A necessary part of every healthy investment mix, insurance has remained a grey area for most of this underserved population. It is not only because the risk is not something that naturally crosses their minds, but it is also due to the layers of complexity its current format has, which gives it an unwarranted shrug. The problem remains that the industry needs to adapt to become a part of the user’s lifestyle. It needs to be broken down, simplified and contextualised for consumers’ day-to-day lives and their relatable risks.
Corporate ethos should be firmly planted in this belief. Early adoption of healthy financial practices is a good sign of a risk-averse population. However, these services also need to be designed basis a first-time user’s requirement, making the onboarding process simple and easy to adopt. A more local approach is necessary, which understands the mindset and is willing to adapt.
Reaching The Next Half Billion
Digital is no longer an option. It must be the default. This cohort is comprised of mobile-first users. Creating both ease and context at the point of sale is required, capturing a market that would be otherwise unreachable. Price tiering positions products as tangible solutions. The economic gap between these users potentially will be wide. Organisations must empower the modern consumer financially, capturing them in a means that is native and feels organic.
While there is vast potential in the growing adoption of the mobile-based internet by this economic segment, they are still averse to transact online. There are other barriers in the form of language and relevance for people with lower purchasing power. Another important and wrongly neglected segment is women – who primarily use the mobile for entertainment and are yet to transcend to utilities online. Popular apps like PayTM are specifically targeting this segment and the results are promising. When insurance is also broken down into much lower investments for relatable risks we find earlier adoption and easy-to-prove benefits.
Insurance and financial services at large should be as easy as ordering a movie ticket online. Innovation is key in transforming the financial services and the insurance industry to serve the new India – the digital India which is no longer limited to a niche but has, in fact, become a medium to the mass.
Additionally, the product overall is too complicated to sell. Which is why, the industry’s penetration level in the country has been poor, which according to IRDA, was 3.69 per cent in 2017.
This is a massive opportunity for both new and traditional insurance company. And this is what the Dhirendra Mahyavanshi and Anand Prabhudesai were looking to tap.
While working together at the classifieds company Quickr, the duo was looking to do something in this space. During this time, they realized that a very small per cent of insurance is sold online. And this prompted them to start Turtlemint.
In a conversation with Entrepreneur India, Anand Prabhudesai, Co-founder of Turtlemint says, “Internet can make some of the things easier. The transactions can be done digitally. The user experience can be improved and better literacy information can be provided to the customer.”
But when it comes to insurance, there were some fundamental problems in consumer behaviour - first, it is a low involvement category. Second, the confidence or the financial to understand the product is hardly there. Prabhudesai shares how Turtlemint approached this problem.
Getting the Advisory Model
Soon after starting the company with the direct to consumer model, the Prabhudesai and Mahyavanshi were unhappy looking at the data and realized there is much more to do in the insurance sector.
Prabhudesai says, “It was quite depressing to see the kind of poor demand that is there online and we had questions like whether we could build out online business.”
This instigated them to revisit their business model and partner with agents across the country to sell insurance products.
“A lot of insurtechs are trying to sell insurance online assuming that people will do self-service online. But ultimately, they end up having a call centre person talk as people are not able to do to that. So, essentially they are following a telecalling model whereas we are working on advisory-model in the neighbourhood,” he says while adding that, “Insurance will be a mix of technology and human touch and that the premise of our business model. Most people are not ready to take the step to buy insurance and there is a little bit of convincing need which can be done through a human to human interaction - it could be any from family or friends to your financial manager.
Setting up the new outlook was equally challenging for the insurance technology company as it was a niche space. In fact, the company even struggled to raise funds in 2016.
“However we were able to show some traction on the model. The model hadn't scaled but we were able to convince investors that it could scale. What we had working for us was economics. Our model is fairly cost efficient compared to an online model where the cost of acquisition is higher,” he added.
Going Forward
Earlier this year, the Turtlemint raised $25 million funding round from Sequoia Capital Nexus Venture Partners and Blume Ventures. The startup plans to invest these funds in image and voice recognition technology. So, all this scanning and processing becomes faster. It was eyeing to invest in data analytics to support the whole decision-making process.
It is also looking to grow its agent network ten times over the next 18 months. Presently, the company has about 30,000 advisors all over the country.
On asking about breaking even, Prabhudesai noted that “We are trending towards profitability but are looking to invest in technology. We think in 18-24 months, we should be able to breakeven.”
British businessman Philip Green has very rightly said, “Good, bad or indifferent, if you are not investing in new technology, you are going to be left behind.”
Innovation through new technologies is steadily becoming a norm in human lives, simplifying their needs and wants and catering to their convenience.
We never imagined making payments would be so simplified unless the Fintech revolution. Financial sector didn't remain aloof to notice the benefits of adopting technology and soon Fintech became the buzzword it is today. Like how Fintech is disrupting the traditional financial services market, Insurtech industry too is waiting to bloom and revolutionize the insurance industry. Forward-looking players in the insurance industry are taking note and working towards making Insurtech more mainstream so that they are able to cater to customers better and are also able to create operational efficiencies within their organizations.
An Ernst & Young study states that in insurance specifically, 24per cent of global respondents have adopted Insurtech with India leading the charge on 47per cent adoption followed by the UK (43per cent) and China (38per cent). These are sure signs of good.
Insurtech in India for sure has been making steady strides in both innovation and premium growth. The key for industry players would be to become more customer-centric and offer more competitive pricing. However, the question that arises is - Are insurance players catering to the needs of evolving consumers, who have become more knowledgeable, are tech-savvy and seek customized solutions? How are the insurance players ensuring that consumers are discovering them when they are being sought?
The fundamental solution is to adopt digitization with force and optimize it to suit the needs of consumers – who may be largely researching, comparing and buying products mostly through mobile channels. What insurers need to bear in mind as a long term success strategy is that going the digital way is not the formula only to be discovered by customers at the right time and not miss out on leads but also the formula of success in retaining those leads through enabling better communication with stakeholders.
Insurers Should be Pressing Hard on Adoption of Technology
Cloud, Blockchain, IoT, ML are all waiting to disrupt the insurance sector. Cloud has seen a faster and better adoption and appears to be a more likeable choice among insurers. This is owing to its cost-efficiency and scalability. These factors will continue to drive its adoption.
A Deloitte study on ‘2019 Insurance Industry Outlook’ states that Insurance CIOs, who are under pressure to deliver digital capabilities, are looking at developing applications on the cloud as a faster alternative to on-premises deployments. Beyond that, evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.
The study also suggests the technology such as Blockchain will still have to wait for another year to witness more impactful blockchain initiatives by industry leaders.
This, however, cements the fact that the future surely lies in staying abreast with the ever-changing tech trends for the industry players.
Challenges
The key challenges hindering the growth of the Insurtech industry could be primarily classified into three – first would be customer-related challenges; second the pace of technology adoption in the sector and dilemmas that come with it for the players and third the regulatory challenges.
Customer-related challenges could be related to the demography of the consumers. There are some who are still wary of the new ways of business. These potential users may not necessarily be on top of the evolving rules of the business and require a lot of education on Insurance, let alone on the evolved products that the sector may offer to their benefits. The other set of consumers are well versed with industry developments, they are clear of what to buy and when but face a roadblock if they want a highly customized solution for their investments. Here, the key lies with the Insurers to up their game and cater efficiently to this category of potential consumers.
According to McKinsey, nine out of ten insurance companies identified legacy software and infrastructure as barriers for digitalization. Insurtech players are now ought to use new business models that are enabled by a variety of technologies. To be bluntly put, this means that they need to be fast at adopting and implementing automation, data analytics, machine learning and leveraging connected devices to build holistic policies for consumers as per their demands.
Last but not least, to further encourage the growth of Insurtech industry in the country, all stakeholders need to further push the collaboration between the startups and the age-old players in the space. Each has to learn much from each other. This is only possible when there is seamless regulatory support. Right now, while on one hand the traditional insurance industry is being weighed down by strict norms, on the other hand, the startups in the sector are also facing challenges owing to the ambiguity around the regulations, which permit automation of activities.
Leveraging Insurtech Solutions
For traditional insurance players to transform into disruptive Insurtech companies, rapid adoption of disruptive Insurtech solutions is the only way to survival. There is a steady rise of tech-savvy players entering the insurance sector who are ready to challenge the traditional players and revamp the market dynamics. Like Fintechs, Insurtech players too are extending innovation throughout the sector, creating threats and challenging incumbent players to rethink their strategy. The good observation is startups offering disruptive insurance solutions are more than willing to collaborate with tradition players to catapult the industry on a speedy growth. Experts also state that while Insurtech startups are yet to dive deep into the sector, they are growing fast and may soon capture a meaningful share of the market within a few years.
The term Insurance or the Insurance industry as a whole has been termed as dull and monotonous. But with the course of time, even the insurance industry has geared up and associated itself with the technology to keep up the pace with ever-growing and ever-changing world. History itself has presented us with the examples of those who did not adapt themselves with the change have perished away with time. Evolution is not just a theory but a fact which we all have come to realise with time and time tells tales. One such example we all witnessed was that of Kodak who failed to foresee the power of technology and digitisation and hung on to the concept of using Films. The result was a major setback in the industry and among the competitors.
Evolution
When it comes to Insurance, we have already evolved ourselves from the traditional paperwork and human approach to the laptop lifestyle. We all come to the office and as a part of our daily routine; we open our laptop and start with everyday tasks. Observing today’s scenario insurance is now majorly handled from backend and rest of the information is offered to the customer through a platform which provides him with every detail needed at the moment. Be it Cloud Computing or our CRM’s, digitisation has managed to renovate this ordinary industry into an exciting one. However, there is still a gap of 30per cent-40per cent where technology can still play a major role in changing the entire aspect of this industry.
Value Chain
To understand the future let us understand the value chain of Insurance in its easiest form. A person buys a policy > Pays premium > Claims > Gets coverage. But in this entire chain, one thing is constant that is the manual effort which in-turn involves a huge cost. Even a process as basic as selling involves considerable expenditure. Now think of a scenario where a customer claiming car accident gets hold of a claim within hours after the accident. How? Imagine the person has crashed his car and is now claiming for the insurance he took. The insurance company or the insurance aggregator company simply sit back and let the virtual process do the job where a social ecosystem is created by way of technology and within seconds of receiving a claim it verifies through its ecosystem of the accident and processes the claim. We all have been accustomed by the use of GPS and Tracking systems which is a technological boon that can be implemented here and can be used at the time of verification by identifying the people connected in that social ecosystem.
Artificial Intelligence
Every facet of the insurance value chain will be impacted by digitization, from interactions with customers to underwriting and claims management. The key to reducing the cost is moving towards the no-touch claim method also serving in reducing the fraud and allowing risk managers to better engage with customers rather than spending time behind paperwork.
Giving Real-time access to the customers is to give real power to them thus nullifying the effect of human error in the entire process. Artificial Intelligence is the future we all behold. We have already seen some significant development in this are with the invention of Chat Bots which has virtually taken over the most basic function of human species which is his ability to communicate. One other such example is of Siri, where almost all our everyday tasks are managed by a virtual identity.
Soon people will begin to expect an insurer to access their data and to do something tailored specifically for them with it. Social networks will help people with mutually aligned interests and common risk factors to form peer-to-peer insurance pools. Knowledge gained from consumer genetics tests or much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability. The future is customer-centric and will be shaped by behavioural science, with social and peer-to-peer networking and smart devices all playing a part.
The term Insurance or the Insurance industry as a whole has been termed as dull and monotonous. But with the course of time, even the insurance industry has geared up and associated itself with the technology to keep up the pace with ever-growing and ever-changing world. History itself has presented us with the examples of those who did not adapt themselves with the change have perished away with time. Evolution is not just a theory but a fact which we all have come to realise with time and time tells tales. One such example we all witnessed was that of Kodak who failed to foresee the power of technology and digitisation and hung on to the concept of using Films. The result was a major setback in the industry and among the competitors.
Changes in the Pattern
When it comes to Insurance, we have already evolved ourselves from the traditional paperwork and human approach to the laptop lifestyle. We all come to the office and as a part of our daily routine; we open our laptop and start with everyday tasks. Observing today’s scenario insurance is now majorly handled from backend and rest of the information is offered to the customer through a platform which provides him with every detail needed at the moment. Be it Cloud Computing or our CRM’s, digitisation has managed to renovate this ordinary industry into an exciting one. However, there is still a gap of 30 to 40per cent where technology can still play a major role in changing the entire aspect of this industry.
Value Chain
To understand the future let us understand the value chain of Insurance in its easiest form. A person buys a policy > Pays premium > Claims > Gets coverage. But in this entire chain, one thing is constant that is the manual effort which in-turn involves a huge cost. Even a process as basic as selling involves considerable expenditure. Now think of a scenario where a customer claiming car accident gets hold of a claim within hours after the accident. How? Imagine the person has crashed his car and is now claiming for the insurance he took. The insurance company or the insurance aggregator company simply sit back and let the virtual process do the job where a social ecosystem is created by way of technology and within seconds of receiving a claim it verifies through its ecosystem of the accident and processes the claim. We all have been accustomed by the use of GPS and Tracking systems which is a technological boon that can be implemented here and can be used at the time of verification by identifying the people connected in that social ecosystem.
Value Chain and Digitization
Every facet of the insurance value chain will be impacted by digitization, from interactions with customers to underwriting and claims management. The key to reducing the cost is moving towards the no-touch claim method also serving in reducing the fraud and allowing risk managers to better engage with customers rather than spending time behind paperwork.
Giving Real-time access to the customers is to give real power to them thus nullifying the effect of human error in the entire process. Artificial Intelligence is the future we all behold. We have already seen some significant development in this are with the invention of Chat Bots which has virtually taken over the most basic function of human species which is his ability to communicate. One other such example is of Siri, where almost all our everyday tasks are managed by a virtual identity.
Soon people will begin to expect an insurer to access their data and to do something tailored specifically for them with it. Social networks will help people with mutually aligned interests and common risk factors to form peer-to-peer insurance pools. Knowledge gained from consumer genetics tests or much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability. The future is customer-centric and will be shaped by behavioural science, with social and peer-to-peer networking and smart devices all playing a part.
It is a known fact that India is poised to be the world’s youngest country by 2020. There is a significant part of this population that has so far been excluded and underserved. Change is coming, however, as this segment, the largest cohort in history, shifts to an online world via mobile phones. Today 3 of 4 adults have a mobile phone and it’s expected that over 500 million first-time internet users will come online within the next five years; this group is the Next Half Billion.
Where is the Next Half Billion Coming From?
This population, poised to be digitally-driven, will lead to purposeful business innovation as the need to remain relevant rises. Two important components ensure services being realistically able to shift to an online model: affordability of data and the uptick of digital payments.
The lowering cost of data has narrowed the internet usage gap between different segments of society. Today data usage of a college student visa vie a rickshaw driver are comparable. Secondly, online transactions have been made simple and secure. This has enabled new pockets of the Indian diaspora to confidently conduct economic activities in a digital format. While almost 90% of all new businesses are basis an online model, even traditional industries need to go through a necessary disruption to adapt to an online outreach. Insurance is one such industry.
A necessary part of every healthy investment mix, insurance has remained a grey area for most of this underserved population. It is not only because the risk is not something that naturally crosses their minds, but it is also due to the layers of complexity its current format has, which gives it an unwarranted shrug. The problem remains that the industry needs to adapt to become a part of the user’s lifestyle. It needs to be broken down, simplified and contextualised for consumers’ day-to-day lives and their relatable risks.
Corporate ethos should be firmly planted in this belief. Early adoption of healthy financial practices is a good sign of a risk-averse population. However, these services also need to be designed basis a first-time user’s requirement, making the onboarding process simple and easy to adopt. A more local approach is necessary, which understands the mindset and is willing to adapt.
Reaching The Next Half Billion
Digital is no longer an option. It must be the default. This cohort is comprised of mobile-first users. Creating both ease and context at the point of sale is required, capturing a market that would be otherwise unreachable. Price tiering positions products as tangible solutions. The economic gap between these users potentially will be wide. Organisations must empower the modern consumer financially, capturing them in a means that is native and feels organic.
While there is vast potential in the growing adoption of the mobile-based internet by this economic segment, they are still averse to transact online. There are other barriers in the form of language and relevance for people with lower purchasing power. Another important and wrongly neglected segment is women – who primarily use the mobile for entertainment and are yet to transcend to utilities online. Popular apps like PayTM are specifically targeting this segment and the results are promising. When insurance is also broken down into much lower investments for relatable risks we find earlier adoption and easy-to-prove benefits.
Insurance and financial services at large should be as easy as ordering a movie ticket online. Innovation is key in transforming the financial services and the insurance industry to serve the new India – the digital India which is no longer limited to a niche but has, in fact, become a medium to the mass.
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