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Digital Insurance – India Style

May 4, 2017 | By: | Topic(s): Digital Strategy, Insurance Business Models, Insurance Transformation

It was mind boggling to read the Economic Times’ recent article showing that India is poised to cross 500 million mobile users by the end of 2017.  For the most populous countries, India is ranked #2 after China in internet usage* with a yearly growth rate of over 125%! However, market penetration is only 36% compared to 88% in the US. Growth will only continue!

More than 65% of the Indian population is under 35 years old, with nearly half of country’s population (i.e. 1.25 billion) under 25 years of age. The dominance of the Millennial and Gen Z generations, coupled with the rapid emergence and adoption of technology and market trends highlighted in our Future Trends 2017 report, points to the inevitable … every business sector, including insurance will need to adapt to these trends.

The digital age is still in its infancy, starting around the time of the introduction of the Apple smartphone in 2007. It is powered by a rapidly emerging set of new technologies that is driving innovation and disruption in the insurance industry.

As a result, insurers must explore new ways of doing business, from new business models, new products, new engagement experiences and more. Businesses like Amazon have raised the bar of expectation.  How?  Consumers are looking for direct engagement with the seller across their customer journey from research to buying and servicing, whether buying a shirt, a book or insurance.  This is highlighted in our consumer research that showed a swing of 76 points when looking at the difference between insurance service and the Amazon experience!

The challenge for insurers is to optimize the current business supporting the older generations of buyers while building out the business to meet the younger generations who have dramatically different needs and expectations. In this way, they will fill the gap of underserved or unserved needs in the market that insurance greenfields and startups in InsurTech are currently meeting. Their new ways of doing business, developing new products and capturing new innovations is helping their businesses stay well ahead of competition.

For customers, switching brands is normal behavior.  Gone are the days when people have one Onida TV for 15 years or a reliable HMT wristwatch for years. Today, the ease of researching and buying online, including an array of payment options, is at the click of a button. Ease and value now wield more market power than brand loyalty. Traditional insurance is threatened by this shift. New insurance startups that make it easy to research and buy, with readily available payment options, are getting a lot of attention in all insurance markets, including India. From Lemonade in the US to Friendsurance in Europe, DirectAsia in Singapore and aggregators such as Coverfox in India … each of these startups are changing the insurance business model across the customer journey. With challenges come opportunities. Here are just a few for insurers to consider:

  1. It’s all about the customer. In today’s customer driven market, insurers need to support a multi-channel engagement. Insurers can reach customers through their agents, phone, website portal or mobile app to engage and get their feedback. However, insurers must be sensitive to these touch points, given that in India, most have insurers have engaged via people rather than technology. By offering the traditional human interaction with new technology oriented options, customers now have choices.
  2. Optimization of the business. As insurers transition to new business models and a new generation of customers, there is still the need to optimize the existing business and customer base. Optimization using modern core systems that automate and streamline business processes or the use of digital portals, not only provide positive benefits to the customers but to your internal staff. As the business is optimized, the business processes are simplified for the customers, agents and staff, ensuring accuracy, quality and transparency … creating positive experiences for both customers, agents and staff as well as improving satisfaction and morale!
  3. Reimagining the business. A traditional insurance office in India cannot be visualized without heaps of files, stacks of papers, overflowing desks and flooded cupboards. As with other insurance markets, the India market is ripe not only for automation, but also for re-imagination! The latest technologies not only automate the core insurance business and place it in the cloud, but many emerging technologies like cognitive, drones, chatbots and more can be integrated into the core systems to provide extended, innovative capabilities, helping to reimagine the business of insurance. In today’s fast-paced changing market, we need to move beyond efficiency and effectiveness to optimization and innovation quickly to remain relevant and competitive.

It is a time of great change, challenges and opportunities and insurers have different strategies and paths to their future. This seismic shift is creating leaps in innovation and disruption, challenging the traditional business assumptions, operations, processes and products of the last 30-50 years. InsurTech entrants and new competitors within and outside the industry are introducing new products, processes, customer engagement, business models and more. For insurers in the Asia Pacific region, insurers aren’t just positioning for today’s competition, they are preparing for a wave of mobile and digital penetration as a higher proportion of the population accesses services through digital channels. The opportunity is truly substantial.

The time for plans, preparation, and execution is now — recognizing that the customer is in control. Those who recognize and rapidly respond to this shift will thrive in an increasingly competitive industry to become the new leaders of a re-imagined insurance business.

 

*http://www.internetworldstats.com/top20.htm

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