Digitization in Insurance Industry

By Easwara Narayanan, COO, Future Generali India Insurance Company Limited

Today we are at the cusp of a technological revo­lution. With more than 300 million internet users, India has the second largest internet user base in the world. Realizing this rapid growth of internet us­age in India, every sector, including insurance, have shifted its focus to­wards building non- traditional plat­forms. The availability of insurance products online, different apps or software developed by the companies to serve their customers, introduc­tion of e-insurance account and an­nouncement of e-commerce exposure draft are some of the major moves in the path of digitalisation.

An Overview of e-commerce Expo­sure Draft and Insurance Self-Net­workPlatform

What the draft regulation seeks to do is to provide a structure to this segment and rules of conduct for the vendors which will infuse transpar­ency and customer centricity. The stipulation that only market par­ticipants who are registered with the Regulator can operate in the online space will go a long way to instil confidence in the minds of the cus­tomers. Further, the regulatory pro­visions on audit of the IT systems and network, particularly the insist­ence of review of controls by an Ex­ternal Information System Auditor (CISA) and compliance to information security management standards of the International Organization for Standardization or the International Electro-technical Commission or its equivalent, will help to enhance the reliability and credibility of the entire model. The objective of these provi­sions is to ensure, apart from robust performance, high levels of system integrity and data privacy.

"The e-insurance account is a new paradigm which will come with a lot of attendant benefits to both the insurers and the customers"

Differential pricing proposed by the insurance regulator would enable insurance companies to offer policies at cheaper rates as compared to what is sold offline. However this may not happen if the policy is sold through online platform of brokers or aggre­gators. Enabling differential pricing for products sold through Self Net­work Platform is aimed at incentiv­izing sales in this infant channel.

While mandatory e- KYC and e- Insurance Account for online busi­ness are welcome moves and will go a long way, in ways more than one, to put the business of insurance on strong technical and commercial foundations, it would certainly be a great proposition to make these mandatory across other modes of business sourcing.

The payment of premium can be done through electronic mode. Electronic payments are becoming increasingly popular due to it wide­spread use in online shopping and banking. The bigger advantage is in­stant gratification of policy issuance that enables customers to transact 24x7.

This will not only boost up the insurance industry but also the e-commerce industry in India. The insurance companies can improve on its distribution channels and web­sites selling the policies will also get benefit out of it there by increasing B2B business.

e-InsuranceAccount

From 1st October 2015, IRDAI has made e-insurance account a man­date for every new insurance policy a buyer opts for. With policy being available in the Demat Account, cus­tomer can now retrieve the policy details while lodging a claim. The customer can select the repository of their choice and all insurance policies will be available under one account through which they can get details of any of the policies at any time. He/ she need not pay a physical visit to the insurance office or branches to regis­ter their claim or access other infor­mation about their policy. There will be appropriate functioning of the ac­count as all the activities will be un­der IRDAI rules and regulations.

The physical insurance policy can also be converted to e-policy by submitting a completed applica­tion form. Every insurance com­pany will also have assigned reposi­tory. The customer can either login to the repository website or inform the insurer to convert the policy to electronic form and link it to their e-insurance account.

The e-insurance account is a new paradigm which will come with a lot of attendant benefits to both the insurers and the customers. Policies will be issued instantly and directly to the customer in the digital form and hence, the question of delay in issuance or non-receipt of policy will not arise.

Through these two developments we will see an upsurge in e-proposals as more people would intend to pur­chase policies through mobile apps and software. The industry will see an increase in claim intimation on digital platform. Additionally, the electronic transfer of data between hospitals, Insurance companies will prove to be more convenient across stakeholders thereby reducing the claim approval as well as settlement time. This would also help in terms of uniformity of documentation, re­duction in fraud cases as well as prod­uct innovation in the long run.

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