Introduction
Year 2000 : India’s Insurance sector was known to be a sunrise sector. In the last over 2 decades, lot has happened in this sector and it has grown significantly in various aspects. Insurtech is surely playing a very vital role in this boom, but it is happening in parts. Regulator is also quite supportive. Some part of onboarding, major part of issuance, some part of customer servicing and some part of claims processing. Full-scale automation in the insurance sector still remains a distant truth.
Year 2024 : India’s Insurance sector is still a Sunrise Sector. But it is a bigger sunrise sector for the Insuretech companies.
Summary of Challenges Faced by Insurtech
Let’s look at a quick summary of the actual challenges that the industry is facing :
Legacy Infrastructure: The biggest problem faced by most insurance companies is their Legacy LoB Systems. Majority of the insurers in India (though the story is not much different even in many developed nations across the world) are old existing companies which have invested in systems which were supposed to be good in those times. Now the problem is that these LoB systems were designed for processes that existed in those times and which supported lot of manual operations and activities. While they do support some part of integrations, but surely they are not geared to get easily integrated with our modern day digitisation tools.
Regulations & Compliances:
The BFSI Sector, whether Banking or Insurance, is an extremely regulated sector with higher levels of regulatory and process compliances. Now, Digitisation applications are designed from these compliances point of view, which at times, becomes a hurdle in itself. Interesting part is that the design would have been relevant or applicable when it was first conceived but may not be relevant with the current changes in regulations or the processes being actually followed. Also, sometimes the systems are designed from a conservative compliance point of view, which over time with process changes are not necessary at all.
Lack of Technology Solutions Experts:
Banking C Insurance sectors have multiple technology touch points and requires a huge skill base to understand both the domain expertise and technical expertise. It is practically not possible for these sectors to have skilled workforce managing all these aspects fully in their offices. Nasscom report issued last year highlights that less than 25% of Indian insurance companies have a dedicated tech strategy and workforce. To add to it, people with domain expertise who can marry these solutions with the actual requirements is also a big challenge.
Fragmented Customer Data:
Because of all the above 3 factors, one major aspect gets impacted severely. That is the “Customer Data”. It is seen that Customer data in the insurance sector lies across various systems, multiple touchpoints and applications being put into force. While the intent of each insurer is to have a Customer 360 view and there are tremendous efforts as well in this aspect, still because of various challenges, this has impacted in a fragmented view of customer profiles.
Has Technology improved Customer Service?
True Digitisation requires a good quality data management process and a seamless data exchange for the right integration to give the desired results. In order to create an effective digitisation, there is a massive requirement of managing the legacy system data migration aspect and collating the fragmented pieces of data. There is a lot happening on this aspect as well. Focus of any entity, irrespective of the sector it belongs to, has always been the customer. So even with these challenges, companies try to use latest technologies and provide the best to the customer. For insurance services, one can undoubtedly say that some tech solutions with purely Mobile No. and DOB as the check point for starting a journey has made it very simple for a customer. But still a big question remains : Has Technology really improved Customer Service to the best extent possible?
Before we look into this aspect for insurers, take examples of the best of Digital Payment Solution companies, Taxi Hailing Aggregators, Grocery supplying aggregators / platforms, Restaurant Aggregators etc. As long as things are working fine, it is good. Moment your query is out of routines, it is a hell of a task to get it solved. You cant even reach out to these people. There is no customer service available except templated BOTs and customer service apps.
WhatsApp services or BOT assisted Helpdesks have replaced the customer care that existed once upon a time. But those customer care people genuinely tried to provide some solutions. But today they are enabled with the same technology platforms which are exposed to the customers and it ends up they also becoming helpless. First of all,
you cant reach out to them. If at all, you are able to reach out to them, they are not of much help and give templated responses. Sometimes their repeated templated responses are very irritating as it makes no sense at all. I don’t want to talk about the Robocalling issues or about the BOT responses, which fail on most occasions except for the standard FAQs.
InsurTech Opportunity
While the insurtech world is surely working on the legacy systems data management part, using different data layers, middleware solutions etc. and is also trying to work on IRDA’s support of sandbox systems etc. there still lies a great scope on various aspects.
To name a few :
Creating Domain Expertise or using Domain Experts
Working on Fragmented Data issues. India Stack services may be able to solve some problems for sure.
Looking further into the Underwriting & Claims automation areas – which requires a process change mindset at the insurers’ end as well. Of course, this will also need to ensure that Ethics and Biases in the AI algorithms are reduced to a great extent which can impact pricing, underwriting, claims and risk management in general. To ensure all these aspects, this would require people with domain expertise who can trigger open discussions with insurers and try to jointly make attempts to explore newer processes. In short, it is very important that Insurers and Insurtech players do not try to retrofit new technology solutions in existing traditional processes.
A Mckinsey report predicts that in the next 7 to 10 years, automation would reduce the operational costs by over 30%. May be this aspect should be looked into to change the current processes.
Bots are programmed to handle specific queries and scenarios – typically scripted responses. They often struggle with complex or nuanced issues that require human judgment, empathy, or a deep understanding of context – a personal touch to be more precise. Trust me, these are not exceptions, but they are normal queries but surely complex in nature. What is needed is a tech enabled combination of Bots and human customer service solutions. What is crucial in a customer service process is to ensure that the automated solutions do not lead to dead ends. So what is needed is a good Tech enabled SMART HYBRID Customer Service solution that will not lead to the Stalemate Situation for a customer and the insurer.
Currently, WhatsApp is being used only as an enabler. The need is to combine WhatsApp with other digital platforms to ensure that customer service is consistent and efficient across multiple touchpoints.
Risk Management and Fraud Prevention solutions still have a larger opportunity. But most importantly, again the same needs to be inbuilt into the processes and not try to create separate solutions for the Frauds / Risk Prevention teams. This cannot be a standard menu selection item. It has to be thought through purely from an Insurance Risk Management point of view and worked upon. Let’s not forget that the fraudsters are also using technology today and are ahead of us many times.
Author: Ganessh S Iyer, CEO, Pro-Risk Group
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same.