Evolving trends: How insurtech startups are addressing the challenges of slow processes in the insurance sector
By Aditya Dadia, Founder, Alwrite
Insurance companies offer a wide range of products that are of critical importance to customers’ different emergency and investment needs. Having an insurance policy is mandatory in a few cases (such as vehicle insurance). However, in most other operational areas, it is discretionary in nature. In a country of around 1.4 billion people, there is a significant population underinsured or uninsured, thereby showing how people have not fully acknowledged the vital role of insurance in different facets of life. At the same time, it leaves a massive growth scope for insurance companies to bridge this gap.
Besides the income constraints and lack of understanding on the consumers’ part, there are a few operational challenges due to which the insurance sector is yet to attain its full potential in the country. For instance, a report suggests that it takes an average of 12 to 18 months for companies to bring entirely new insurance offerings to market, and modifications to existing coverage can extend up to 3 to 6 months; it’s evident that the industry faces significant hurdles in meeting evolving customer expectations.
How the industry is faring currently: The state of affairs
Undoubtedly, the collaboration of tech and insurance has resulted in increased coverage and provision of personalised products to customers. Consequently, there are still a number of challenges, and making changes to existing coverages or bringing new products to the market takes a lot of time. This prolonged timeline consumes substantial resources and severely hampers insurers’ agility and responsiveness to market demands.
The reasons for slow product development and manual underwriting
There can be multiple reasons for these two major issues in the industry. One significant issue stems from outdated legacy systems that many insurers still rely on. These systems are often complex, inflexible, and incompatible with modern technological advancements, thereby impeding efficiency and innovation.
Even though compliance and regulation are critical for the security of both the insurers and customers, the regulatory process could be quite long. Compliance requirements demand meticulous attention to detail and can significantly prolong the approval process for new products and services. Another factor can be risk aversion. It (risk aversion) within the industry fosters a culture of caution, where insurers are hesitant to embrace change and experiment with new approaches to product development and underwriting.
Embracing the gamechanger: Insurtech solutions
One of the solutions for these industrial challenges lies in the collaboration of the insurance sector and the latest technologies. Insurtech solutions offer myriad innovative tools and technologies that promise to streamline product development and automate underwriting processes. One such solution gaining traction is artificial intelligence (AI) and machine learning algorithms, which can analyse vast amounts of data in real time to assess risk and expedite underwriting decisions. These advanced analytical capabilities enhance accuracy and significantly reduce processing time, enabling insurers to offer tailored products more efficiently. Moreover, digital platforms and cloud-based systems empower insurers to collaborate seamlessly with stakeholders and expedite the entire product development lifecycle. From ideation and prototyping to testing and deployment, these platforms facilitate agile workflows and rapid iteration based on market feedback.
One of the most important roles that the latest technologies can play is to eliminate the shortcomings of manual processing in different sub-processes. Beyond accelerating product development and underwriting, Insurtech solutions pave the way for personalised insurance offerings, enhanced customer experiences, and sustainable growth in an increasingly competitive marketplace.
Summing up
For any industry seeking to attain its full potential, it is vital to acknowledge the most critical challenges it faces. The insurance sector in India is flourishing, and with encouraging macroeconomic indicators, the overall role of the sector will be even more critical in the future. The lack of coverage and the number of people uninsured (life, health, property, etc.) should be major concerns and a gap that needs to be filled.
As the traditional pace of product development and underwriting is pretty slow, to say the least, it is critical that companies embrace Insurtech solutions. By implementing the latest technologies, insurance companies can offer better personalised products to customers and become more agile. From monitoring customer requirements to fulfilling them with customised products, the overall pace of development in the sector can improve rapidly due to the usage of technology.
