By Prasad Rai – Vice President – Global Strategic Clients Group, Oracle India
This has been an unprecedented year for all – the insurance sector is no exception. Across the nation, COVID-19 has underscored the importance of protection to many customers, leading to increased demand for insurance products and policy servicing volume. However, the enforced social distancing has meant that severe competition has moved to the digital arena.
Insurers are therefore under pressure to accelerate the digitization of end-to-end customer journeys and internal processes, while adopting tools that they might once have considered risky just to stay ahead. At the same time, industry-wide digitization is also opening the sector to a host of new players, including Big Tech companies which are both making inroads within the global insurance industry.
According to a study done by Oracle, there are six distinct trends that will impact Indian insurers in the near to medium term. These trends include disruption to traditional sales channels, adverse economic headwinds, the emergence of large ecosystems, regulatory tightening, stiff digital competition, and the rise of insurtechs.
Powerful forces are reshaping the Indian insurance industry. Economic headwinds have forced changes in business models and created shifts in consumption patterns that have yet to settle. At the same time, Indian insurers have themselves been impacted by operational disruptions such as travel restrictions, social distancing, and mandatory remote working requirements.
To survive and then thrive, Indian insurers will have to be adaptive. The insurers need strategies ranging from taking full advantage of data, enabling a more technology-driven workforce, using advanced analytics based on Artificial Intelligence (AI) and machine Learning (ML) throughout the insurance value chain, harnessing the power and agility of the cloud, modernizing financial management, streamlining regulatory compliance, elevating digital customer engagement, and enabling an ecosystem approach to bring the best insurance solutions to market. In this new reality, the role of data will be even more pronounced than ever before. The insurers need to see data in new ways, discover insights, and unlock endless possibilities.
In an industry based heavily on trust, especially for life and healthcare insurance, the inability to meet customers in person has made business continuity all the more challenging. But not everything is gloomy, there is an upside for the protection business. In the midst of uncertainty and sweeping changes, digital transformation is finally underway. To cope with disruption in the traditional customer journeys, foresighted insurers have deepened their digital presence, embarked on better digital customer experiences, and are optimizing their digital sales channels.
Interest in financial and family protection has also surged. More people are now purchasing health insurance policies, particularly new insurance products that were introduced in the wake of the pandemic . According to regulatory data, health insurance premiums grew by 10.44% between July 2019 and July 2020. Policy claims for COVID-19 treatment have also surged to over Rs 3,300 crore (US$450 million) as of September 2020 .
Digital technology offers a vital means for shortening the application-to-closing process, lowering onboarding costs, and minimizing consumer attrition rates. Technology offers opportunities for the industry to settle claims more quickly, dramatically improving the customer experience, which in turn strengthens the brand loyalty – something that is the most coveted in this time of growing uncertainty.
As more people retreat into their homes, away from urban centers, this transitory period presents an opportunity for adaptive insurers to accelerate their digital transformation plans. Not just for business continuity, but to thrive in the new normal. The truth is, only some insurers will succeed in adapting to this dynamic business environment. The insurers that survive this period will be those that make a valiant effort to be adaptive. They’ll invest in their business intelligence. They’ll shed their rigid, legacy pasts to become digital, organic entities. They’ll listen and respond to their customers in ways that are human, humble and helpful. They’ll do the work. These are the insurers that will set the new standard for business for the next few decades.
