The emergence of insurtech as a concept has brought in much needed digital acceleration to the insurance sector. One of the key nations expected to benefit the most from the remunerative alliance of insurance and technology is India, the second-most populous country in the world. India presents greener pastures for insurers, with the lowest level of insurance penetration – a meagre 3.69%. The availability of uncharted markets, coupled with the technological advancements promises a brighter future for the Indian insurers. This is welcoming news, seeing the impressive levels of internet penetration of the country. A joint PwC-CII report estimated that of all the life insurance policies sold so far, 98% have been sold directly. The rapid adoption of online services points at a changed scenario for 2020, with insurtech hoping to scale the market using online tools.
Also, the low consumer market for insurance policies have been credited to the lay-back temperament of the Indian public, with life insurance coming into play at times of only life-threatening circumstances. But with the ongoing coronavirus pandemic, industry experts are expecting a boom in the insurance market. Let’s have a look at key insurtech trends in India that utilise digitalization to its peak.
Reliance on data & analytics
With the 21st century referred to as the age of data, the insurtech industry plans to use this data to their advantage. The industry has now moved past the concept of generalized policies for all, and is now keenly working to offer individualized policies to attract, gain and retain a robust consumer base. Backed by tools like Artificial Intelligence (AI) and Machine learning (ML), the insurtech industry is now offering better policies and an enhanced consumer-oriented experience by generating insights from the data it now has access to:
- By using ML and other advanced algorithms, insurers process big data from varying data sources like crime data, policy contracts, IoT, online activities and many others.
- Through advanced analytics, the insurers are able to create an individualized profile that offers key insights like risk ratios, customer lifetime value and other critical behavioural predictions.
- AI technology processes the real-time behaviour of malicious individuals and helps in detecting and blocking fraudulent claims. Also, it offers the base for automation of customer redressal procedure.
The foundational knowledge about an individual as gathered by these specialized tools and algorithms helps an insurer in crafting a personalized policy based on the data. This adoption of modernized technology offers a mutual victory for both the insurer and the insuree.
The insurtech industry may be best poised to integrate blockchain into its landscape. According to a report from Atlas Magazine — nearly 54% of insurers believe that the foremost threat to their business is insurance fraud. In fact, the FBI estimates a loss of $40 billion annually for the insurance industry due to fraud. Blockchain tech offers some key features vital in addressing these issues and ensuring an efficient and secure insurance ecosystem:
- The decentralized ledger offers a transparent data network for safe transmission – with the risk of fraud greatly reduced,
- Cryptographically protected data makes the system trustworthy and fraud-proof.
- It’s also got low administrative and operational costs.
- It promises faster redressal support and quick claim payment – since there is no middleman involved.
A feasible usage of blockchain technology is visible by the system established by Digit Insurance, an insurer focused on creating smaller value products. Digit Insurance has deployed a blockchain-based system at the backend that is aiding in hastening the procession of claims. They have already reduced downtime taken to service a mobile phone damage claim from about 25 days to just a few hours. And many more such practical adoption of blockchain centric solutions are underway.
Neobanking and insurtech synergy
Neobanks have brought forth a much-needed revolution in the banking realm. Catering to a more tech-savvy demographic, neobanks are offering traditional bank facilities and much more right from the comfort of one’s smartphone. Though neobanks are still in their infancy in most markets, the advantages they offer are significant:
- An all-in-one app for every banking facility installed on your smartphone right from setting up an account and making payments, is crucial in 2020.
- Travel-friendly banking experiences offer 0% international purchase fees, allowing storing and transfer of multiple currencies and much more.
- Superior and in-depth technical analysis of your spending habits and prompting multiple saving options to save your money.
And these are just a few general benefits of choosing a neobank over traditional banks. The good news comes for the Indian insurance sector through the upcoming move of neobanks in integrating insurance products along with the other facilities on their banking platform. Now, along with enjoying a superior banking experience, insurees in a quest to identify the best insurance provider can select insurance policies from a single platform. Plus, the tech superiority offered by the neobanks can be a game-changer feature in the coming years.
These were our major insurance trends that should dominate the insurance sector in the upcoming years. A European and Western trend that we are witnessing is a demand for case-based insurance as compared to life insurances in general, as an increasing number of consumers demand insurance on their flight tickets, taxi rides, doctor visits and many such case-based circumstances. This trend is likely to surface on the Indian insurance market in the coming months. For any insurer to likely emerge as the major winner in the insurance sector, they’ll need to offer the personalized insurance policies and customer-friendly claiming experience.