Until last year, Samira thought her floater health insurance policy of Rs 5 lakh—between herself, her spouse and child—was adequate. That changed when the second wave of pandemic hit. “I realised the cost of hospitalisation had shot up,” says Samira, a professional, who didn’t want to reveal her real name. Towards the end of April 2021, she decided to take a top-up health insurance cover for Rs 25 lakh. The 40-year-old was pleasantly surprised and relieved to find the policy document in her inbox within just a week or so of applying.
“A representative of the distributor called me to guide me on filling the form, and then I got another call from the insurer regarding a surgery that my son had undergone when he was two months old. I provided all the paperwork online,” says Samira. A top-up policy covers the residue of the hospitalisation claim amount after the main policy is exhausted. For Samira, the top-up cover would kick in if the claim is higher than Rs 5 lakh, to cover the rest of the expenses.
Samira’s case indicates two broad trends that the insurance industry has seen in the past year—growing awareness about the importance of having adequate cover and digitalisation making lives easier for policyholders.
According to the Economic Survey for 2021 released earlier this year, India’s insurance penetration increased to 3.76 per cent in 2019. Life insurance penetration increased to 2.82 per cent, and the figure for non-life insurance went up to 0.94 per cent in 2019. India’s insurance penetration is pegged at 4.2 per cent in FY21 (life insurance at 3.2 per cent and non-life at 1 per cent), according to India Brand Equity Foundation (IBEF).
“The pandemic has made people realise that health insurance is important. The associated mortality has also made people aware of life insurance. Besides, the need for a higher sum assured was felt,” says Abhishek Bondia, principal officer and managing director, SecureNow.in, an insurance broking firm.
The pandemic not just shook people out of the complacency that they had enough or didn’t need insurance but also gave a leg-up to digitalisation of the industry, which used to be largely dependent on physical modes of distribution.
“After the pandemic, the move towards digitalisation has become very rapid. There is hardly any insurer who is not moving towards digitalisation or not trying to take the process end-to-end digital,” says Bondia.
In some ways, it was also the need of the hour, as customers, armed with new awareness about taking insurance but also practising social distancing, were looking for digital alternatives. “Over the past year, customer behaviour and expectations have changed drastically owing to accelerated digital adoption,” says Kayzad Hiramanek, chief, operations and customer experience, Bajaj Allianz Life Insurance.
The industry has responded well to the new demand. “The pandemic acted as a booster and accelerated this transformation, making insurance companies, insurance aggregators and distributors join the digital bandwagon,” says Balachander Sekhar, co-founder, RenewBuy, an insurtech platform.
Simplifying The Buying Process
Contactless Onboarding: From life to health and other general policies like motor insurance, contactless onboarding is the norm.
“One of the key aspects that digitalisation has pushed is do-it-yourself mode of buying insurance. More policies are now available on DIY mode on websites of insurers and web aggregators. Even insurance channels have shifted online,” says Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance.
For example, to buy life insurance, you can go through the know your customer (KYC) process online now. “We have leveraged our existing digital capabilities and integrated our onboarding digital enablers together on a single collaborative platform, bridging the physical and digital divide,” says Ganessan Soundiram, chief technology officer, ICICI Prudential Life Insurance.
Even health covers that need buyers to undergo medical tests in certain cases, don’t need a physical interface anymore. “Medical records of pre-existing diseases or otherwise can be scanned and submitted. Tele underwriting is a reality so bots will reach out to you for routine queries on health,” says Datta.
While newer insurers took a lead in selling insurance directly online, others too have started selling directly through their apps and websites. “While 100 per cent of our business is online, 70-80 per cent comes directly from our website,” says Animesh Das, head, product strategy, Acko General Insurance.
Specific Solutions: Though small-ticket insurance policies came into existence a few years ago, they took shape and found takers only because of digitalisation. “If you want to cover a road trip to Goa, no agent will come to get you that cover for a few hundred rupees,” says Datta. But it can happen online.
These covers provide specific solutions and are, therefore, simple to understand for the buyers and to issue for the sellers. They usually come bundled with other services such as payment or cab aggregators and e-commerce companies, among others. “Insurance will increasingly become more contextual to a person’s needs and easy to buy, so that customers do not have to spend additional time evaluating them,” says Bondia.
These covers work for specific situations: covering the everyday taxi trip with an accident insurance or taking a missed flight cover while going to the airport against traffic jams, accidents or other unforeseen events.
Das explains with an example that Acko General Insurance provides to Zomato delivery agents. “They need a cover while they are on the road because that’s the risky part; not while they are at home. These small covers won’t charge for the whole time but only while they are working,” says Das. Without a digital tool, this was impossible, he adds.
Faster Turnaround Time: More companies and distributors are using the artificial intelligence (AI) model and bots, which has reduced the overall turnaround time of issuing policies. For instance, for health claims, relevant information is culled out from all the documents shared by a customer and classified under categories such as discharge summary, doctor notes, pharmacy bills and so on. “This acts as a catalyst in expediting processes and communicating with customers should there be any missing or incorrect documents,” says Vishal Shah, head of data science, Digit Insurance.
In auto insurance, video assessment by customers and workshops for own-damage claims has made the process much faster. With physical inspections, insurers would sometimes take up to a week to inform the customer whether their vehicle would be underwritten or not.
“The turnaround time for insurance advisors have reduced by three times, consumer outreach has increased by nearly 20 per cent and there is massive increase in consumer satisfaction,” says Sekhar.
After-Sales Support
Services: One of the biggest challenges for policyholders was chasing after agents for after-sales services such as change of address. Digitalisation has improved and quickened the servicing architecture and additional services can now be easily communicated and delivered. “For example, motor insurance is not just about a cover now, but also about roadside assistance. Similarly, health insurance offers a gamut of services such as teleconsultations and emergency ambulance services. Digitalisation has made insurance more acceptable as a product,” says Datta.
As mentioned earlier, many insurers have made the inspection of vehicles after an accident, which is routine to avail of the motor insurance cover, completely online, post Covid.
Claims: You can now lodge your claims by sending all the documents digitally. Mostly, claim proceeds also get credited into your account directly. “As much as 99 per cent claims payment happens digitally. With UPI’s uptake going up drastically during the pandemic, renewing a policy or enhancing a coverage has become simple,” says Datta.
The insurance industry largely relied on traditional methods of doing business, but in the last few years, new companies have adopted technology to revolutionize how insurance products are sold and claims are reported and settled, says Shah.
WhatsApp has become a tool of choice. Data from Digit Insurance shows that it received over 82,000 service requests on the app in Q1FY22. Insurtech platform Plum also helps users make claims through WhatsApp. “Claims experience on a familiar tool makes the process a lot easier for the end-user. This allows our users to self-serve in different situations, for example in an emergency at the hospital, and with reimbursements,” says Abhishek Poddar, co-founder and CEO at Plum.
The Road Ahead
The insurance industry is moving away from the traditional insurance branch offices to app-based models, while face-to-face meetings have given way to audio, video and virtual interactions, online chats, and voice assistance. “Data analytics has helped in tailoring services as per each consumer’s needs and requirements,” says Sekhar.
The more the dots are joined, the more seamless is the experience. “Integration with hospitals is being thought through. Things like patients’ health records being completely digital to ease the claims process, or easy accessibility of airline data to make travel insurance automated where you don’t even need to lodge a claim are the way forward,”says Datta.
The industry, however, is yet to reach the level of ease of comparing, ordering, paying, and getting details that e-commerce platforms offer, says Das. “If you are able to give a great experience, then customers will be sticky,” he adds.
There are other chinks as well in the armor. “Digitalisation has worked to a great extent across key categories such as health, motor and travel insurance. For certain categories such as fire and property, automation is still a slow process, but a few years from now, there could be enough and more digital advancements within these segments as well. However, one needs to keep in mind that the insurance industry has a high element of fraud, so till digitalisation achieves a certain level of maturity, one needs to be on the toes all the time,” says Shah.
Taking insurance to Tier II and III cities, where digital innovations can help, is also a challenge. “Over the years, insurance has been majorly concentrated in the top 50-60 cities; mainly because of the traditional and branch-led insurance distribution model. The demand-supply gap is the biggest issue. The penetration rate is around 4 per cent, which indicates there is a long way to go in insurance outreach. The next steps in digitalisation will focus on increasing outreach and expanding digital insurance infrastructure in the country,” says Sekhar.
These are early years in terms of digitalisation of the insurance industry, and a lot of innovations are on the cards in terms of products, distribution and outreach. Watch this space!
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4.2% India’s insurance penetration in FY21, versus 3.76% in 2019
3.2% Life insurance penetration; up from 2.82% (2019)
1% Non-life insurance penetration; marginally higher than 0.94% in 2019
With inputs from Kundan Kishore