From reducing paperwork and going digital to gaining customer trust and speeding up the claim process, insurtech firms have an uphill task to solve.Rohan Kumar
The insurance industry in India is not known for a great customer experience. Lack of a consumer-focused mindset and slowness to adopt technology creates pain points for customers. For a young demographic that is used to ease and simplicity, this has made insurance a difficult concept to embrace. India has this huge underserved market, thus creating the perfect opportunity for the rise of insurtech startups. According to EY’s Global Insurance Trends Analysis 2018, $2.3 billion has been invested into insurtech startups, representing over 45 percent of insurance investments spanning 2012-17. Yet, Indian insurtech startups are yet to tackle some significant challenges as they try to break into the local market.
Today, a third of India’s population is made up of urban millennials aged between 21 and 35 years. This huge market faces very specific risks on a daily basis that are not being covered by the insurance industry, which continues to focus on one-size-fits-all health, life and motor insurances. Most young adults will, for example, not think twice about buying an expensive silicon cover to protect their cell phones, which is insurance in a tangible form. Buying small insurances for specific risks is the same thing. They can cover their unique and immediate risks, which can amount to basic cycle or commute coverage, salary protection in case of hospitalisation, and coverage of their belongings such as laptop bags in case of theft or burglary in their daily lives.
Identifying this growing target population and providing to their needs gives rise to a whole new direction for the insurance industry. More user experience research needs to be done in order to understand the specific concerns and needs of this new target client category, a challenge that can easily be taken on with the right partnerships and technology.
Even with insurance aggregators, customers seldom complete their purchase entirely online. A telephone call or a visit from an agent is often needed to clarify, fill forms, understand the inclusions and exclusions of each plan as well as to wrap one’s head around obscure terminology.
Startups need to improve the design of the purchase processes by deconstructing over-complicated products into easy-to-grasp, bite-sized coverage plans that use simple language with examples set in the user’s day-to-day life. This will not only greatly increase customer understanding by taking out unnecessary decision fatigue, but it will also speed up the purchase process.
Hence, insurtech startups have the exciting task of pulling insurance from a financial mindset (something you have to sit with an expert or an agent to plan meticulously) to a product mindset (something you can pick up as and when it is needed like a case for your phone).
The popular general impression is that an insurance company does not want to approve claims, which of course is reinforced by the hoops one has to jump through to just file a claim. To be fair, insurance companies are worried about fraud and have a complex maze of processes to prevent it. From getting all the needed paperwork together, physically mailing them and filling out forms in triplicate. (We exaggerate a bit, but you get the idea.)
Insurtech startups need to show that they can approach claims entirely differently, while following the prescribed guidelines. They want to approve claims with minimal information and trust their customers on face value. The assumption of an insurance company is that the customer is dishonest, while the precedent set up by Amazons of the world has proven that trusting the customer is good business as well.
Digitising the whole experience goes a long way, removing the inefficiencies of paperwork and decision-making. Simplifying document requirements along with a smart algorithm-led fraud check can take the frustration out at both ends - saving the company’s manpower cost and eliminating customer frustration from the lengthy process of submitting claims. With these digital tools, a typical claim would only require one to simply upload the photos of relevant documents and money could be sent to the client’s bank account instantly. This process obviously works a lot better for simpler products.
Insurance for a typical Indian has always been about tight family bonds, counting on your relatives to come through for you - not something you have to buy. However, as a consequence of the evolving society, we see the trend of families breaking down from big, extended groups into smaller or nuclear units, and this phenomenon is affecting half a billion people. As huge joint families dissolve and migration weakens community bonds, there is little hope of relying on family and communities to come through to help in times of crisis. Hence, the ground is set for insurtech startups to introduce the idea of risk mitigation (beyond family bonds), a safety net in the shape of a small, simple insurance policy that can mitigate those risks and concerns.
Insurtech startups also have the responsibility to deliver a powerful and pleasurable experience for first-time insurance buyers. They have to look at digitising, simplifying and automating the entire buying and claims processes for a seamless, end-to-end user experience so that insurance can be bought as easily as any product in the digital marketplace.
These powerful innovations, topped off with improved customer service with trust instead of suspicion, has the potential to revolutionise the insurance industry.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)