Digitisation is central to insurance-providers' strategy

The COVID-19 pandemic has increased awareness about the need for health and life insurance, said Sumit Rai, Managing Director of Edelweiss Tokio Life Insurance, at the BFSI Leadership Summit organised by YourStory and EnterpriseStory on July 16.

Watch all videos of the BFSI Leadership Summit 2021 here.

"Better awareness, and the ability of technology to reach farther in areas where insurance-providers were not able to reach before, bode very well for the industry," Rai told Priya Sheth, Senior Anchor, YourStory Media, during a panel-discussion on InsureTech.

"Digital is a no-brainer for any insurance company, regardless of business model," said Goutam Datta, Chief Information Officer and Digital Officer of Bajaj Allianz Life, referring to the distribution buildup that digitisation has enabled for the insurance industry.

Bajaj Allianz has more than 80,000 agents and 509 branches around the country. Still, insurance companies are not in every pin code in India, Datta noted. "The pandemic has refocused our strategy on digital to ensure that the journey is smooth and that services are available for whoever is interested," he added.

Pushan Mahapatra, President-Strategic Investments, SBI General Insurance, concurred. He said the pandemic has driven two trends in the insurance industry: creating awareness of health insurance, and fast-tracking providers' digital journey.

"In the past 15 months, awareness of the need for health insurance has gone up, which has translated into higher sales," Mahapatra said. "And all service-providers have fast-tracked their digital journey because of the pandemic."

In this context, the insurance industry has an opportunity to reimagine how products are designed and distributed in under-penetrated parts of the country.

"The distribution buildup is filled with possibilities that are yet to be tapped in the industry," said Datta. For example, the purchase journey can be digital and physical, to include people who are not digitally-savvy. But, service-providers can make relevant products and design buy-journeys for an expanding market because of digitisation.

Low penetration of insurance industry

The insurance industry in India had a penetration rate of 3.7 percent in 2018, compared to the global average of 6.3 percent, according to the India InsurTech Report 2020 by global fintech advisory Medici.

The insurance industry's gross written premium was $94.7 billion in 2020, compared to $82.8 billion in 2018, the report says. It has the potential to grow to $280 billion in this decade because of insurance-tech ventures that are growing and getting funded in India.

"Traditional insurers are still struggling with simplifying of policy terms, settlement procedures, mutual trust deficits of buyers and sellers, and differentiating products to help customers buy without much confusion," states the India InsurTech report.

This has become an opportunity for insurance-tech ventures, Medici says.

As the industry seeks to expand the buyer base, Datta outlined two areas in which the sector can capitalise on the increased digitisation. One, innovation for better products that are specific to buyer needs, both in life and general insurance.

Two, making the buying- and processing-journey frictionless. "The degree of transparency and trust must be as high when insurance-claims are discussed remotely, as it is during face-to-face interactions," he said. "This is a huge area of investment."

Rai of Edelweiss Tokio Life Insurance said the changes were revolutionary for its sales force that took insurance to the market from home. It needed a crisis like the pandemic for the company to completely pivot, and see the various parts of the digital journey, he added.

"Electronic sales media did exist in the past five years. But the process of taking an interaction or discussion completely remote, or selling insurance without meeting customers face-to-face is a big revolution," Rai said.

The electronic means are also making processes more efficient. "If we are able to harness this and combine it with the warmth of face-to-face interactions, the insurance business can reach a new level," he said.

Mahapatra of SBI General Insurance Company said digitisation is now on the centre-stage of every insurance company's strategy. "The leading players had already started taking a lot of steps around it, but the pandemic really forced the issue of a system—with zero contact—to deliver the entire range of services. It is now for us to take it forward," he said.

Watch videos of all sessions from the BFSI Leadership Summit 2021 here.