E-potential in insurance

Written by Saikat Neogi | New Delhi | Updated: Nov 5 2013, 21:17pm hrs
General insuranceEven regulator is promoting digital platform for demat policies and grievance management.
Insurance companies are adopting comprehensive digital strategies to maximise revenues through greater reach and comfort for the customer. Even the insurance regulator is promoting the digital platform for demat policies and effective grievance management.

Beginning with tentative moves by a few insurance companies a couple of years ago, most life and non-life insurers are now creating a robust online channel for distribution, which constitutes about 20% of total sales for insurance companies. In fact, more than 1 lakh term plans were sold online during the last financial year. The market for online life insurance in India has increased from R10 crore three years ago to over R200 crore in FY13 and is estimated to be worth around R8,000 crore by 2020.

Digital platform can enable seamless switching between channels and can give transparent comparison with products of other insurer. Product development will benefit as companies can share feedback on social networks and communities and be more responsive. Also, companies can offer value-added services integrated into a classical product. The platform will help address claims as it can become an all-inclusive service to deal with customer problems. Digital claim filings supported by mobile applications can help in automated and fast processing of claims.

Moreover, in a recent circular, Irda has said that for all customer identification procedure, insurance companies will accept the e-KYC issued by the Unique Identification Authority of India (UIDAI). The letter issued by the agency containing details of name, address and Aadhaar number will be considered as an official valid document and will be accepted for KYC purpose under the Prevention of Money-laundering (Maintenance of Records) Rules. Last year, the insurance regulator notified that the current passbook with details of permanent/present residence address were officially valid document for identity and address.

Digitisation and automation of insurance processes can yield significant process cost and customer service benefits to companies. A Boston Consultancy Group report benchmarking in South East Asia shows significant potential for reduction of turnaround times of processing policy applications by up to 208 days. Digitisation can reduce operating costs of policy processing by almost 67%.

Integrated Grievance Management System

Irda has launched an Integrated Grievance Management System (IGMS), which enables a policyholder to escalate any unresolved complaint or issue to the regulator and also track its resolution status online. A policyholder can access the portal at www.igms.irda.gov.in and register with all details. The system allows a policyholder to lodge a complaint against an insurer both life and non-life a broker or an intermediary in respect of any point of sale, servicing or claim-related issues.

At the time of registration, the policyholder will have to enter unique identification parameters, which will then be used to log in. These could be mobile number, landline number, passport number, PAN or voter ID. Once registered, an individual can lodge complaints and track them through subsequent log-ins. A reference number will also be generated for each unique complaint, which can be used to edit or track the complaints.

The system's software will assign and track unique complaint IDs and also initiate pre-defined actions or intimations to all parties involved.

Demat policies

All existing and new insurance policies will now be in dematerialised format and held with an insurance repository. The repositories will enable the policyholders to make changes like alteration in nominee or address details and any other modifications in the policy and will also act as a single-stop shop for all policy-related servicing.

In fact, dematerialisation and digitisation of policy will be a key enabler for the insurance industry to adopt digital processing. One of the major advantages of keeping insurance policies in an electronic form is safety as there is no risk of loss or damage. Since all insurance policies can be electronically held under a single e-insurance account, the policyholder can access the policy and get the details from anywhere and even download a copy of the policy. Also, a single change of address request made to the insurance repository can update the policies issued by multiple insurers, thus reducing paper work.

An e-insurance account holder will be spared from the trouble of submitting KYC details each time a new policy is taken. Every year, the repository will send a statement of account to the e-insurance account holder with details of the policies of the account holder. Single view of all policies will be made available to an authorised person in case of death of the e-insurance account holder, which will help in faster claim settlement.

At present, the management cost for the insurance companies is around R120 a policy per annum. With e-insurance, it is likely to come down to R20 a policy. Analysts say digitalisation will help companies to do data mining, improve risk management and roll out new services quickly.