In May 2015, IRDA issued guidelines allowing life and non-life policies to be available in digital form. According to the new guidelines, the insurance repositories created will store the policies electronically under a single e-insurance account.
Leaving aside the scale of adoption and success these guidelines will meet, this single step has already put industry on a high speed trajectory.
The digitisation story, as in any industry, will hugely favour the customers and eventually the industry too. This is indeed a pre-cursor to the tectonic shift that will witnessed even in the health insurance sector, as digital gains further stronghold.
The need to go According to reports and studies, the health insurance market in India is expected to show 18-20% y-o-y growth in the next five years, riding on the technology advances made in the industry.
As the internet adoption in the country advances, the insurance sector would need to speed up to reach out to its half-a-billion internet-connected people by year end.
The statistics which objectively characterise the shifts in consumer behaviour should help illustrate the case for change.
According to a study by the Boston Consulting Group and CCCI, about 14% of all health insurance policy purchases are influenced by digital channels. This is about 2.5 times the number of purchases actually made digitally. By 2020, about 65% of the global population will be connected to internet.
This will be the “mobile age” with people consuming 100 times more online data via faster connections. This will be the single and most significant transformation for the healthcare insurance industry.
The digital ecosystem prevalent today does much more than just facilitating the purchase of health insurance.
While the proportion of digital sales of health insurance today might be in single digits, the influence of digital on actual purchases is in double digits.
These are leading indicators which if extrapolated help us visualise what the impact of digital would be on just driving the growth for the industry.
The influence of digital on purchases is also expected to grow to 45-50%. A corollary to this is that if the industry is not digitally ready over the next 3 years, they might be missing out on half of the later stage opportunities in their sales funnel.
Beyond purchase–Using digital to differentiate
A complete digital experience goes beyond a channel for purchase. It starts from attracting the target audience and connecting with them on relevant issues. It then goes onto customer engagement, post purchase digital fulfillment and providing wellness and preventative healthcare services and customer advocacy.
The consumers are evolving rapidly and there is an affinity to use products and services which are digitally enabled, which provides them with more control of what they want and at what time.
Digitisation of health insurance, therefore, can help us differentiate, by providing a service which is sync with the times.
Global trends already illustrate how digital transformation is already changing the industry in a massive way. Incentives for consumers who take care of their health are directly impacting premiums for consumers.
The disruption has now highlighted the emergence of a new personalised digital health market with an estimated to grow is expected to grow with a CAGR of 21.4% during 2015-2020.
Digital to drive efficiencies
The BFSI industry has been foremost, perhaps only second to travel industry in using technology to drive efficiencies. Beyond customer acquisition, retention and advocacy, the changing form of digital opens up even more opportunities. A few examples include:
Customer verification: Aadhaar based verification is becoming mainstream. The mutual fund industry has begun using Aadhaar for paperless KYC. For the consumer it reduces the hassle and for us, this reduces a significant cost line item.
Fraud prevention: Going paperless can also help reduce fraudulent claims. In fact, for those filing genuine claims are hassled due to our pursuit of looking for possible fraud. Technology makes it easier to cull out fraudulent claims from genuine ones. The leakage due to such claims can be stemmed.
Persistency: The inability to constantly engage the consumer and demonstrate value during the lifetime of the policy holder, especially the first few years, leads to customer attrition. Digital can most certainly stem attrition as well. A higher life time value is the premise of insurance businesses and this can transform the economics for us.
A few digital programs, or a transformation?
I use the word ‘transformation’ intentionally. Going digital would be quite unlike other projects or initiatives. We need an organisation wide push to think digital. We need to take a leaf from the way successful startups in the e-commerce players and even aggregators have disrupted the existing business models, while the incumbents have not been able to make such an impact, despite their industry knowledge and financing power.
The window to transform is limited to 2-3 years and therefore it is high time we begin a concerted effort towards digital transformation.
The government’s initiatives to drive Digital India, the regulators effort to come out with various initiatives such as the online repository of policies, policies favouring e-commerce for insurance products and a mandate to provide digital policies.
In fact, the new generation which would be users of our products are now feeling more responsible as custodians of their family’s health. These are in fact tremors, symptomatic of the tectonic shift which is impending. The time to get ready to ride the digital way by transforming our organisations is now.
Written by: Ashish Mehrotra
The writer is MD & CEO,