With digital innovations rapidly changing consumer behaviour, insurance companies will have to innovate products to create a pull factor and unlock demand. Insurers will also have to introduce next-generation bancassurance practices with digital enablement of sales. They will also have to reimagine and digitise the entire customer journey from policy creation to servicing for enhanced customer experience and leaner, low-cost business models.
These are some of the recommendations from a Boston Consulting Group and Ficci report titled India Insurance – Going from Teems to Twenties. The report points out that the the insurance industry is at a critical point in its evolution as it completes 20 years since private companies were allowed and is poised for sustained growth.
In order to gain from the digital transformation, insurers will have to build a customer-centric mindset and focus on solutions, personalisation and digitally-enabled engagement. Insurance companies will have to accelerate the process of digitalisation and automation by deploying next-generation technology, and rewire business models using analytics.
The report says that traditional channels such as agency and bancassurance, which will continue to be the core channels for growth, need to leverage digital and data as force multiplier to increase productivity. In fact, digital sales has the potential to become mainstream leveraging digital marketing strategies that efficiently engage relevant customers. As the next decade will also see the rise of digital ecosystems and ‘InsureTech’, insurers need to engage with them and create a seamless customer journey. In India, most of InsureTech investment has been made in web-aggregators and online-focused new insurance companies.
Pranay Mehrotra, MD and partner and insurance lead for BCG in India, says insurers will need to drive digital-led transformation to unlock growth, deliver a superior customer experience and improve returns. “Insurers will need to challenge the status quo to significantly enhance their core models and build new models for the future. Companies need to become more customer-centric else they run the risk of getting disrupted,” he says.
The regulatory sandbox created by the Insurance Regulatory Development Authority of India (Irdai) will enable insurers to innovate products. The sandbox approach will also help to strike a balance between development of the insurance sector and protecting the interest of the policyholders. An applicant wanting to promote any innovation in insurance will have to demonstrate to the regulator that it will help increase insurance penetration and provide enhanced services to the policyholders. The regulator may consider granting limited regulatory relaxation to the proposal that promotes innovation in insurance.
Irdai guidelines on the operational issues pertaining to the regulatory sandbox states that prior consent of customers will have to be taken regarding their willingness to participate in the proposal.
Targeting mass market
Large-scale growth of the mass market or at the bottom of the pyramid is difficult because of many factors. However, digital will play a major role with more than half of the country’s population set to be connected to internet through smartphones. The scope of Bharat Bill Pay Services has been expanded to include payment of insurance premium. Insurers can leverage this, especially for life and health insurance policies with recurring payments.
The report notes that digital-driven customer experience across the value chain of insurance, renewals, servicing and claims can dramatically cut turnaround time by 60-80%, reduce customer complaints by half, optimise cost by 30-40%, and build a business model ready for the future. The research indicates that customers are keen to consider innovative insurance products which better meet their needs.