Insurance to go through much transformation, says BCG’s Alpesh Shah
People from outside the sector—auto firms, retailers and e-commerce— will eat away the core business, says Alpesh Shah of the Boston Consulting Group
Mumbai: Alpesh Shah, head of the insurance practice in the Asia-Pacific region for Boston Consulting Group talks about some insurance sector predictions for India. These are predictions which should and will happen, he says. Edited excerpts:
• New-code digital attackers: Insurers will actually challenge themselves, because to do it within the company, you really struggle with talent. People have actually set up digital attackers to kill their own businesses.
• Partnerships and ecosystems to further customer engagements: We have the examples of Ping An and Alibaba. Ping An has a health business with doctors, it has a financial services business with banking, asset management and insurance. It has a car business, used-car business, a home business. It has 450 million people as customers. They have a large ecosystem operating in the background from where they get their business.
• Disruptive entries: People from outside the industry will eat away the core business from insurance firms.
We have automotive companies that want to eat away business from insurers. We saw the example of Tesla. So, Maruti can do it too. Retailers do this, e-commerce sites do this, Flipkart is looking for entering insurance and their application is already with Irdai (Insurance Regulatory and Development Authority of India). They are looking for a partner.
Airlines are also there. AirAsia has done six million travel policies last year. Even more surprising, Qantas (an airlines company) is already one of the top five health insurance firms in Australia. They have 11.8 million loyal customers, which is more than 50% of the Australian population, more than 70% of the population over 15 years, and more than 90% of the people with money. They have clocked $150 million health premium last year just by using their loyalty base.
• Imagine the customer’s journey from end to end: Why should insurers keep it at 45 days for a claim or for selling a policy when Alipay can do it in three days? They have to shift and, with the given access to a large amount of data, they have to change.
• Blockchain: Motor, health, travel and marine will go through a lot of transformation with the advent of blockchain technology. There will be only two options—you have insurance-only blockchain partnerships, or you have an ecosystem blockchain partnership. For example, in case of travel insurance, the flight is either late or not late. The data is out there and it cannot be fudged. In a blockchain ecosystem, if a flight is late, why should the customer be even asked to file a claim? The money should be already entering the customer’s account the moment the flight is late. And that’s what blockchain allows you to do.
•Agents will all be bionic: You will not able to differentiate between a physical agent and a bionic agent .
•New-age attackers (insuretechs) will impact every element of insurance value chain.
•Insurers will have to leverage data across the value chain.
•Move from traditional policies and innovate on-demand insurance products that can be purchased on smartphones.
•Insurers will have to shift from protection to prevention.
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