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Business News/ Opinion / Digital insurance: converting the promise into reality
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Digital insurance: converting the promise into reality

While pricing is a key factor for buying online, convenience and transparency cannot be ignored

Shyamal Banerjee/MintPremium
Shyamal Banerjee/Mint

Whether it is creating a winning experience on the Internet or enabling the mobile platform, digital commerce is a hot topic today. Everyone is increasingly adopting new digital mindsets to harness the true potential of technology to connect with customers.

While the influence of digital is already big globally, India is no exception. It has one of the largest digital-user populations—only after China and the US—and the number is projected to grow with the exploding popularity of smartphones, Internet and social media. Over the past few years, India has witnessed one of the fastest growth rates in terms of penetration of the Internet—it grew from a mere 0.53% in 2000 to a little over 19% in 2014. On the other hand, the number of mobile subscribers crossed 900 million in July 2014.

Since the statistics clearly portrays a lucrative picture for the digital world and as people continue to integrate the digital experience in their everyday lives in the country, insurance firms, like all other sectors, are also gearing up to embrace the technological platform to build a more direct, seamless, transparent and interactive relationship with customers.

So far, insurers typically depended on the traditional mode of business to connect with customers, even as the digital wave in the country was only getting bigger in terms of user growth. However, this scenario is expected to change, as one, India’s digital world holds an enormous growth opportunity in the future, and two, the overall influence of the Internet on various insurance product purchases is also growing. What’s more, people who are in the age group of 25-40 years use the Internet extensively and they are the people who are also in the initial or mid-level of their careers and think strongly about securing their future by purchasing life insurance products.

Currently, online purchases of insurance policies in India—life, general and health—represent a small component of insurance activity. As per estimates, the online insurance market stands at over 700 crore. Sales of term and travel insurance plans have already started picking up online, and property and casualty insurance are also set to attract significant consumer interest. Simultaneously, one can also expect sale of health insurance products and life protection plans to gain momentum.

Insurance companies today are on the brink of big technology-driven changes and insurers need to rethink their customer engagement model.

Technology needs to be adopted in such a way that it seamlessly facilitates sale of policies on various platforms. Companies will have to use technology for convenience of purchase and process efficiency and this can be achieved keeping in mind that the benchmark on technology adoption is not just with the insurance sector but with other industries as well where the digital wave has had a positive impact. As far as life insurance goes, agent advisers and intermediaries are still the most preferred channel for purchase of insurance policies and insurers have started using hand-held devices and tablets for need-based selling and faster processing.

Insurance is a sector where reputations can be damaged within a short span of time and margins can appear or disappear. In this volatile scenario, insurers should take adequate measures to understand customer expectations and chart out suitable social customer relationship management (CRM) strategies to serve them better and win their loyalty.

Whether customers are digital or not, insurance companies today have access to a lot of data from web analysis and proposal forms. Added to this, consumers also keep leaving their mark on digital platforms. Insurers should use this data to customize offerings. Besides, there are also new data sets available from connected devices such as social media that can enable insurance companies to price risk better.

While we all know pricing is one of the key factors for buying online, however, convenience and transparency cannot be ignored. Currently, the two prominent drivers of digital strategies are “enriching customer experience" and “gaining direct control of the customer relationship". These can be achieved through a more interactive platform online so that insurers can connect with customers at every stage of purchase and post-purchase processes. In this regard, it is imperative for insurers to share information transparently so that they can be the trusted source of information for customers.

The future of digitally enabled insurance sector in India looks good with better synergy expected to come between key stakeholders—consumers, life insurers and distributers. While the new breed of digital population in the country is confident enough to buy directly from insurers and allow their choice to be guided by their social networks, be it family or friends, insurers are doing everything to reassess their business models to serve customers better.

As the completion of the digital world along with offline sales intensifies, it is time for the Indian insurance industry to create digital capabilities to be leading the industry in the wake of this digital revolution in the country.

Rajesh Sud is chief executive officer and managing director, Max Life Insurance Co. Ltd.

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Published: 28 Jan 2015, 06:43 PM IST
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