The Indian insurance sector is experiencing a technological shift. Technology in the insurance sector is transforming the ecosystem not just in scale but also in fundamental aspects. The digital-first business model is the result of companies using data and technology more than ever, testing new business models and revenue streams fueled by new technology. Advanced insurance technology is now already an integral part of the industry, for both insurer and insured.
Today’s consumers have more complex needs and are more knowledgeable and aware of their choices than ever before. They want personalized offerings and tailored communications which leads to insurers digitizing their services and optimizing all interactions.
The business ecosystem is changing with the rapid emergence of new-age technology such as Artificial Intelligence (AI) and the Internet of Things (IoT), and the incumbents of the market are strategizing to enable their businesses to transform digitally. The implementation of any emerging technology is a top-down exercise for the industry, from evaluating the acceptance of new-age technology to shifts in customer behavior, the insurance company has to run the show and usher in the digital transformation.
The insurance industry in India has adapted to numerous developments, amendments and trends such as:
Artificial Intelligence (AI)
Consumers are always looking for personalized experiences, especially when purchasing something as important as insurance. AI offers insurers the ability to create these unique experiences, meeting the high-speed demands of modern consumers.
With AI, insurers can improve claims turnaround cycles and fundamentally change the underwriting process. AI also helps insurers to access data faster and cutting out the human element that leads to more accurate reporting in shorter periods of time.
Machine learning can not only improve claims processing; it can automate it. When files are digital and accessible via the cloud, they can be analyzed using pre-programmed algorithms, improving processing speed and accuracy. This automated review can be used for policy administration and risk assessment.
Also, advances in ML (Machine Learning) is allowing incumbents to systematize the gradually complex tasks, including addressing all forms of customer queries. Machine learning is progressively being used to identify fraud, process automatic payouts for small claims besides offering digital self-service damage assessments
Telematics capabilities will continue to impact motor insurance policies. It is the wearable technology for cars as applied in insurance technology. Cars are equipped with monitoring devices that help in measuring various parameters such as data related to speed, location, and accidents. This information is further monitored and processed with the use of analytics software that in turn determines your policy premium. There are various benefits of the use of telematics for both insurers as well as insured. It encourages better driving habits that is directly proportionate to the lower claims costs for insurers. Moreover, it allows the companies in serving their customers better and add pro-activeness in relationships.
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Some reports suggest that 95% of all customer interactions will be powered by chatbots, by 2025. With the effective utilization of AI and machine learning, chatbots can seamlessly interact with customers which further saves everyone’s time within an organization. This further helps in cost reduction for insurance companies. A bot can help walk a customer through a policy application or claims process while saving human intervention in only complex cases.
Most consumers are willing to share extra personal information if it means saving money on their insurance policies and the Internet of Things (IoT) can automate much of that data sharing. Insurers can use data from IoT devices such as the various components of smart homes and wearable technologies to better determine rates, mitigate risk, and even prevent losses in the first place. IoT will bolster other insurance technology with first-hand data, improving the accuracy of risk assessment and giving insureds more power to directly impact their policy pricing.
Technology as a positive influencer in the motor insurance sector
The future of insurance lies in the digitization of processes, making it seamless for insurance agents and customers. The introduction of IRDAI (Regulatory Sandbox) by the Insurance Regulatory and Development Authority indicates the vision of the Government in seeing digitization as the future of the sector. The regulations will create a conducive environment for experimenting with insure-tech solutions. Digitization will also help insurance penetrate into the semi-urban and rural segments of India in the next five years.
Author: Balachander Sekhar, Co-Founder & CEO, RenewBuy.com
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