How Technology Is Reshaping the Insurance Industry

Technology is reshaping almost every sector in the economy, and the Indian insurance industry is no exception. It is at the cusp of a significant technological transformation. With India set to make insurance a $280 billion industry, technology has a vital role in enabling this phenomenal, inevitable growth.

From being limited to public sector undertakings to warming up to liberalization reforms and accepting FDI, the insurance industry of the new millennium was an entirely different beast as compared to its 20th-century counterpart. The last two decades, however, have seen this industry through near-exponential evolution catalyzed, this time, by technology. 

The insurance space has previously operated within the barriers of traditional frameworks and manual functions. It was more of a paperwork and documentation dependant industry. But as IT gained a foothold in insurance, it brought about fundamental changes in day to day operations, customer outreach and service, fraud detection, prediction of risk, and ultimately, risk prevention. 

The deployment of new-age technological advances such as smartphone penetration, 4G / 5G technology, Big Data, Artificial Intelligence (AI), and Machine Learning (ML) are changing the face of insurance in India. The increasing use of the internet has transformed the distribution channels for insurance products. Habit of using smartphones and apps are changing the interaction with various services. App-based economy and business is on rise. Same is the case with app in app and combined eco-system. People prefer to have all the service in one place and that too just a click away.

Technologies with prevalent use-cases in insurance — or Insurtech — have emerged from varied domains of innovation. Some of the critical changes that have powered the evolution across the sector are:

  • Smartphones and easy access to the internet have created the single most substantial growth in serviceable customers and made it possible to reach under-served parts of the nation where physical presence has not been viable. 
    • With half a billion active users, Indian internet is more rural, local, mobile-first than ever
    • India continues to be the world’s second-largest internet market after China. However, what makes it more irresistible to Silicon Valley companies is that it also happens to be the largest untapped internet market in the globe. With close to 900 million people without internet connectivity still, there’s little doubt that the Next Billion Users are going to come from India. 
  • Artificial Intelligence and Machine Learning have facilitated the analysis of customer-related data and, as a result, led to better risk profiling and precision in premium calculations. This has translated to lower premiums for a majority of the insured population. 
    • Leveraging image analytics to formulate insurance policies – Advanced image analytics allows for quick analysis of photos (selfies included), to determine parameters like age, BMI, habits, etc. that are important in the perspective of insurance.
    • Machine Learning in Underwriting: Underwriter shaves the tedious and error-prone job of dealing with multiple pages of unstructured documents and extracting information from them for making business decisions. AI, Machine Learning, and deep learning can help in extracting information from these documents, align it to common vocabulary, and make information easily accessible through a search engine or virtual assistants. Underwriting is thus reduced to an automated process that lasts about a few seconds.
    • Chatbots and Virtual Agents: Lengthy documents and complex policies often leave customers confused and daunted about insurance policies. They have questions, expect almost instantaneous responses to their problems and so, 24×7 support is mandatory. Chatbots, developed from Natural Language Processing (NLP) capabilities of AI, serve as Virtual Agents that can answer most customer service requests and questions. These chatbots can also transfer certain requests to human agents if the requests are not within their domain.
  • Internet of Things or IoT has made real-time collection of behavioural data about the insured possible. Better tracking of a vehicle’s usage, for instance, can be factored into the calculation of premiums or even lead to more unique pricing models such as paying as per the number of kilometres driven.

Aside the widespread technologies fuelling the changes in the sector, the industry is preparing itself for the next wave of evolution. Insurance companies have been exploring use-cases in upcoming technologies like Blockchain or DLT as well as smart contracts based on this technology.

Some of the explored applications are the underwriting of group or community insurance, transparent premium fluctuations based on customer behaviour, and automated claims settlement for sufficiently evidenced claims.

We at Bajaj Allianz General Insurance- India’s top private-sector insurance providers – have adopted various technology-based business initiatives. We have unfurled online interactions through AI-powered chatbots, web portals, mobile applications, and insurance aggregators to facilitate the online purchase of insurance plans and registration of claims. Our customer service chat bot ‘BOING’ addresses customer queries 24×7.  This app is available on our company website, mobile app and Facebook page. Taking the engagement forward, Chatbot ‘BOING’ has also been integrated with Google Assistant and Alexa. Thereby, enhancing the customer experience in voice format. Additionally, we have integrated our chat bot with WhatsApp to serve our customers and resolve their queries in a better manner. Besides, the company has also established its presence across a multitude of digital channels to be able to serve any customer remotely. 

For the insurance industry, long-term growth opportunities shall largely reside in digital solutions, technology-based processes, and innovative products. A glimpse into the future of the industry reveals more remote distribution and customer service channels, lower premiums stemming from lower costs, and increased automation. With the help of AI, insurance companies are bringing pay per drive and similar initiatives. Understanding the customer requirement and usage would be primary achievement  via technology. 

Finally, with the help of advanced technology, insurers of the future will be more focused on risk prevention rather than risk mitigation.