Insuring the insurers in a connected world

Equipped with technology, insurers are creating entirely new business models and disruptive offerings that generate non-risk, fee-based income

Updated: Aug 8, 2019 01:41:08 PM UTC
Image: Shutterstock
Image: Shutterstock

As digital transformation gets pervasive, the fusion of data streams with artificial intelligence (AI) can help insurers predict customer journeys, assess risks, personalise pricing and ensure real-time service delivery to drive overall business growth.

Fuelled by a solid economy, higher disposable incomes and robust government policies, the insurance industry in India is poised to witness strong growth and expected to touch US$ 280 billion by FY20. The insurance industry’s growth is further accelerated by enrollments under the Government of India’s Pradhan Mantri Suraksha Bima Yojana, which reached 130.41 million in 2017-18, and the National Health Protection Scheme, under Ayushman Bharat that will provide insurance cover of up to US$ 7,723 to over 100 million families. While these are promising schemes for large-scale adoption, the overall insurance penetration pace has been rather slow.

However, the emergence of technologies like Machine Learning, Artificial Intelligence, Big Data, Cloud, Cognitive Computing, Blockchain, and Internet of Things is driving a new wave of on-demand, on the move and connected economy.

As digital intelligence is increasingly embedded into mobiles, wearables, cars, appliances, speakers and smart homes—consumers are interacting intuitively with connected devices, and services—anytime, and anywhere. As a result, they are leaving a very rich trail of data not only gives insurers customer insight to improve their businesses and products, but more importantly, has opened up new business models. A surge of usage-based insurance has emerged across sectors—real-time driver behaviour data for automotive insurance; smart appliances with security features within homeowner insurance; fitness trackers for life and health insurance; warehouse monitors and fleet management in commercial insurance, and so on. The Internet of Things has truly transformed the healthcare sector too, and today, every stakeholder has a lot more access to data and other information whenever required. As a result, there are dedicated healthcare data companies that maintain patient and other records and offer their services at a fee. With this data at hand, healthcare services are also now available to patients in remote areas, especially in a country like India where villages are so widely spread.

Equipped with technology, insurers are creating entirely new business models and disruptive offerings that generate non-risk, fee-based income. For instance, think of usage-based auto insurance—a small device installed in your car monitors your driving habits and enables you to earn a lower insurance premium than those who don't drive safely. Or in healthcare, organisations are working towards building a digital ecosystem wherein insurance companies work with healthcare companies, pharmacists and clinicians to improve outcomes. Technology is bringing a transformation; from merely paying out for illness to creating preventive mechanisms.

Tech leaders today are engaging sophisticated analytics to stay nimble and stay ahead of the curve and this is a global phenomenon. While there are many success stories, a case in point is Bajaj Allianz General Insurance’s group personal accident cover for school children, which covers them during their travel in a pre-registered school bus. By using IoT, it tracks the bus providing real-time location through GPS and beacons inserted in the identity cards of kids. As Indian households are increasingly using personal assistant devices such as Amazon Echo and Google Home, insurance companies are taking advantage of devices such as Alexa, and also offering their services on these devices. (Aviva Life Insurance was the first life insurer to make its debut on Alexa).

Today, every company is racing against time to respond quickly to changing market needs and the insurance sector is not a laggard. However, the ideation and tech innovation needs to quickly transform into implementation. What will make a difference is how technology is leveraged to gather and assess data, and ultimately create solutions that benefit both consumers and insurers.

The author is Chief Sales and Marketing Officer, Tata Communications.

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