India's Insurance Sector Undergoing Massive Digital Disruption
The insurance industry in the country is undergoing multiple disruptions in its functioning and the trend will accelerate in the future. The operating and business models of insurers have been evolving due to the disaggregation of the insurance value chain, according to the report prepared by industry body Assocham in collaboration with Ashvin Parekh Advisory Services.
Recent technology trends such as artificial intelligence (AI), machine learning, blockchain and robotic process automation (RPA) have significant potential to streamline insurance operations and enhance customer experience, it added. Insurers have begun capitalising this potential of technology to address rising customer demands and expectations.
Where the major task has been customer acquisition and services for the insurance industry, technology has made it easier to manage the sourcing by way of interactive machine learning and artificial intelligence tools, the report said.
Three disruptions including technology, financing of insurance companies and the policy and regulations will perhaps pose new challenges for the industry,” Ashvin Parekh, Managing Partner, Ashvin Parekh Advisory Services said in a statement.
At least four insurers, including ICICI Lombard, Birla Sun Life, PNB MetLife and HDFC Life — are already using advanced technology for either customer support or sales. At the same time, two new-age non-life insurers — Acko and Digit Insurance — have received the final approval from the insurance regulator IRDAI to do business in India. Both companies are relying on their technology platforms to differentiate themselves and plan to replicate the e-commerce service experience that customers are used to.
As per the report, the insurance sector has grown fairly well in the past one year, with both life and non-life sectors recording higher than previous year premiums. The average growth rate for the industry has been around 10-12 percent.
Despite the positive waves in the sector, the industry’s ability to confront structural and technological changes remain at risk, according to CSFI’s latest Insurance Banana Skins 2017 survey, conducted with support from PwC,surveyed 836 insurance practitioners and industry observers in 52 countries, including in India, to find out where they saw the greatest risks over the next 2-3 years.
Change management is at the head of a cluster of operating risks which have jumped to the top of the rankings. The report raises concerns about the industry’s ability to address the formidable agenda of digitisation, new competition, consolidation and cost reduction it faces, especially because of rapidly emerging technologies such as mobility solutions and artificial intelligence. This has also been highlighted as a significant risk by the Indian insurers.
While regulatory risks have reduced [though the cost and complication of regulation continue to be a concern] the report shows that the industry’s ability to attract and retain human talent is a fast-rising concern, particularly to handle the digital challenge. In fact, insurers from India rated human talent as the top risk. The dearth of skilled workers (eg. actuaries, cyber risk experts) needs to be addressed differently.
Studies reveal that companies are adopting strategies of open workers or outsourcing of the function, especially. for seasonal work. This provides the added advantage of significant reduction in cost.
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