What Can Drive Insurtech Revolution in India?
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British businessman Philip Green has very rightly said, “Good, bad or indifferent, if you are not investing in new technology, you are going to be left behind.”
Innovation through new technologies is steadily becoming a norm in human lives, simplifying their needs and wants and catering to their convenience.
We never imagined making payments would be so simplified unless the Fintech revolution. Financial sector didn't remain aloof to notice the benefits of adopting technology and soon Fintech became the buzzword it is today. Like how Fintech is disrupting the traditional financial services market, Insurtech industry too is waiting to bloom and revolutionize the insurance industry. Forward-looking players in the insurance industry are taking note and working towards making Insurtech more mainstream so that they are able to cater to customers better and are also able to create operational efficiencies within their organizations.
An Ernst & Young study states that in insurance specifically, 24per cent of global respondents have adopted Insurtech with India leading the charge on 47per cent adoption followed by the UK (43per cent) and China (38per cent). These are sure signs of good.
Insurtech in India for sure has been making steady strides in both innovation and premium growth. The key for industry players would be to become more customer-centric and offer more competitive pricing. However, the question that arises is - Are insurance players catering to the needs of evolving consumers, who have become more knowledgeable, are tech-savvy and seek customized solutions? How are the insurance players ensuring that consumers are discovering them when they are being sought?
The fundamental solution is to adopt digitization with force and optimize it to suit the needs of consumers – who may be largely researching, comparing and buying products mostly through mobile channels. What insurers need to bear in mind as a long term success strategy is that going the digital way is not the formula only to be discovered by customers at the right time and not miss out on leads but also the formula of success in retaining those leads through enabling better communication with stakeholders.
Insurers Should be Pressing Hard on Adoption of Technology
Cloud, Blockchain, IoT, ML are all waiting to disrupt the insurance sector. Cloud has seen a faster and better adoption and appears to be a more likeable choice among insurers. This is owing to its cost-efficiency and scalability. These factors will continue to drive its adoption.
A Deloitte study on ‘2019 Insurance Industry Outlook’ states that Insurance CIOs, who are under pressure to deliver digital capabilities, are looking at developing applications on the cloud as a faster alternative to on-premises deployments. Beyond that, evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.
The study also suggests the technology such as Blockchain will still have to wait for another year to witness more impactful blockchain initiatives by industry leaders.
This, however, cements the fact that the future surely lies in staying abreast with the ever-changing tech trends for the industry players.
The key challenges hindering the growth of the Insurtech industry could be primarily classified into three – first would be customer-related challenges; second the pace of technology adoption in the sector and dilemmas that come with it for the players and third the regulatory challenges.
Customer-related challenges could be related to the demography of the consumers. There are some who are still wary of the new ways of business. These potential users may not necessarily be on top of the evolving rules of the business and require a lot of education on Insurance, let alone on the evolved products that the sector may offer to their benefits. The other set of consumers are well versed with industry developments, they are clear of what to buy and when but face a roadblock if they want a highly customized solution for their investments. Here, the key lies with the Insurers to up their game and cater efficiently to this category of potential consumers.
According to McKinsey, nine out of ten insurance companies identified legacy software and infrastructure as barriers for digitalization. Insurtech players are now ought to use new business models that are enabled by a variety of technologies. To be bluntly put, this means that they need to be fast at adopting and implementing automation, data analytics, machine learning and leveraging connected devices to build holistic policies for consumers as per their demands.
Last but not least, to further encourage the growth of Insurtech industry in the country, all stakeholders need to further push the collaboration between the startups and the age-old players in the space. Each has to learn much from each other. This is only possible when there is seamless regulatory support. Right now, while on one hand the traditional insurance industry is being weighed down by strict norms, on the other hand, the startups in the sector are also facing challenges owing to the ambiguity around the regulations, which permit automation of activities.
Leveraging Insurtech Solutions
For traditional insurance players to transform into disruptive Insurtech companies, rapid adoption of disruptive Insurtech solutions is the only way to survival. There is a steady rise of tech-savvy players entering the insurance sector who are ready to challenge the traditional players and revamp the market dynamics. Like Fintechs, Insurtech players too are extending innovation throughout the sector, creating threats and challenging incumbent players to rethink their strategy. The good observation is startups offering disruptive insurance solutions are more than willing to collaborate with tradition players to catapult the industry on a speedy growth. Experts also state that while Insurtech startups are yet to dive deep into the sector, they are growing fast and may soon capture a meaningful share of the market within a few years.