Why HDFC ERGO is Adopting the Insurtech Approach?
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Insurance is a very complicated product. Every time you try to buy a policy either through your financial advisor or the internet, the entities will leave you more confused than ever. But times are changing and complexity around the product is getting solved.
With the rise of technology and increase in smartphone users, the insurance sector is looking at a bright future. According to IBEF, gross premiums written in the country touched INR 5.53 trillion (USD 94.48 billion). However, the penetration levels in the country need to improve which presently stood at 3.69 per cent in 2017.
In a conversation with Entrepreneur India, Mehmood Mansoori, Member of Executive Management and Group Head, HDFC ERGO General Insurance says there is two way to look at this number - on one side, it is a cause of concern because there so many people are underinsured which only means they are vulnerable to problems. While on the other hand, it is a great opportunity from the insurance industry point of view.
The Challenge and the Solution
If one looks at the insurance sector in India, there is a lack of awareness within the masses. Take an example of the health insurance space where people are often happy when their employers cover them and they do not feel the need to buy an additional policy. While on the side, people living in states like Kashmir, Uttarakhand, North East region, Kerala and states which are prone natural disasters, do not feel the need to ensure their houses.
“The market needs to be developed and this is a matter of people's awareness. For many years, insurance has been looked at as a tax saving instrument. Having said, the perception is changing but the pace is slow and hence, I think a lot needs to be done to increase awareness among people,” he said.
Secondly, with a country like India, for insurance companies to reach out to the hinterland, depending on the physical network cannot be a sole solution. Hence, Mansoori feels distribution needs to be improved and digital has a major role to play here.
Digital has indeed played a significant role among other financial services industry, especially on the payment front. They have increased the adoption among masses as these platforms are available on their fingertips via their smartphones.
“By simply adding manpower and infrastructure will not help us meet our goals, we have to adopt digital. In order to survive, we have to adopt technology. This has become a mantra for us.” he pointed out.
The Insurtech Way
In the last two-three, HDFC Ergo took an approach of transforming the more insurance organization. The move yielded significant results for the company. Today, the company claims to issue policies within five minutes.
Furthermore, 95 per cent HDFC ERGO’s policies are issued in a straight-prude processing mode which is either bought by the customer directly or via B2B integration or by a channel partner online.
Mansoori shares, “This has been a massive transformation which we have been able to achieve. On the customer service front, we have adopted the net banking style. Our overall call volume is not increasing with the linear growth of our business. While our self-service is continuously growing up but I still believe that we are yet to reach to the tipping point,” he added.
Elaborating on how the company is looking at artificial intelligence, he says the technology is shaping up well - both on the conversational and intelligence side because this domain is full of transformation.
“We are dealing with humungous data and that’s the perfect recipe for any AI solution to work. Though it is too early to say as there is a lot of room for improvement,” he concluded.