There has been a lot of buzz in Insurance Industry in last few months after new IRDAI chairman took over. Do you think Insurance Industry is poised for transformation in coming days?
Yes, I strongly believe that the Insurance Industry is poised for growth and transformation in the days to come with Shri Debasish Panda at the helm. After his taking over as Chairman of IRDAI, there is a dramatic change in the thinking of IRDAI. It feels that it is now the time to look at Development seriously as Regulations are already in place and it is a continuing process.
Technology trends set to transform the very nature of insurance. In motor insurance, risk will shift from drivers to the artificial intelligence (AI) and software behind self-driving cars. Satellites, drones, and real-time data sets gives insurers unprecedented visibility into the risk around facilities, leading to greater accuracy. Claims processing after natural catastrophes will be automated, infinitely scalable, and fast. Life insurance industry will bring to market specific products that focus on coverage based on the evolving needs of their customers. This is tomorrow’s insurance. This is development. The technologies behind these already exist, and innovative offerings could become mainstream.
With this background, IRDAI is encouraging Insurance Companies for Product filing with Use & File as against the existing practice of File & Use. This change in thinking of IRDAI clearly shows that it is more focused in Growth of Insurance Industry.
IRDAI has been stressing a lot on Insuretech model. How do you think this will impact the industry in long term?
I firmly believe that future lies in the adoption of Insuretech model of Insurance Companies and Intermediaries. Covid- 19 has made digital Technology inevitable. Since the start of Covid -19, globally, digital distribution channel is growing rapidly. Digital distribution is cost effective and therefore beneficial to customers. Recent statistics shows that LIC which has been focusing on Traditional Agency model is losing its market share to private players who are adopting digital distribution besides other distribution channels. Thus, there is a shift in marketing mode of distribution from Traditional mode to digital mode of distribution.
Technology trends can change some of the underlying inputs of insurance products and functions. In underwriting, for example, automated factories may fundamentally alter the nature of workmen’s compensation cover by removing the majority of human workers from most operations. The impact of these trends on insurance will be experienced when technological forces interact and build upon one another. Similar innovations could take place across the insurance products.
Roy Amara was an American scientist and futurist. He famously coined the following, that was to become Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”With respect to the tech trends affecting insurance, it is unclear where the industry is in the impact continuum. Insurance companies have started using technology to offer new products and services. However, many insurers are still modernizing their technology stacks and are at an early stage of the digitalization journey, leaving them susceptible to being overtaken by more nimble players. This should be a wake-up call for insurance executives to develop an understanding of where and how these trends may affect their products and competitiveness.
In India still a large number of business is done for compliance rather than covering the actual value of asset. How do you advise your clients for proper coverage of assets?
Due to lack of awareness, not allocating sufficient portion of funds(towards insurance) and by leaving things to destiny, a lot of Insurance coverage (such as Third-Party Insurance, taking coverage to the extent of loan taken from a bank etc..) is done to meet compliance where required rather than for an adequate amount. Many are either not aware of or not giving a thought of Insuring their lives/assets. There is a greater need of educating the general public about various Insurance needs. All stakeholders should participate in this deed. As we all know that squint is better than blindness. In the same way insuring to some extent is better than not insuring at all. But Insuring adequately is always advisable. We strive to educate our clients to cover their lives/ assets adequately and for all events.
While the Insuretech trends could affect property insurance in a range of ways. For example: The combination of applied AI, distributed data collection, future of connectivity, and next-level automation will allow insurers to underwrite accurate cover of risks using real-world, real-time data from a variety of sources. Insurers can increasingly use drones, satellite-generated radar imagery, computer vision, applied AI, and smarter edge devices to collect a variety of data on facilities and assets.
In just a few days, an insurer could compile a data set of radar-based and drone-generated images and image attributes of a property to inform underwriting in a fraction of the time currently required. Thus, business cannot be done for compliance, but for the actual value of asset.
The growth of Risk Management culture in India has been muted, though after Covid, companies are realizing its importance and taking suitable measures. What development you expect in this space.
As long as things are happening as usual, people will not think of Risk and Risk Management. With the onset of Covid and its after effects, Individuals and Companies are realizing the importance of Risk Management and taking suitable measures. Regulators are thinking that each company should have a Chief Risk Officer, though small companies cannot afford to have such a professional.
Through technology, insurance underwriting becomes continual with innovative products emerging to reflect shifting customer behaviors. Ecosystem-enabled data sharing will give insurers greater access to granular information to support more specific pricing and risk tiering. The combination of tech trends will enable insurers to cover individuals in more dynamic and responsive ways.
The ability to engage individuals continually will lead to products that dynamically adjust premiums, benefits, or both on a regular basis. For example, many individuals today need to buy life insurance, critical-illness protection and disability coverage to fully protect their families from the financial disruption of high-cost medical events. In the future, the lines between these product categories will blur substantially, as insurers are able to offer “umbrella” coverage across risk categories tailored to each individual. In addition, with the bio revolution and the advent of precision medicine, insurers will be expected to have a significantly more nuanced perspective on a customer’s risk. The ability to “unbundle” traditional protection products to create custom packages will be guided by broader regulation and actuarial standards.
The competition among the different distribution channels is growing fast. How do you perceive to stay ahead of competition?
We need to get into fast moving train to reach the destination quickly. To fight with the fierce competition, we need to adopt digital distribution channel while not completely leaving the Traditional physical selling such as Agency model. Those who cannot follow and adopt latest Technology for marketing will eventually vanish from the market.
LIC, which is focusing on Traditional Agency model is losing its market share to private players who are using Technology is an eye opener to what is going to happen if Technology is not adopted.
Remain focused on what we do, less on what others do. While it’s good to stay aware of what the competitors are doing, but we don’t want to devote too much undue attention to what they have going on. After all, we are selling a product for customers and not just trying to keep up with a rival. In trying to match our competition move for move, we are allowing someone other than ourselves to dictate our actions and planning. Worse yet, we are straying from our own ideas in favor of trying to ultimately be second-best at executing someone else’s.
Do you think new innovative products will help to increase the size of the market and attract more people to buy innovative products.
I do think so. More than innovation, the product should be simple and it should be need based.
Insurance Education and Awareness among all constituent of Industry is must for organised development. Do you think this area is lacking in India and all stakeholders need to gear up.
Insurance Education is a continuous process. All channels of communication should be used to educate people. Though with privatization of Insurance sector, insurance awareness among public is increasing day by day, but it is still lacking. When compared to many developed countries, we are lacking in insurance penetration. Insurance penetration will depend more on income levels rather than Insurance education and awareness among general public. If income levels are increased, people will think of Insurance and find the cost of insurance relatively cheaper.
The main problem with insurance is not whether or not someone is covered, it lies more within the issues surrounding people not having the proper education about what type of insurances are available or how to go about learning more. Financial education is frequently taught in secondary education, but it should be made a priority for higher education institutions.
What is the USP of your company and how do you plan to expand your operations.
USP at the top of our mind is Distance Marketing. With the onset of Covid online business of all items have increased manifold and people have accustomed to do all types of transactions online and we have the necessary tools and technology in place for carrying out online transactions. While giving push for online marketing, we also wish to expand PoSP model.
