This is an authored article by Girish Kannalli, Vice President, Insurance BU at Infogain that appeared in CRN India.
To read the original article, please click here.
India is one of the largest and fastest growing markets for digital consumers, expected to have over 600 million internet users by 2021. Over the past few years, ‘Digitisation’ and emerging technologies have brought a substantial transformation in many industries, one of them being the Insurance sector.
According to the Indian Brand Equity Federation (IBEF), it is expected that the Indian Insurance Industry will grow up to $280 billion by FY-2020, driven by the launch of new and innovative products, increasing awareness, and comparatively more distribution channels. Emerging technologies are revolutionising and reshaping the industry’s landscape. Today customers have more complex needs and are more knowledgeable about their choices than ever before. They want personalised offerings and tailor-made communications. Digital is driving buying decisions in this digital native era, and the demand results in nanoseconds, including interacting with their insurance provider while on the move, on the mobile, and through digital platforms. Therefore, insurers are starting to put the customer at the heart of everything they do.
For example, to meet the demands of the consumers, the Health Insurance industry has launched innovative products and wearables using the Internet of Things, which has dramatically transformed digital health. Innovations such as hybrid smartwatches that take electrocardiogram (ECG) readings, the first wearable blood pressure monitor, and a smart belt that keeps tabs on your health, including tracking overeating, will revolutionize the industry in the coming future.
So, while some have been innovating, most have not kept pace with the technology needed to deliver the prime experience. Now, with the recent outbreak of novel Coronavirus, insurers are facing new challenges that call for a measured, practical, and informed approach from leaders. Insurance as an industry needs to upgrade, as companies will need technology more than ever to sustain their business in the post COVID-19 era. Insurers will need to consider establishing cross-functional, emergency decision making teams to coordinate the organization’s response, set new safety protocols, and assure quicker action as conditions continue to evolve. Technology will, therefore, become an equalizer for the sector. Companies that can harness the right technologies and deploy them effectively will possess a chance to sustain.
Some of the key technologies that organizations in the insurance sector will need to deploy include Artificial Intelligence, Machine Learning, Robotic Process Automation, Augmented Reality, Telematics, Social Media, and Drones.
Artificial Intelligence and Machine Learning: Consumers today have more complex needs and are more knowledgeable about their choices than ever before. They want personalized offerings and tailor-made solutions when purchasing something as important as insurance health, home, product, automobile, etc. With AI, insurers can improve claims turnaround cycles and fundamentally change the underwriting process.
As per a report from PwC, AI’s initial impact will primarily relate to improving efficiencies and automating existing customer facing underwriting and claims processes.
According to the 2018 McKinsey report, by 2030, 90% of personal and small business insurance claims processing will be entirely automated, and AI‑powered chatbots will be the primary claims processing touchpoint for most customers, with 70% to 90% fewer human claims personnel than in 2018.
Besides AI, Machine Learning, which essentially is an extension of AI, can help reduce fraud in claims data and malicious activities in payment systems. AI and Machine Learning together can help companies to embed technology in a legacy workflow to modernize complicated legacy systems and develop new ways of working (without sacrificing the old approaches that got them where they are today). The use of AI and Machine Learning helps capture the information of the accident and initiate a claim. This application also supports Fasttrack of the claim.
Robotic Process Automation: Robotic Process Automation (RPA) impacts key performance indicator (KPI) transformations through the integration of multiple automation toolsets, processes, and technologies. According to the recent Kenneth market research, the RPA market in India will grow at a CAGR of above 20% during the forecast period 2019-2025. As a tool for the insurance sector, RPA proves to be most effective in reducing the processing time for claims settlement by automating data collection and management. Automation is the need of the hour, and businesses are at a precipice where integrating with such technologies is imperative for survival and sustenance in the coming years.
Augmented Reality: At present, Augmented Reality as a functional tool is predominantly leveraged by the Gaming industry and Entertainment industry and, to an extent Medical field. However, in the future, the insurance sector will find its application in elevating user experience, especially by improving customer interfaces, used to share more information about products. Insurers are still exploring the capabilities of AR while taking small steps towards determining their key priorities and goals within this technology.
Telematics: Telematics is a term that combines ‘telecommunications’ and ‘informatics’ to describe integrated use of communications and information technology to transmit, store and receive information from telecom devices to remote objects over a network. This technology is broadly adopted currently in the US, and the majority of the OEM’s are embedding the required hardware and software in the vehicles. The adoption of the same is increasing in other parts of the world, including India. The Insurance Regulatory and Development Authority of India (IRDAI), back in Nov 2019, proposed a draft recommending adopting ‘Telematics for Motor Insurance.’
Social Media: Usage of Social Media Data has been debated for quite some time by the Insurance industry experts. There are specific guidelines which are being released by different regulatory bodies regarding the ‘do’s and don’ts’ for underwriting a premium based on the Social Media Data/alternate sources. However, concerns around bias, discrimination, and the validity of the data still need to be addressed. Though it’s believed that the data will help to speed up the underwriting as well to prevent/ detect fraud, the concerns need to be addressed before wider usage of this data.
Drones: Drones are becoming a viable alternative technology. They can be used across many stages of the insurance lifecycle – collecting data to determine the damage as well to calculate risk, aiding in preventative maintenance. In addition, this technology has proven to reduce the overall cost and time for processing a policy or a claim.
In the days to come, insurance companies will need to use a mix of various technologies today to bring innovation and drive value with the capability to make decisions in real-time and increase customer engagement. For instance, Mitchell International, a leading provider of information, workflow and performance management solutions to the Property & Casualty claims and Collision Repair industries, deployed RPA to process data from various systems with better accuracy, guaranteeing full compliance and eliminating errors. The company has used the technology to automate auto insurance for customer satisfaction in vehicle damage assessment. Additionally, it has also deployed Augmented Reality in Repair Procedure Solutions for vehicles by making use of Virtual gear. The Technician wearing the Glass can look at the vehicle and scan the Vehicle Identification Number (VIN) to verify all the registered details of the vehicle quickly.
These techs were supposed to start a revolution setting the insurance companies on the journey of paperless and virtual claim processing. But, looking at where the world is right now, these developments have been hastened forth. Now it is imperative for insurers to start, if not already, with the application of such technologies to process and manage data in order to devise sustainable business strategies. Begrudging as it may be, businesses now must use this glitch in the clock to understand the impact of technologies across the value chain and invest in the right one.