Technology adoption is always based on the right context: Vinaikrishnan Nair

Authored by Vinaikrishnan Nair, Head Insurance Service Delivery (IT), SBI General Insurance.

The digital revolution has transformed the way companies interact with customers, creating an environment where business and IT must work together. As mobile and social networks increase in popularity, consumers are relying on smartphones and tablets to research, compare prices and buy products online – anytime, anywhere. One could say that there has been a tectonic shift in the relation between man and machine, given that internet and mobile devices have become core elements of our lifestyle.

The insurance business is one of the most competitive industries and faces multiple challenges. These challenges are not just caused by changing customer expectations and behavior but also with the advent of non-traditional organizations making inroads to the insurance space with the help of technology.

Insurers are changing

Insurance industry has largely been averse to change, however, in recent times, the ecosystem in which we conduct business has evolved at a very fast pace, forcing insurers to think differently.

1. Changing Consumer Behavior – With improving connectivity and access to technology through web and mobile platforms many businesses have now transformed consumer buying patterns from “hailing a taxi” to “app-based taxi hiring”, from “queuing up at a billing counter at a shopping mall” to “clicking a buy button on a shopping portal”. The world has moved from a physical to a “phygital world”. And now, consumers are expecting the same level of services from financial institutions, be it in banking, dealing in investment products, servicing of insurance policies etc. The change has not just impacted sales and servicing but it’s also a big challenge to build a Company’s image and retain it, since consumers are willing to switch faster than ever before.

Further the consumer’s behavior is also influenced by an increase in GDP. The pattern of spread in the increase in income levels have a direct relation to purchase of assets and thereby create a need for securing them through insurance.

This means that Insurers need to not only focus on improving the existing set of products and services but also need to look at product innovation.

1. Need to bring Differentiated customer experience – There are 35 non-life and 24 Life insurance companies in India today. To add to this there is an undercurrent of a number of new non-traditional insurers who want to carve out their space solely by leveraging technology. Giving a superior and consistent experience to the customer is today not just a requirement to compete but to survive.
2. Need to bring in Operational Efficiency – The need to compete better, drive operational efficiencies and connect more with the objects they Insure means Insurers are looking at ways of reducing costs and improving service by using new technologies including Blockchain, Artificial Intelligence and the Internet of Things.
3. Increase insurance penetration – At about 3.49% the Insurance penetration, there is a huge potential to be explored. Digitalization has tremendous potential to optimize organizational resources and reduce manual operations; there by reducing cost per transactions. This makes low-ticket high-volume products a viable option. This will help insurers cater to the long tail segment – making insurance accessible and viable at the same time.

Some Insurance specific capabilities where digital technologies have the potential to impact and transform:

• Artificial Intelligence (AI): The concept of AI has been around since the 1950’s and encompasses a wide range of sub-streams or branches, such as Machine Learning or Deep Learning. Insurers are actively using or experimenting with developing predictive fraud detection techniques while also looking at developing dynamic pricing models based on AI. Machine Learning and RPA are also now gaining popularity to automate back-office processes, attend and resolve customer service requests without any manual intervention.
• Blockchain: Though this technology is still in its very early stages, this is touted to be the next generation of internet. Given that businesses are increasingly connecting on the shared economy model, Blockchain has the potential to expose a wide array of opportunities. Blockchain has the capability to bring the customer, the bank, the insurer and the regulators all on the same platform bringing in high levels of transparency and efficiency. Use cases for Trade Finance, KYC, transfer of risks of frauds across insurers etc., are very strong examples.
• Cloud: Eliminating the need to purchase IT equipment with the flexibility of scaling up when required has a direct cost benefit to organizations. Apart from the cost benefits, the other clear advantages are manageability, reduced downtimes, scalability and elasticity. Adoption of cloud is growing rapidly in the financial services space, especially since the global technology giants have established their services and data centers in India.
• Data (Big Data): An analogy which I overheard - Imagine if we take 10 photographs at a birthday party, we may have, say a 10,000 data points. Now if we were to video shoot the same event at 24 frames per second, the potential number of data points grow exponentially. As we move from analogue or physical to digital the data points by 2025 we are expected to create about 175 zettabytes (1 Zb = 1 trillion GB).

By harnessing big data we can now combine large unstructured data to derive meaning. Analytical engines can now identify correlation and causation of events based on this data and allow businesses to not only reach and service customers at the right place.

• IoT:  IoT enabled devices are also making inroads, the adoption has been fast on the manufacturing and retail sector, financial services such as insurers now have potential access to information. The industry needs to address challenges around data ownership, security, data management and more importantly collaboration with equipment manufacturers.

The above enablers have the ability to transform the face of the current insurance sector, where carriers struggle with manual process steps – including many repetitive tasks, such as checking a claim input for completeness and requesting missing information like a motor accident police report.

Technology adoption is always based on the right context, such as nature of what needs to be protected with an insurance policy, the family context, regional differences, specific attitudes regarding risk, trust and insurance as such, the employment status, the local digital ecosystem and much more. So, while as we speak everything is as ‘digital’ as we might expect, understanding the context and developing the right use case is critical to develop a sustainable solution. Having said that, steps are being taken in the right direction, there are examples of insures using digital technologies to implement automated and integrated end point solutions allowing insurers to attend and pay claims faster. As we move ahead, the digitalization will fundamentally modify the insurance value chain with new ways of conversations with customers, new processes, newer risks, new services and new guidelines for operating.

Vinaikrishnan Nair has been a part of SBI General Insurance Co Ltd since its inception and was responsible for setting up and delivering IT Services across various technology platforms. He was a member of the core team that has been instrumental in setting up the IT Strategy, Architecture and Governance processes for the company.

In his current role, he is also responsible for running the core insurance services as well as to lead and implement the Digital Transformation Initiatives. Prior to SBI General, he has worked with a leading technology company as a consultant for assignments with Insurers in Asia & Europe. He has played key roles in various start-up insurance ventures and IT enablement of functions such as Policy Administration, Claims, Sales Channel Management and Operations & Customer Services.