Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Opportunities for
Indian Insurance
Contents
Foreword 3
2
Foreword
The digital boom in India has affected almost all retail focused industries. Starting with
transportation and retail, it has now even spread to niche segments such as salons and
tiffin services. All these industries are driven by the need to build direct bridges with the
end consumer through the smart phone in order to survive in an era where the customer is
using the phone as the primary medium of communication with the rest of the world.
The trend in India has been fast have taken up the challenge of realize that by not going beyond a
paced driven partly due to the large connecting with customers directly transactional approach of engaging
base of phone users and partly due through mobile apps. Social the customer, it could lose the plot
to lesser weight of legacy systems media, as a coherent strategy to completely to a new player (like the
(for eg. radio cabs). This made Indian understand customer preferences e-retail or the phone companies).
consumers increasingly depend is almost wholly missing. The most
Our report this year focusses on
on their smart phones for reasons that most insurers have managed
the digital trends in the Indian
beyond just communication or are online and mobile based
insurance industry in India. In
entertainment. While initially, digital solutions for tactical transactions
order to do so, we first show how
spread was limited to metro and -policy purchase or renewals. A
digital is re-shaping the daily lives
Tier 1 cities, recent data has begun holistic approach to connect with
of retail and SME segments in
to show signs of breaking that the customers and graduate towards
India, followed by how the business
barrier, and growth into semi- a more daily-risk management
opportunities that these trends
urban towns and villages. In this, relationship is still not considered.
open up for them. In the final
government efforts to increase use
At the back end, technology-of section, the report goes on to detail
of digital across the country have
the disruptive kind-is necessary how insurance companies would
also begin to pay dividends for
to put in place an agile company need to change their operations
greater penetration.
that is ready to quickly adapt along their entire value chain in
The imperatives for the insurance to a new trend. While there has order to successfully tap into these
industry can be looked at in two been some movement in Indian opportunities.
ways. On one hand we see a threat- insurance companies, the extent
that of insurers losing any connect is often limited to tactical process Roopen Roy
that they have with their consumer improvements in policy issuance or President,
if they do not begin interacting with claims rather than fundamentally Indian Chamber of Commerce
the customer through the digital changing the way to doing business
medium. On the other hand we in a more efficient and (digital) Samir Bali
also see an opportunity for insurers customer centric manner. Managing Director
to establish a direct connect with Financial Services
It is true that insurers start out with Accenture India
more customers than they have
a disadvantage when it comes to
had till now without the use of
customer connect-their relationship
traditional channels. In addition, is
is traditionally linked to a one-
the opportunity for cost reduction
a-year connect during the time
of anywhere between 15%-20% of
of policy purchase or renewal (as
their opex base.
against that of a bank which has
While the response of insurers to almost daily transactions with the
the digital trends has been varied customer). In addition, it is linked to
till now, it can, at best, be termed as negative events and consequences.
inadequate. A handful of insurers However, the industry needs to
3
4
1. Key Customer
Digital Trends
Growth in digital penetration in India is
a well-known and visible phenomenon.
However, the exact extent and nature of this
phenomenon is little understood. Everyone
remotely connected (or unconnected) to the
Digital phenomenon has an independent
view on the size of this inflection point.
Add to this, the absence of single source of
public data for the entire digital footprint
of Indian customers makes approximations
necessary.
5
1.1 Retail Segment community with 50% of the GDP
and more than 70% of organized
Digital Trends retail (Figure 1).
The Indian ecommerce industry has
evolved significantly in the last
5-7 years with digitization lending a
disruptive edge to many businesses
and impacting the ecosystems
around which such businesses
operated. Notably amongst these
have been travel, e-tailing including
fashion, apparel and electronics,
classifieds and financial services. 8.1m
1.6m Delhi
Ecommerce in India has grown Jaipur
exponentially from a little under 2.8m
Ahmedabad
$2 bn in 20071 to $20 bn by
20152. However, it gets dwarfed 2.4m 4.4m
in comparison with the developed Surat Kolkata
economies like China and USA
which are estimated to be over 2.7m
$250 bn. Nevertheless, taking into Pune
account the recent growth and 4.7m
12m
favorable factors and enablers that Hyderabad
Mumbai
the country has to offer, future
growth in ecommerce appears 4.5m
3.8m
Chennai
sustainable and impressive. Detailed Bangalore
below are some of the key trends
and factors that are expected to
impact this growth.
(2011 GDP Internet Internet Internet
Large favorable Census) (USDBn) users users
(2015)
demography for a India 1237.0 1842 17% 213 256
In India, however, the digital push Top 20 Cities 122.4 1060 47% 57.1 68.5
6
The Indian demography being
a complex diaspora, has been
Internet usage, in minutes per day
witnessing interesting digital Internet users by gender
by age/gender
1
ASSOCHAM Figure 3: Modes of Entertainment in Indian Retail segment
2
Fast and furious, e-commerce, Motilal Oswal
3
Comscore
7
Deep penetration of mobile internet users. Key enablers cog of the digital market place
for this growth are low cost of because more than 90% of them
Digital solutions internet and cheaper entry level use smartphones for searching
Doing businesses the traditional feature phones and smart phones. local content and researching
way involving physical market place Current penetration of smartphones products and over 50% of them use
is becoming increasingly difficult stands at 30%6 amongst mobile smartphones to make purchases8.
due to lack of differentiation in phone. The number of smartphone The graphics below represents a
offerings, high real estate cost, users is expected to reach 2 billion brief snapshot of major usage of
data collation and security and by 2016 according to eMarketer. Indian online population.
geographic limitations. This is where But smartphone sales in India
the digital market place scores over grew by over 100% year-on-year,
the current brick and mortar way with over 40 million units shipped
of doing business. For some of the to the country. India is expected
leading Indian online shopping to house the second highest
retailers, over 50% of mobile traffic number of smartphone users by
comes from Tier II & III cities, 20167 on account of increasing
showing that their its core audience popularity of social media, gaming,
is in the smaller cities. entertainment, purchases and data
streaming.
One of the most significant
advantages of digital industry is its The popularity will increase on
reach. Mobile penetration in India account of improvement in
currently stands at 70% making it telecom infrastructure, lower data
the third largest market for active cost and onset of 3G/4G services.
Smartphone users are an important
172 108 80 80 30 28 28
Top Users Top Users Top Users Top Users Top Users Top Users Top Users
Sites Sites Sites Sites Sites Sites Sites
Figure 4: Internet usage Pattern in Indian Retail Segment
100 M 18 M 13 M 5M 20 M 11 M
195 M
4
Global Web Index, 5 M of internet users
50 MQ4 2014, Based on a survey 8M aged 16-64, March 2015 1M 8.5 M 15M
141 M
5
India Stat, Internet Live Stats, Stat Counter, IAMAI
6
India Continues As One Of The Fastest Growing Smartphone Markets In Asia Pacific In 1Q 2014, IDC
7 33 M
Marketer research 10 M 3M 121 M 0.5 M 1.6 M 25 M
8
Googles Our Mobile Planet report
8
9
Emerging technologies of web traffic (page views). Many
companies offer special discounts
enabling increasing and offers for app-based users
adoption to increase their digital footprint.
There have been significant Multiple Indian online shopping
technological advances in the retailers have begun to migrated
telecom industry which has resulted to a mobile app-only model The
in revolutionizing the entire value root causes for this being that 95%
change of telecom domain. of internet traffic comes through
mobile and that 70% of sales are
The cost of handsets-be it a basic generated through smartphones9.
phone, a feature phone or a smart
phone, has reduced significantly. Companies are taking additional
Increasing competition and price efforts to improve digital literacy to
wars between the domestic and ensure customers feel comfortable
international mobile manufactures while transacting online and
have spoilt the customers for choice. creating awareness against online
In fact, today the cost of buying a frauds and fishing. Multi-layered
desktop or a laptop is often higher secured transaction models have
than buying a high end smartphone evolved which has brought the
or even a tablet if the end use is reluctant anxious consumers into
limited to browsing, content viewing the mainstream. One of the most
and social media. The usage pattern impactful event is the emergence of
for the devices too has evolved Mobile wallet as an alternative to
from being primarily for making the traditional payment methods in
calls to a more evolved use of video the country. The number of active
streaming, instant messaging and m-wallet users in the country last
data sharing. This is evident from year surpassed the total number of
the growth of the companies like credit cards issued by banks. Mobile
Youtube, Facebook, WhatsApp, wallet offers multiple advantages
Instagram and Twitter. like ease of transfer, flexibility of use
and most important safety. Apart
Businesses are designing special from the acceptance by the urban
mobile based applications to tap users, this can truly change the way
the target market with special focus rural users adapt to mobile internet
on friendly graphical user interface. because of the lack of penetration
Though low on penetration, the of other established means of
popularity of smart phones and financial transactions and the ease
tablets is eminent from the fact of handling such transactions.
that they account for 70% share
9
Company statements, Media reports
10
Data capture and Analytics The opportunities and possibilities
are unlimited and across industries.
The above mentioned enablers For example, while auto insurance
will force the businesses across is based on the age of driver,
industries to evolve and adapt emerging data capturing techniques
to newer business models built (telematics) and analytics can help
around digitization and accordingly insurance companies track the
develop robust systems with checks travel hours clocked by a particular
and balances in place. One of the driver and accordingly underwrite
largest advantages of focusing on the insurance with appropriate
a digitization supported business premium. In fact, recruiters
is the ease of data capture on traditionally were dependent on
customers, their preferences personal interactions and references
and needs. A quick analysis of to understand the personality traits
the customer history can help of the candidates. Today, many
companies suggest customized recruiters use the social footprint
value added offerings to the as part of the pre-screening of
consumers and generate prospective candidates during the
customer loyalty. recruitment process.
Legacy layer
New gen.
Customer Web Mobility Social
sales layer
Service Network
11
1.2 SME Segment segment that stepped up and
contributed heavily to the GDP.
Digital Trends Quite aptly, the much needed thrust
has been provided to this segment
SME Contribution to in the Union Budget.
Indian Economy
Internet has played a very important
Outpacing the industrial sector role in the growth of SMEs across
growth rate, Indias SME sector the globe and this is directly
has been one of the major growth impacted by the retail penetration of
drivers of the Indian economy internet. Thus, as seen in the above
contributing 45% to the industrial section, as the retail penetration
output. SMEs contribute heavily to is growing exponentially, impact
the GDP and employment in India. of internet on the SMEs will be
In fact, Indias strong resilience much more pronounced in the
to the financial crisis of 2008 years to come and we will witness
and commendable growth rate more SMEs joining the mobility
compared to the global economy bandwagon. A great opportunity
in general thereafter is attributed beckons for this sector to transform
to the strong SME base. While their business model leveraging
the big corporates cut down on technology.
their investments, it was the SME
12
The SME Digital Government Initiatives- The key areas where SMEs are
Strong government focus on investing in Technology are:
Opportunity e-governance, digital India and MarketingSocial networking
India houses a strong MSME base push for digital infrastructure, platforms, CRM tools and
of 51 Million. Four major factors digital services delivery and digital SEO techniques help SMEs in
that augment the strong SME base literacy. enhancing their online visibility
and provide for a great digital and targeting customers.
Technology helps SMEs address two
opportunity are-
major pain points It helps them AccountingSME business
Increasing penetrationAffordable grow and it helps them achieve typically involves credit sales and
phones and tablets and high operational efficiency. Thus it is a hence needs to be appropriately
adoption levels and expected key differentiator. SMEs are different accounted. Invoicing, payment
universal adoption by 2020 from big corporates in terms of collection, account maintenance,
Thriving EcosystemIncreasing their spending on technology. working cycle management
focus on mobile applications and SMEs typically face funding issues are some of the issues that the
pay per use based cloud services and hence face cash crunch. Thus SME has to deal with apart from
augurs well for the SMEs business there are inherent differences in handling the core business.
model the digital solutions that the SMEs Electronic accounting solutions
adopt when compared to what the like Tally help SMEs manage their
Digital customer trends big corporates use. accounting needs with ease.
Rising digital penetration and
exponential rate of adoption by Cloud servicesCloud services
the retail segment augurs well for the SME
community especially because of
its inherent pay per use nature
and emergence of SaaS (Software
as a Service).
Internet-capable phones
~4.3 Mn
Feature Phone
~450K
Mobile Phones
~8.7 Mn
Smart Phone
~4.4 Mn
Internet
enabled SMEs* ~850 K
~7.7 Mn Laptops
~7.7 Mn
(69% of SMEs)
Tablets
~3.3 Mn
Figure 6: Internet connectivity of Indian SMEs Source: Internets Role in the Performance of Indias Small and
Medium Enterprise,(Nathan, FICCI) JULY 2013
* Reflects digital penetration of organised Small and Medium
enterprises only (Total 11 Mn), excludes micro enterprises
13
SME digital penetration Moving ahead, a favorable
demography and the rapidly
Indias digital SME population is changing consumer lifestyle is
connecting to internet to access expected to increase the pace of this
emails, conduct internet banking acceptance. Almost all businesses
and ecommerce. Figure 7 shows need to realize the potential of
the usage percentage of major this changing landscape and make
categories for SMEs concerted efforts in redefining their
We see how the digital acceptance business strategy and processes to
rate has grown exponentially over align with the new digital customer.
the last few years in the Indian
Retail and the SME segments.
95% of the Most of SMEs Information 46% of the B2B-S$ 420 Mn 23% of the 43% of the Of the total
SMEs have deal with 2-3 on trends in SMEs are B2B market place SMEs are SMEs have ERP SMEs using
access to banks at the domestic and engaged in for SMEs growing engaged in installed. Of payment
emails. same time. International Social Media at 61% YoY. 80% Foreign Trade that, SAP and gateways,
SBI, ICICI, market and Activities such of the market Activities Oracle together 60-70% of
AXIS are the conducting as engaging in captured by have 80% merchants
large banks Competitors B2B forums. Indiamart.com and market share. use
operating in intelligence tradeindia.com. players are CCAvenue.
SME space. Microsoft, IFS, Bank
Infor Global Payment
Solutions, gateways
Ramco and are primarily
Tally. used by large
players as
qualification
criteria is
higher.
14
Box Item: Government actions resulting in
Digital push
The Government of India has attached a large significance to build and improve the digital
literacy of the Indian populace. An enhanced E-governance environment in the country has
helped launched the Digital India program aimed at transforming India into digitally empowered
society and knowledge economy. This program entails an outlay of over $20 bn1 and help India
prepare for a knowledge based transformation and delivering good governance to citizens by a
synchronized and coordinated engagement of both the Central and the State Government. Digital
India has three core componentsdigital infrastructure, digital services delivery and digital literacy.
completely to a new player (like the e-retail or the phone companies).
17
2.1 International Trends An empowered buying
in Digital Customer process by Insurance
Propositions customers Discover
18
According to Accenture Digital Innovation Survey
2014, 84% executives feel that digitalization is
84%
changing customer expectations.
Traditional Insurance a new policy or insurer near every to customers digital behavior.
renewal. The changing information Todays customer is continuously
Customer Journey environment also allows the discovering and considering
Traditionally, a customer would customer to now re-compare and products available in the market
discover policies available through chose a product more suited to the based on expectations from the
various channels like agents, needs. In the Global Consumer Pulse product and the promises made
brokers, banca and insurance Research conducted by Accenture in by the insurer. He/she is making
offices. The policies would 2014, this change in the dynamics purchase decisions or continuing
then be considered for fit with of insurance customers was clearly usage decisions based on the reality
requirements and evaluated for observed. Only 26% life insurance and actual value delivery done by
price to arrive at purchase choice. customers and 19% non-life the insurer.
Once the traditional insurance insurance customers perceive
To summarize, the path to purchase
customer chose the policy he/ switching to be a hassle. Only 22%
used to be linear. Now, the customer
she would largely continue to use insurance customers feel loyal to
journey is dynamic, continuous
same insurance provider (baring their insurer. 34% life and 39%
and accessible. Dynamic, because
a negative experience) and would non-life insurance customers have
decision paths are multi-directional
rarely revisit other options available switched partially or completely in
and at different speeds. Continuous,
in the market. the last 6-12 months.
because evaluation, not purchase, is
Empowered by digital media, todays Insurers need to recognize that central; promise is now as important
customer is continuously revisiting customers are not buying insurance as delivery. Accessible, because
choices. A purchase decision once the way they did in the past. They influence of open content is
made is almost never final. Many need to adopt a new customer pervasive and difficult to control.
customers consider switching to connect model thats more relevant
Discover Purchase
Expectation Reality
Evaluate
Promise Delivery
Consider Use
Almost 60% executives feel that Where digital transformation the customers appropriately. The
new technologies will radically is expected to impact all the insurer needs to build a holistic
change traditional practices and distribution players, insurers are distribution network with symmetric
agree that digital technologies expected to gain the maximum. In information and support across
will transform the way they this aspect insurance companies all channels. Insurance industrys
interact with their channels. In have globally begun to create the organizational silos, multiple
the traditional insurance setup, largest impact on distribution distribution channels and legacy
insurers reached customers through models. technology considerations make
agents, brokers, banca and (in only the task at hand challenging and
Also, customers are increasingly
few cases) directly. Digitalization is time taking. Digitalization across the
using more than one channel to
providing an enormous opportunity network also presents the insurers
research products that fit their
to reach the customer directly with a new opportunity to adopt
requirements. While they may
without any of these middle men. cost-effective distribution network
use digital sources to gather
The digital insurer can use online, by determining which customer
information, many customers still
mobile apps etc. to create this direct segment can be reached through
prefer to make the actual purchase
connect. which channel mix effectively.
through a distributor. Therefore, it
is important for the insurer to make
sure the distributors themselves
are digitally equipped to serve
26%
20%
12%
Figure 10: % Companies expected to gain the biggest increase in share of distribution in the next 3 years
20
21
Digitalization
along the value chain
of insurance
Having realized the importance the digital world. 43% have made or
of digitalization, companies think are planning acquisitions of start-
a radical change of the insurance ups or innovative players. This not
value chain is key to success in only opens up opportunities for
the digital world. Companies have Insurers but also for a whole digital
already started strengthening their ecosystem. Many insurers have
digital foot-print along all the links added, or are considering adding,
of the value chain. According to a wide range of non-insurance
the Accenture Digital Innovation products to their customer offerings
Survey, 82% executives expect in an effort to develop customer
insurers to make acquisitions to intimacy and ultimately position
better position themselves within in themselves as lifestyle partners.
66%
63%
56%
53% 53%
41% 41%
22
Digital initiatives Becoming a digital insurer can
significantly improve finances
generating additional by activating new value creation
growth levers. Increase in sales revenue
Digital transformation is not could be achieved through three
only redefining the market but levers: generating e-sales, improving
also promising value to the sales of traditional channels and
investors. Our estimations based creating a new brand. E-sales could
on the Accenture Consumer be generated by targeting new
Driven Innovation Survey, 2014 customers due to the new digital
survey results indicate that digital value proposition, by optimizing
transformation can increase the online subscription funnel through
insurers sales by 10-15%. Sustained analytics and by developing offers/
combined ratio can be expected to additional services as described
improve by 4-6%. for everyday insurer. Sales from
traditional channels also could
More results from the survey show be increased by capturing new
that life insurers are expecting an leads, cross-selling, up-selling
annualized 7% revenue growth and increased cross channel
whereas the non-life insurers transformation. Creating a new
are expecting an annualized 5% brand is another way to increase
revenue growth through their sales revenues. The insurer may
digital initiatives over the next 3-5 choose to create a new brand or
years. Innovation is being seen chose to define a new range for the
as a key driver of market-share existing brand.
growth. Existing players that are
innovating can look for growth Increased profitability could be
than even new entrants. 24% achieved through increase in gross
of insurers expect innovation to technical margin and reduction
increase market share by up to 10 in costs. Gross technical margin
percentage points. At the same time, can be expected to grow through
one-third of respondent companies improved pricing and promotional
expect usage-based auto insurance methods, managing risks and frauds
to account for >6% of premium and developing loyalty to retain
income in 3 years time. It is customers. Further to this, costs
interesting to see that almost 29% could be reduced through end-to-
of respondents expect premium end digitized processes, self-care
growth to come from expanding and optimizing customer processing
their customer base using digital channel & distributor commissions.
channels rather than only upselling
existing products to their existing
customers.
23
24
Lever Examples of initiatives
Traditional sales Conversion One-stop shop: digital signature at the point of sale
Better sales preparation using artificial intelligence
Select risks/ detect fraud Precise segmentation of prospects: making best use of external data plus data
on consumer behavior on every channel (including telematics)
Real-time analysis of contracts at risk and predictive analysis of when claims
occur during underwriting process
Improve commercial pricing and Manage promotions based on success rate and customer value
promotion Integrate a large volume of external data in pricing criteria
Adapt online pricing in real time based on competitors best offer
Enhance customer channels and Salesforce commissioning revamp based on channel of origin
commissions Customer routing to the appropriate channel based on preferences and value
Make costs variable Identify IT functions to be obtained as a service via the cloud, thus linking cost
to usage (variable costs)
25
2.2 Every day Insurer
To cater to increasingly demanding This non-commoditized proposition
customers requirements and to the consumer is a bundled
to keep growing in the market, proposition to provide the consumer
todays insurers have to provide with traditional insurance products
a unique customer experience. coupled with short and long term
The traditional insurance market risk management for all aspects
is a commoditized market. To be of life. Built around an ecosystem
able to compete in the future and of customers, insurer and third-
to be relevant in the customers party providers, Everyday Insurance
eyes, insurers need to engage their touches the customers life in
customers directly, building a more various spheres and through various
direct and sustainable relationship media. It not only supports the
with customers. The proposition customers traditional insurance
of Everyday Insurance is targeted requirements, but also helps him/
to make the insurer create this her manage his/her other related
footprint in the customers digital or non-related activities through
world. the insurers support. An everyday
insurer rises above todays
customers expectations by linking
insurance services to the customers
current ecosystem.
Everyday Insurance
My Workforce
My Risk
My Tax Online Manpower My
Mgmt. Systems
Ecosystem partners Product Enquiry
Online SME Tax on my Phone Proposal Form
reporting Online filing of form
My Home and uploading
Online Home Third Party Insurer photos
Monitoring Systems Provider
Everyday Insurer
My Car My Policy
Driving Physical meeting STP of policy issuance /
Call/video conference online payments and
Performance Telepresence
Measurement Customer Chat Agent delivery
...
My Renewal
My Family Auto reminders and one
Online health touch renewal payment
tagging of elderly Insurer automating
Insurer Providing
family members insurance services My Claim
non-Insurance App based claim intimation
My Travel and interaction for
services through and progress updates
Travel Updates customer
third party tie-ups
convenience
360advanced analytics
Technology Enablement
10
Figure 12: The architecture of an Everyday Insurer
26
27
Value proposition Ecosystem support administration system, his/her
social media presence and other
The everyday insurers value However, engaging the customer digital footprints, analytics has the
proposition to the customer has two beyond the traditional insurance power to understand the customer
main components product would need to be done beyond insurance product and
in order to position the insurance predict customer behavior. Analytics
The traditional insurance product,
company in the consumers mind. uses data related to customers
provided digitally
The proposition could range from likes, dislikes, recent purchases, GPS
Ecosystem risk management home security systems connected navigation, events planned etc. to
directly to the customers mobile assess his/her purchase interests
Insurance support
phone to a tax reporting portal and intents. This allows the insurer
Built on digital enablers, for an SME customer. Providing to treat each individual customer
everyday insurers automated customized traffic updates, as a unique customer segment- a
insurance services enable the speeding warnings while driving, customer segment of one. Insurer
customer to manage his/her health condition updates of elderly is thus empowered to run very
policies, renewals, claims, proposal members of the family etc. are just specific campaigns to its customers
forms and risks. This change takes a few examples of non-insurance within very low budgets. A deep
multiple forms through the policy support insurers could provide to understanding of each customers
life cycle. During sales product engage the customer and increase behavior also can be fed into
information and needs analysis loyalty. The Everyday Insurer would product innovation and bundling to
can be provided in an interactive need to partner with various third enrich the product portfolio. Social
manner digitally. During policy party providers to provide these media listening can be employed
issuance, customer KYC details can non-insurance services. in proactive grievance handling to
be taken online resulting in real provide customer delight.
time policies. For claims, notification Architecture of an
can be done online by filling up an everyday Insurer Omni- channel presence
online form and uploading pictures
To provide the described value A digitally enabled insurer is well
where necessary. Claim status can
equipped to provide the customer
also be tracked online. Auto-renewal proposition an insurer needs
a truly omni-channel experience.
reminders can be sent to customers to develop a comprehensive
understanding of the customer Omni-channel presence is the
near their renewal date. One click
and should be able to reach use of a variety of channels and
renewal is made possible through
the customer through various combination of such channels in a
the bank account linked with the
routes. This section describes the customers shopping experience. The
policy records. Insurer could also
capabilities an insurer needs to channels include agencies, brokers,
proactively pitch for upselling. The
develop in order to evolve as an banca, direct through website,
list can be endless as the industry
everyday insurer. mobile stores, mobile app, consumer
moves towards digitization of its
forums and other channels of
entire value chain. 360o customer view transactions. This entails providing
the customer a holistic and unified
Comprehensive understanding of
product experience through all
the customer can be made possible
the aforementioned channels. The
through a 360o customer view
customer would be facilitated
enabled by advanced analytics.
to reach the insurer for policy
Tapping into a customers
purchase, renewal, claim or any
records available in the policy
other query by just a click or a call.
28
2.3 Size of the Digital Increase in sales revenues digital means to book sales. These
digitally enabled sales today make
Opportunity in India- The impact of digital on sales up a significant portion (almost
revenues is two-fold:
Enhanced revenues and 20%) of retail insurance purchase.
through digitally bought policies We believe that the trend of digitally
efficient operations and influenced sales being larger than
directly bought digital policies will
In a digital world, winning and through digitally influenced
continue well into the next five
retaining customers hinges on policies.
years.
creating value for them that Policies are currently bought
enhances the convenience and Digitally enabled insurance sales
digitally through a combination
quality of their everyday lives are expected to grow by 8 times
of insurance websites, aggregator
beyond mere transactions. With in the coming 5 years. In FY 15,
websites and online sites of
increased interactions, comes a digitally enabled non-life policies
insurance brokers. However, the
larger opportunity for selling and are estimated to be ~Rs 6200 Cr
need for advice in insurance still
hence increase in sales revenues. and digitally enabled life policies
means that digital consumers prefer
Additionally, the same digital also (new) are expected to be ~Rs 4000
to research insurance options online
provides prospects for developing Cr. Online renewals of existing life
before actually purchasing through
more efficient operations and hence insurance are expected to become
traditional channels. This online
increased profitability. The following 35-50% in the next 5 years from
research includes a combination of
paragraphs detail the magnitude 10-15% in FY 15. This will result in a
visits to community forums, blogs
of these opportunities for Indian 5X increase in online renewals of life
and even news websites. Digital
insurers. insurance policies by 2020.
influence in sales also comes during
with traditional channels using
Potential Digitally influenced Non- life sales 0 0.8-0.9 1.7-1.8 3.3-3.4 0.3-0.4 6.1-6.5
Retail Life Policies-New (Approx.) 640 1520 660 170 10 3000
Online Renewals of life Insurance 4-5 10-11 4.5-5 1-1.2 0.08-0.09 20-23
Online Renewals life Insurance (2020) 22-23 53-54 23-24 6-7 0.4-0.45 104-108
Table 3: Potential digital sales in five years Source: IRDA Annual Reports, Accenture Analysis
Note:
Sales in Rs 000 Crore
Policies in lakhs
All numbers are estimated for FY 15 unless mentioned otherwise
29
30
Digitally Influenced Insurance Sales Online renewals of life Insurance
(Life & Non-life) (Rs 000 Cr )
(Rs 000 Cr )
80 105
8x
5x
20
10
31
32
3. Operating Model
Imperatives for
Insurance Companies
33
3.1 Key Operating The Choice
Differentiators of The Clear Choice -Doing it Better vs. Doing it Differently
34
Technology Trends Digital Physical Blur: Extending Cloud is being used to share
Intelligence to the edge data as amount of data increases
in Insurance exponentially even as the prices
Insurers have to ride the next of these devices fall and quality
big digital disruption wave and improves
hence must be cognizant of the Digital Physical blur to help
opportunities and threats that this insurers get contextual data that
wave brings. can help refine risk, products and
Those that win the race to transform customer relationships
transform into digital insurers Carriers that started off with pay-
will find opportunities to disrupt per-use insurance offerings are
their existing markets as well as to moving toward mobile, contextual
drive new revenues and profits in and behavior-based products
industries and customer segments
where they have not traditionally Example-In India, Policybazaar.com
competed. Those that dont get has carved out a new business for
out of the starting blocks quickly The real world is coming online as itself by using Chleons insurance
enough will be outrun by more smart objects, devices and machines telematics- as-a-service to calculate
aggressive insurersand they may increase our insight into and control future motor insurance premiums
also lose market share and profits over the physical world. Its a new for car drivers. With the drivers
to tech companies, automotive layer of connected intelligence that permission, his or her personal
manufacturers, and other augments employees, automates driving score can be provided to
companies pioneering emerging processes, and incorporates insurance companies that have
technologies that undermine the machines into our lives. accepted this score as a rating
traditional insurance business model From wearable devices to home factor
at its foundations. The choice is a sensors and vehicle telematics,
stark one: become a disrupter or be intelligent interfaces are blurring
disrupted. the physical and digital
We believe for the insurers to Play There is unprecedented
To Win, they have to consider 5 key connectedness as these edge
imperatives described here. devices touch each other
35
Data Supply Chain-Putting For example, an auto insurer could Focus on hardware-Build scalable
information into circulation leverage traffic data in its mobile systems
app or data from another vehicle
in close proximity to warn insured
drivers of accident hotspots or
traffic congestion
Build embedded teams with
knowledge of the business
problems
Cognitive Computing
Leverage machine learning
capabilities incorporating
components of artificial
intelligence-Cognitive Computing,
to manage the scale and
complexity of data supply
Data is the most valuable assets for Eclipsed by more than a decade
insurance firms. It has to be treated Insurers could use natural of innovation in software, the
more as supply chain-enabling it language processing to transform hardware world is now a hotbed of
to be accessed and then to flow unstructured data, such as social new development as demand soars
easily and usefully through the media posts or claims submitted for bigger, faster, more efficient data
entire organizationand eventually in free text, into insights centers
throughout the organizations Streaming data-ranging from Benefits of hyper scale
ecosystem of partners too. news to weather information- innovation will trickle into the
could help insurers to better data center in the form of cost
Few insurance companies have respond to catastrophes reduction
mastered the concepts at the
Monetizing Data Legacy IT systems will be
foundation of modern data
threatened by a deluge of
management ideas such as the Realize the latent value of the
unpresented amount of data
mobility and portability of data, its data collected by forging new
structure and velocity, and data as a partnerships to creating new As all of this information begins
saleable product or monetization. revenue streams, or even entering to be collected every hour, and, in
new markets extreme cases, multiple times per
More uses of data second, large systems are required
Monetize data-sell data insights
Capitalize on the business value to store and analyze this data
directly, share them through
from the external data obtained Hyper scale computing designed
partnerships, or develop entire
from partners, data-as-a-service to crunch through vast volumes,
ecosystems around them, but in a
providers, or open data sources variety, and velocity of data at
way that is sensitive to the issue
Augment these sources with social of data privacy rapid speeds and with great
media sentiment, weather data, efficiency are required
Insurers could even sell data to
and more and make informed
their own customers or offer it to Insurers will need to look at the
decisions while also adding value latest innovations in the world
them as a value-addfor example,
to the customers life of hardware to enable the digital
usage patterns of commercial
vehicle fleets transformation of their businesses
Correct recipe of commodity
versus specialized hardware
and private versus public cloud
architecture will be required
36
App ecosystem-Be a part of the Lifestyle apps that encourage Insurers need to be able to gather
thriving ecosystem risk friendly consumer behavior- and operationalize big data
for example, regular exercise as uninterrupted and at speed and
monitored by fitness trackers provide uninterrupted services to
could help improve customer their partner ecosystems
retention and reduce the Business continuity and systems
frequency and size of claims availability are of paramount
With mobile apps, the insurer is importance
there with the customer when he To provide a range of everyday
or she needs risk management services to connected customers,
advice or even impromptu risk insurers must begin to consider
cover how they will architect their IT
infrastructures to support nonstop
Architecting Resilience-All time business processes, services and
availability applications
CIOs must use a business-driven
Mimicking the shift in the consumer strategy to manage risk across
world, enterprises are rapidly the enterprise, understanding
moving from applications to apps. which assets are critical and then
As organizations push for greater prioritizing resilience and active
operational agility, there is a sharp defense measures accordingly
shift toward simpler, more modular
and analytics-enabled apps. A wholesale shift in mindset to
Mimicking the appetite for mobile the idea of 100 percent uptime
apps in the consumer market,
enterprises are starting to deploy
lighter, simpler, more modular and
analytics-enabled apps to end-users
within their organizations as well
as to their customers and business
partners. In the digital era, businesses are
It is imperative for insurers expected to support the nonstop
to rapidly develop, or partner demands that their employees and
to create and launch new stakeholders place on business
applications and be positioned processes, services and systems. As a
to innovate, collaborate, improve result, todays IT leaders must ensure
customer experiences, and enrich that their systemsand to some
personal interactions extent those of their key business
partnersare designed for resilience
Considering apps for reducing the under failure rather than designed
customer churn rates to spec. Hence,
37
3.2 Digital interventions Insurers need to take cognizance of
three areas to identify the strategy
along the Value Chain that would help them identify the
Due to the digitization and challenges in the current operating
disruptions in other industries model and leverage mobility to
customers have been found wanting convert those challenges into
more in other industries including opportunity.
insurance. Thus, time has come Below we present the typical
for the insurance industry players insurance value chain and follow
to take cognizance of this fact it up with various challenges that
and start their efforts towards the traditional model has and also
providing mobility solutions to suggest various mobility solutions
their customers and capture the along those dimensions.
market share and reap first mover
advantages.
Product Development Distribution & Underwriting Policy Holder Claims & Benefits Investment
& Pricing Marketing & Producer Admin /
Servicing
3 C
6 F
2 B 7 G
5 E
Analyze Market & Branding & Lead
Customer Needs Generation 1 A
Captive Agent
Insurance Co.
Driven
Configure / Deploy Distribution Rate/Quote/ First Notification
Policy Issuance
/ Maintain Product Independent Illustration Of Loss
Agent Driven
Distribution 1ST & 3RD Party
Billing Injury / Property
Damage
Payments &
Policy Renewal Payments
Processing
Secure Investment
Returns
8 H
Mobility Opportunity
Figure 16: Mobility solutions along the Source: Accenture Insurances Business Services Analysis & High
value chain of insurers Performance Industry Architecture for Insurance
38
39
Theme No. Challenge Opportunity
1 Consumers have become lot more demanding A mobile application that provides all the information
required by the customers over the lifecycle of their
Seek transparency
insurance policy will
Expect availability of self service options
Provide convenience to the customer
Attach a lot of significance to convenience
Facilitate action at each stage through Omni channel
Evaluation before buying requires them to experience
have immediate access to information
Mobile enabled enrollment process and instant
feedback and notifications as the policy passes through
different stages
E.g. Notification about traffic congestions, travel
planning, personal finance management, weather
warnings based on customer geolocation etc.
Mobile Consumer Engagement in a Digital Age
2 Pricing the insurance products is definitely one Employing content listening tools and analytics to
of the most difficult ask for the insurers understand the behavior and create risk and profitability
profile
Every customer behavioral attributes are
different, a condition which is aggragvated Capturing client behavioral data and activities using
due to moral hazard mobile technologies and analyzing these with an
analytics engine to manage risk and pricing with
Insurance companies have to invest a lot to
appropriate premiums
balance the rewards and risks of their policies
E.g. Using telematics to offer customized premiums
Retention of the right/profitable customers
based on driving behavior ensures the right pricing
becomes a challenge
which would ensure right risk reward returns and also
help in retaining clients
risk profiles makes it difficult to retain and Customers could be allowed to configure insurance to
acquire customers meet their requirements
Customers could also be allowed to make quick micro
insurance purchases based on the situations through
their mobile devices
40
5 Attrition is a pain point for the insurance firms Mobility helps agents remain relevant in the digital age
allowing them to perform their functions effectively
Aggravated if the currently digital savvy
and efficiently
workforce is not given the tools and systems
that would enable them to effectively and They can use tablets to create customer specific
Back-office Optimization through Automated Underwriting and Policy
efficiently dispense their work presentations, proposals, do real time what if scenarios,
provide real time quotes and capture digital signatures
Paper based manual processes are extremely
thereby reducing errors giving customers a delightful
time consuming and costly
experience
Also on the customer end, it causes servicing
issues if the customers are not given the
policy premium calculation details in real
time
6 Huge cost overhead owing to inefficient and Companies can integrate the processing systems with
obsolete transaction processing mobiles and tablets
Competition is further driving the cost Customer could be provided with self-service tools to
overhead in fight for sustaining the market upload relevant documentation thereby reducing cost
share by providing door step customer service overhead
and capturing client documentation
Online application processing can help in data
Administration
7 Insurance companies grapple with unexpected Event based communication to policy holders of say an
events which will impact its portfolio of assets impending hailstorm could help in reducing the damage
Challenge to be able to forecast the losses Allowing the customers to access the insurance
Next Generation Claims
due to such events and manage financial application and upload images from the accident/issue
investments accordingly sight would not only help the insurers in easy collection
Management
Table 4: Opportunities for Customer Experience improvement and cost reduction along the value chain
The time has gone for the insurance The choice for most insurance
organizations to start their digital carriers is to transform into a
journeys. While many have adopted risk manager, advisor and value
technologies such as digital aggregator at the center of a digital
distribution, grafted their digital ecosystem that delivers high-value
strategies onto legacy systems, services to customers every day, or
business processes and business be pushed to the periphery as an
models, it is imperative for them interchangeable, commodity service
to plot the stages of their digital provider with limited control over
journeys where they will transform your destiny.
their businesses more thoroughly.
41
42
Conclusion The Digital push brings three
types of opportunities for insurers
currently drive todays insurance
companies. As a result, we also see
in India. The first is in terms of a clear focus of insurers on the
The Indian insurance industry is repositioning themselves in front of revenue enhancement side and
not new to changing consumer the customer. The opportunity stems little or no focus on digitizing their
preferences. Indian consumer from the fact that insurers now operating models.
preferences have known to change have a channel to directly reach out
with rising and falling economic to the customer. Creation of a new In the short to medium term,
growth (eg. stock market booms), ecosystem, or being a part of one we expect to see new insurance
social communication trends (eg. would be essential to stay relevant companies (more so in the non-life
advent of the mobile) and structural in a customers mind. However, in segment) looking to tap into the
(eg. rise of the motor OEMs). order to do the same, insurers would Digital space while existing insurers
However, the push towards Digital need to break the barrier of low- ready themselves to innovate
stands apart from all these changes awareness for risk management and deliver new propositions.
in terms if the size and speed of These companies would test the
The second opportunity is in terms
the change. Till now, insurance boundaries of what products,
of helping improve revenues by
companies largely had an ability to
increasing the number of insurance channels and processes can actually
tackle these changes, absorb them be digitized and to what extent the
customers and by increasing risk
into their operating models and
management products being sold to industry will continue to be driven
hence, have a revised customer
existing customers. Given the nature through traditional ways of doing
proposition in quick time. business.
of products, the non-life insurance
Probably for the first time, the segment is better suited to tap into
market change has left the Digital based revenue growth.
insurance industry well behind in a
The third opportunity is in terms of
very short period. Over the last three
reducing operating and distribution
years insurers have begun to feel
costs. While the business case for
the need to relook at the way they
cost reduction is fairly obvious in
can position themselves in front
Digital, implementation and value
of the client in a fundamentally
accretion has been a challenge
new manner. This is especially a
for insurers. The key constraint to
challenge for the industry as the
implementing changes for a Digital
direct customer touchpoints with
value chain are the legacy systems
insurance companies are few.
(manpower and technology) that
43
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