The business models of insurance companies in India are based on patch-work automation, fragmented data systems and ad-hoc technology layers. While these seemed necessary in the early stages of digitisation, in 2024, they are the cause of performance bottlenecks and capability gaps. Poor product-to-customer fit and a lack of alignment with business goals have rendered existing models obsolete. As traditional operating models and technology solutions reach end-of-life, the Indian insurance industry needs modernisation to capture emerging growth opportunities.
However, legacy systems and frozen operational models may weigh on the growth potential, slowing the transition. Here are the top 7 strategies that insurance industry participants can adopt to stimulate growth.
1. Harness the Value of Data
Offering hyper-personalised solutions is increasingly becoming a business imperative in the services sector. The insurance sector is no exception. It needs to collaborate with a whole spectrum of industries, such as healthcare, automotive, banking, etc., to gather valuable data and extract useful insights. Shared data and the associated insights can serve as inputs for product development and customer-targeting. On-demand personalised offerings can enhance customer acquisition and retention.
Tips to Utilise the Potential of Data
Cross-industry collaborations are critical to accessing data that can offer insight into customer requirements. Leveraging neural network-based customer segmentation and dynamic personas can help insurance companies in India attract customers with personalised offerings.
2. Instil Agility and Scalability in Business Processes
Adopting flexible business models and practices unlocks innovation potential. Achieving agility helps businesses prepare and respond to changing customer needs ahead of the competition. This is critical for a country with a massive income range, exposure to diverse natural catastrophes and human-created risks, and varying awareness levels regarding insurance. While you plan to penetrate the unserved and underserved regions, the horizontal scalability of each vertical is paramount. Personalisation, customer onboarding, user analytics, risk profiling and claims management, all require digital elasticity to handle high volumes. For instance, in situations like a pandemic or a natural disaster. Reliable server-less data management and process flows are critical. In addition, micro-services-based architectures are essential to manage distinct cohorts with specific needs.
Tips to Bring Agility and Scalability into the System
Predictive modelling using generative AI and machine learning can be instrumental for insurers to adequately predict future needs and prepare distinctive offerings. Cloud-based solutions enable on-demand up-scaling and down-scaling for insurance companies.
3. Promote Customer-Centricity
Automating mundane administrative tasks to minimise performance bottlenecks is no longer a business differentiator. Insurance companies in India need to shift towards making customer-facing processes more efficient. For instance, 61% of customers prefer using self-service tools to deal with simple issues. Customer-facing processes include customer onboarding, claims settlement, customer support, KYC, and more. Convenient and autonomous experiences that empower customers to resolve problems accelerate grievance redressal. These solutions free up customer support executives’ time to handle more critical issues and work as differentiators for insurance companies in India. However, maintaining accuracy and monitored control is critical for the insurance industry. Additionally, meaningfully engaging customers across social media, emails and other interactive platforms is essential for building loyalty for the long term.
Tips to Prioritise the Customer
AI-powered live chat solutions, data-informed engagement initiatives, and intuitively designed user dashboards are critical to improving customer experience and offering greater autonomy. Leveraging diverse sources of data can prove instrumental in planning offerings.
4. Improve Risk Assessment Capabilities
The biggest challenge in the anytime-anywhere working models is improving the accuracy of risk assessments. While accessing data from a wide spectrum of sources is the first step, high-speed analytics to extract value in real time is critical. In the emerging models of embedding and piggy-backing insurance products with e-commerce and other sectors, enabling real-time risk assessment and customisation to meet customer needs can keep you ahead of the curve.
Tips to Improve Risk Management
Leveraging blockchain-based smart contracts and adopting open digital identity frameworks can introduce new levels of transparency in the system. Decentralised systems that automate claims processing can reduce turnaround time and disputes, making insurance decisions and claims settlement more efficient and reliable. Once again, exceptional analytics can be instrumental in improving real-time customer-associated risk assessment. Leading InsurTech companies offer a comprehensive suite of technology tools to enhance risk management and fraud prevention.
5. Ensure Compliance and Security
There is no doubt that digitisation has enhanced operations, outreach and the accessibility of insurance. However, it has also opened up more opportunities for cyber fraud, data breaches and identity theft. As the insurance industry expands its presence across communication mediums and distribution channels, securing the entire digital surface area is critical to smooth functioning. Emerging data-centric operating models and collaborative approaches to analytics have raised concerns about user privacy. Data sharing has alerted customers and regulatory bodies to the growing need for defining and exerting ownership over personally identifiable information (PII). Insurance companies in India need to navigate the increasing oversight and tightening regulatory landscape while simultaneously protecting the privacy of customers. This requires an improvement in data-sharing practices without hindering analytics.
Fortify Security and Stay Complaint
Securing the digital façade is crucial for the success of online operating models. Adopting cyber-security measures via a cloud-based mechanism to secure all touchpoints across user and third-party interfaces is essential. Automating compliance validation and conducting regular audits can help ensure that all your processes remain compliant. Adopting privacy-protecting data practices, such as encryption, watermarking and anonymisation, are vital to stay competitive and compliant in the long run.
6. Plan for User Training
While modernised IT infrastructure and updated processes form the cornerstone of growth, adequate team training is the pillar on which growth stands. A common mistake among companies is missing out on planning the costs, time and effort required to train employees to make the most of the modernised system. This is critical to reap the benefits of the agility, scalability and flexibility introduced into the system through data and process improvements. Adopting effective change management programmes and backwards-compatible modernisation models is crucial for the insurance industry to take advantage of existing features while transitioning to newer ones.
Accommodate Capability Building in Business Planning
Equip your employees with the necessary knowledge and skills to maximise the potential of modernised systems and bolster organization-wide efficiency.
7. Collaborate with Experts
Future-proofing your business requires a focused approach to adopting emerging technologies, staying on top of trends and predicting what customers may need in the short and long term, ahead of the competition. As emerging technologies, such as generative AI, digital twins, big data and analytics, etc., become ubiquitous; insurance companies in India must prepare themselves to embrace the latest tools. Additionally, with sustainability becoming a key differentiator, adopting sustainable business practices can be the foundation of long-term survival despite the cut-throat competition.
How Strategic Partnerships Drive Faster Growth
However, moving away from set mechanisms and “functional” systems can be daunting. This is why you need a technology partner. Some reputed InsurTech companies have years of experience in modernising technology to accelerate the growth of insurance companies in India. They help instil interoperability, agility and scalability in the insurance industry’s operations. InsurTech solutions leverage API-based integrations to develop an open IT infrastructure to securely share data and insights. This lays the foundations for preparing the insurance sector for the emerging open finance ecosystem.
Bibliography (Last Accessed on Sep 21, 2024)
