The Benefits of Digitisation of the Life Insurance Sector

Though the penetration of the life insurance sector in the country is improving over the last few years, according to a survey, the penetration of life insurance in India is 3.9%, which is significantly lower as compared to other countries across the globe.

To improve penetration in the country and increase their reach, life insurers in India as well as insurtech startups are adopting digitisation tools to give them the much needed boost. In fact, as per another study, in 2012, insurance fraud resulted in an approximate of a $30 billion loss for the insurance sector across the world. To combat these losses and make the process of reaching out to customers a lot more efficient and smoother, insurers have adopted Artificial Intelligence, Blockchain, IoT and Robotics, etc.  That said, let’s take a look at how technology and digitisation will benefit the life insurance sector in India and across the globe.

How digitisation will benefit the insurance sector 

Listed below are a few ways in which digitisation will improve or is improving the life insurance sector in India:

• Customers can get a life insurance policy with just a few clicks

Back in the day, possibly the only way to get a life insurance policy would have been through an insurance agent. This meant that customers would have to pay for the premium of the life insurance policy and added to that expense, they would have to pay the agent fees. Not to mention, going through an agent could be a time-consuming process as well.

Now, most life insurers give their customers the benefit of purchasing a life insurance policy online. All that the customer has to do is to choose the policy he/she wishes, fill up the application form and make the payment for the life insurance policy. With the online process, customers will not have to spend any more than the premium of the policy.

• No need for human communication with Chatbots

Over the last few years, the introduction of Chatbots has made the whole process of buying a life insurance policy and knowing the details of a particular policy, easier. Customers do not need to call an agent and depend on his/her suggestion prior to buying a life insurance policy. Chatbots run on artificial intelligence, machine learning, and insurance analytics and help solve the queries of customers in seconds and have improved the customer end-to-end experience by leagues as compared to what was before. Of course, customers can take the help of Chatbots round-the-clock, basically 24/7.

• Products are customer specific

Using the analytics compiled by Chatbots, customers are offered life insurance products that are specific to their needs. Once the customer enters his/her personal details including their income and financial situation, the Chatbot will recommend a product that will suit their needs.

• Helps insurers track the necessary details of the customer

Through digitisation, insurers can now track the lifestyle of the customer, his/her past behaviour, and the medical history of the individual before approving the policy application. Through the compiled data, life insurers can assess the risk of insuring a candidate and help them decide whether to approve or reject an application.

• Customers will not be taken for a ride anymore

With each insurer having their very own digital platform, customers will know exactly what product they will be buying and have the privilege of going through the customer reviews of the insurer as well as the product before choosing a particular life insurance product. In short, a customer will not be mis-sold a product or a victim of cheap marketing gimmicks as there is enough product information and reviews on digital platforms to help the customer decide what he/she wants.

• Claim settlement has become quicker and easier

Through digitisation and online banking, settling life insurance claims has become as easier as ever. Back in the day, filing an insurance claim would have been a painstaking process and the settlement amount would have taken days to be in the hands of the claimant. Now, through cloud-based platforms and online banking, the whole process has been simplified for the insurer as well as the customer. 

• Helps insurers extend the death benefit of life insurers to the nominees

Solving claims is one of the key parameters that decides the reputation of a life insurer. Now, if the nominee or legal heir of the policyholder fails to claim the death benefit, the insurer has to track down the dependents and make the death benefit payout, as per the regulations set by the Insurance Regulatory and Development Authority of India (IRDAI). Through digitisation, insurers can now track the dependents of the deceased policyholder and make the death benefit payout to improve their claim settlement ratio.

• Reduce fraud and solve other processes efficiently

Through the adoption of Blockchain technology, insurers can now track fraudulent claims and reduce their losses. In addition, through the digital pipeline using blockchain technology, insurers can now issue timely reminders for renewals, issue policies, and servicing processes easier as the whole process is automated through digitisation. According to an insurance expert, all policy-related transactions took a minimum of 30 minutes and it required 90 fields of information but after digitisation and automation of processes, policy-related transactions take 10 minutes and have only 20 fields of information to process.

With the rise of insurtech startups and insurers adopting digitisations, according to a survey, digital insurance (not specific to just life insurance), will increase by 2,000% by 2020 and have a turnover of Rs.15,000 crore. In addition, as per the survey, 75% of the processes in the insurance sector will be automated and digitalized.