EMERGING TRENDS IN THE INSURANCE BUSINESS

EMERGING TRENDS IN THE INSURANCE BUSINESS

Information technology is an important aspect in the corporate world that has become an integral part of the working of all kinds of businesses and industries. With the advent of technology, the business of insurance has been revolutionized to such an extent wherein this sector has managed to not only achieve exponential growth but also a commendable form of sustainability. In the information era, by making the world more connected, it has not only raised the levels of development but also made accessibility of information quick and user-friendly. Who knew that with a single click on Google, our insurance policies would be one day available to us in less than a second?

When we talk about its role in internal functioning, IT has constantly played a very imperative role in the operations of every insurance company. It shall be noted that of all the business establishments in the facility sector, the life insurance companies were the first to adopt computerization in an undisputed manner as part of their operation all over the world.

On the other hand, the growth in IT has led to the complete transformation of traditional business paradigms particularly of the insurance organizations, which have become networked organizations today. Innovative technologies have resulted in a rapidly expanding base of customers cohesively held through relationship management protocols. The Internet has played a role in the marketing and sales of insurance products. New capital markets have emerged to cater to the needs of reinsurance. Businesses are relying on computer systems to store, share and process almost every transaction imaginable. Employees have access to sensitive information. In the Western world, companies are selling Network Security and Privacy insurance. This coverage is designed to cover a data breach after the loss of information and can protect an insured from the loss of information.

But as nothing comes without its cons, the swiftness and innovation in the area of information and communication technology have stood with serious challenges for the insurance industry in India. Moreover, the entry of private insurance players has generated more powerful competition in which the insurance sector plays a major role. Although as said earlier, the insurance sector is very well sound with IT, there exists certain constricted use of it in various departments including the major players from the past several years.

As per PwC’s 22nd Annual Global CEO Survey, it has been found that insurance companies are more receptive to the technological changes in recent times. Adapting to the changing technological advances in the current global scenario is inevitable and had become imperative for insurance companies to keep up with the pace. The reason being that the digital revolution in India alone has disrupted the business environment in all industries and the insurance industry is no exception. According to a report, the increase in Internet penetration (with the number of users in India expected to rise from 429 million in 2017 to 829 million by 2021 at the rate of 17.9%) will continue to influence the insurance business as well as other industries.

  • Increasing customer expectations

With the shift towards customer-oriented business, the experience of the customers has led to an increase in their arena of expectations. Because of being aware of their rights and needs, thanks to the development of technology, the customers today have managed to set their new standards of convenience, ease of use, and value. Initially, the traditional insurance business model proved to be resilient towards the changes but due to the rapid impact of information technology on their business, they too had to surrender to it.

At the same time, mere digital and online solutions do not come under the purview of customer’s expectation as the sedentary lifestyle living population expect personalized high-touch service which directly correlates with their loyalty towards the companies. However, these interactions, are aloof to the very nature of the insurance business.

 

  • Shifting Product Needs

[1] To survive in this ever-changing atmosphere, the insurance business has been trying to chalk out those solutions which would ensure not only their profits but also their existence in this business. Therefore, the insurers can offer non-coverage offerings as an addition to their main product, for example, financial planning and fitness monitoring to attract the attention of the customers and turn out to be key players in the ecosystem of interconnected services. This will not only build towards the insurers but also grow additional profits. Moreover, these services will help the insurance companies to get hold of the customer data which can be used to mold and develop policies as per the expected needs and deliver them efficiently, thereby improving the goodwill and expansion of the customer base in the market.

 

  • Blurred industry boundaries

These changing factors have paved a way for every sector to equip itself with wider product and service offerings to win over the customers. This is the reason that those businesses which were once disconnected have come up to effectively fit together and uncover the wholesome benefits in this sector. With easily accessible and user-friendly ever-developing technology, there has been a surge in the opportunities which extend across various ecosystems, thereby blurring industry boundaries and offering a holistic set of interconnected products/services related to a given dimension of someone’s life. Therefore, with new ideas, talents, and technologies entering the market, the insurers with age-old and obsolete ways need to buck up, or else they would be lost in the rat race.

CONCLUSION

The IT systems have created an interconnectedness that has become somewhat like a double-edged sword. It has to be agile to be able to bring products to the market with increasing speed and automated processes. The regulator and insurance sector must work together to better leverage the humongous amount of data they have been sitting upon but have been unable to make the best use of. On the other hand, this seamless flow of information from one channel to another has given a big boost to the business development efforts of the insurance community. But all it requires from the Insurers is to maintain appropriate checks and balances and be vigilant to deal with fraudulent claims along with proper compliance with the regulation mandated. In a nutshell, the government, the insurance companies, and the customers have benefitted from the use of information technology in the insurance sector. But to continue using it for their benefits, would depend upon how much have they understood the pros and cons of technology and the immense amount of effort required to successfully survive in the fast-paced era.

 

Endnote:

[1] Joy deep K Roy, Competing in a new age of insurance: How India is adopting emerging technologies (April 5, 2020, at 02:35 am), https://www.pwc.in/assets/pdfs/consulting/financial-services/competing-in-a-new-age-of-insurance.pd

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