Radhika prides herself on regularly receiving discounts on premium payments towards her car insurance policy. The credit goes to her good driving skills. A trait that is encouraged by her motor insurance provider, who tracks her driving habits using telematics devices and rewards her with policy discounts.
Likewise, Samar who quit smoking a year ago and visits the gym regularly, now pays up to 10% less premium for his health insurance policy. The insurer, who tracks Samar’s activities through his FitBit band, showers him with discounts for his dedication towards health and fitness.
Welcome to the phy-digital world of Indian insurance, driven by InsurTech i.e. technologies such as Internet of Things (IoT), Robotic Process Automation (RPA), Blockchain, and Artificial Intelligence (AI).
Let’s see how Indian insurers are leveraging InsurTech to deliver on the digital promise:
#1 Artificial Intelligence for risk management:
AI can significantly lower risk in claims underwriting by: leveraging deep question answering techniques to help underwriters look for the right risk attributes, and using predictive risk assessment models in the commercial and personal insurance product lines. AI and ML can also analyze data from external sources such as social networks or text/videos/images to identify patterns of fraud in claims and link them with insurance products and distribution for proactive risk mitigation.
In the healthcare industry, predictive algorithms enable proactive health management. Aditya Birla Health Insurance leverages AI-driven predictive algorithms that mine customers’ claims and hospitalization history, renewal history and other data, to offer wellness benefits that encourage customers to stay healthy. In doing this, the company also lowers its own risk by reducing instances of illnesses.
#2 Robotic process automation for claims efficiency:
As a process-driven industry, the insurance sector is no stranger to automation. However, the next-generation of robots are not only adept at rules-based processing but can also leverage contextual process mining techniques to identify and eliminate bottlenecks in claims settlement. The result: enhanced accuracy, efficiency, and speed.
RPA in combination with robotic desktop automation (RDA), and cognitive document processing (CDP) can completely transform the claims audit process. Robo-claims adjusters reduce losses and accelerate the claims settlement process by combining predictive risk models, with insights from sensor and IoT data. Max Life Insurance prides itself on leveraging an automated claims processing system, which uses analytics models to identify clear cases and process them immediately. The company’s claims paid rate soared to over 98% in FY17-18, wherein most claims were settled within six days on average and a third of the claims within a day.
#3 Wearables for intelligent premiums:
Smart watches, fitness bands, contact lenses, and e-textiles are changing the Indian insurance game in a big way. A recent Insurance Regulatory and Development Authority of India (IRDAI) report lobbied for the use of wearable and portable devices (including smart implants) for life insurance and health insurance policies as they can provide a regular stream of data about the policy holder.
Not just life and health, data from IoT-enabled movement sensors can also be used in home and motor insurance to track burglaries, accidents, vehicle speed, etc. With the millennial population in India expected to touch 45 crores by 2020, the potential to tap wearables for optimizing insurance outcomes is huge – as millennials are more comfortable using the devices and sharing data across the IoT ecosystem. Cigna TTK’s Get ProActiv app allows customers to integrate wearable devices with the company’s rewards program, resulting in up to 10% reduction in health premiums based on the quantum of their physical activity.
#4 Blockchain for cross-company data sharing:
Indian insurance is finally achieving its Blockchain moment as a consortium comprising 15 leading insurers and Cognizant is set to come into force. Blockchain can enable 15 to 25% reduction in document processing costs, through real-time data sharing related to KYC, risk assessment, fraud, underwriting, etc. thereby preventing duplication of procedures, streamlining approvals, and increasing transparency.
Blockchain-driven smart contracts can also help in the auto-initiation and settlement of claims. As soon as the conditions in the code of a smart contract are fulfilled, claims processing, verification and payment can be triggered automatically. ICICI Prudential Life is the first company in India exploring Blockchain to enable faster, touch-less claims settlement.
Consumers are game, but what about insurers?
74% of Indians say they prefer to interact with modern technology and appreciate the computer-generated system of insurance advice and processing. Clearly, InsurTech is here to stay. The bigger question is – are insurance companies ready to step up their game using InsurTech?
The Hindu Business Line