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Digital Insurance – the future of Insurance

Society’s growing reliance on digital technologies is not only reshaping customer expectations but also redefining boundaries across industries. Insurers cannot avoid this phenomenon: as traditional industry borders fall away, the future of insurance stands to be greatly influenced by platforms and ecosystems. It’s about using technology in innovative ways to achieve true customer focus across the entire organization. But every insurer is different and digital transformation is a process—not an event.

A digital insurer should offer a richer set of data-driven, customer-facing services, enabled by:

  • A customer-centric approach to doing business
  • An omnichannel-enabled buying journey that augments traditional channels with robust self-service options, direct purchasing and single customer experience across online, mobile and now social channels
  • The ability to leverage data and analytics across the entire value chain, including product innovation, marketing and sales, new business, servicing, claims, and operations
  • Straight-through processing (STP) made possible through simplified products, automated underwriting for new business, first notice of loss (FNOL) automation and self-service options for claims

With these on our hindsight let us try to look at few digital insurance products which have hit the market recently.

The Digital insurance Products in India

Caught in unexpected traffic en route to the airport and panicking? Pulled a muscle at the gym? Or need to make an emergency visit to the vet for your Labrador? Or broke your mobile? Or want to to buy a term life insurance without any hassles?

The Digital insurance companies such as Toffee, Acko, Digit and hosts of other companies are designing innovative policies precisely to protect against just such niggling vagaries of modern living.

These fintech start-ups are moving beyond digital payments and lending to disrupt how insurance is sold and consumed.

Acko General Insurance company, a spinoff from Mumbai-based insurance marketplace Coverfox, recently secured a general insurance licence.

Acko General Insurance company has partnered with cab aggregator Ola to offer insurance for taxi rides, a product the company says is already seeing significant traction. While booking an Ola cab, customers can insure the ride against a breakdown or unpredictable traffic that can result in them missing a flight by paying a premium as low as Re 1.

Bengaluru-based insurance start-up Digit General Insurance, too, is focussed on innovative products. Digit’s smartphone protection policy not only covers damage to phones but also offers pickup and drop facilities for phone repair. The company offers this service at 6,000 pin codes across India.

Digit General Insurance has done a lot of market research to find out what kind of products are needed. For instance, if a phone is damaged, they can run software remotely to scrutinise the phone and tell the customer how much it might cost to repair the device, and then also offer pickup and drop.

Digit General Insurance is also working on products like pet insurance, where pets can be covered against health expenses incurred at veterinarian clinics. The company has tied up with Cleartrip to insure passengers against delayed and missed flights including connecting flights as well.

Traditionally, insurance companies give protection against lost luggage. Digit General Insurance is providing a much more common use case of insurance against flight delays, and consumers can claim it by just clicking a picture of the boarding pass.

Toffee Insurance is working with legacy insurance companies to offer customised products.

Toffee works with seven insurance companies including Apollo Munich and Future Generali to offer products like dengue insurance, fitness insurance, daily commuter insurance, and backpacker.

Digital financial services company Mobikwik has partnered with Aegon Life Insurance to launch a digital insurance product.

Mobikwik has partnered with Aegon Life Insurance to launch a digital insurance product to protect its wallet users from both deaths as well as accident related disability cover for up to Rs 2 lakh. The premium amount is kept small is mainly aimed at driving financial inclusion for the masses.

While these new-age companies have the potential to disrupt the insurance sector, most of their products need support at an ecosystem level. The customer needs to be digitally connected and empowered to undertake the end-to-end process digitally. That requires other simultaneous processes to be digital as well.

If a company is offering health insurance, then customers need to be taught that healthy living will be rewarded with lower premiums. These companies will have to spend to create that ecosystem-level awareness.

We have seen new insurance companies (more so in the non-life segment) looking to tap into the Digital space while existing insurers getting ready to innovate and deliver new propositions. These companies would test the boundaries of what products, channels, and processes can actually be digitized and to what extent the industry will continue to be driven through traditional ways of doing business.

Conclusion

It can be risky, however, to think of digital insurance as a finite set of terms, values or technical capabilities. Instead, digital insurance should be viewed as a transformational journey that can ultimately lead the insurance industry to redefine its basic value proposition. In the digital age, insurance products cannot merely act as instruments of risk management. An insurer’s relationship with its customer needs to be more holistic and experiential. Digital insurance is about moving the insurance industry’s core value proposition from one of simple indemnification of loss to one of education, prevention, and continuous value.

About the Author

Mr. Paramesh Kumar S has a diversified work experience of 27 years. He has worked with McMillan Press as an Editor for 2 Years, 22 Years in various Capacities in leading Insurance Companies including LIC, HDFC, Reliance, Exide Life. He was heading South India for Training needs of Apps Daily, mobile App. The company, before joining Manipal. Currently, he is associated with MABFSI since November’16 as Assistant Professor with Life Insurance vertical.

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