Banking and Insurance

Dr. Ruchi Jain

Week 6_V7

Week 6 : Video 7

Digital Insurance

Dear learners, Namaskar,

Have you ever wondered how the rapid flow of the Internet is revolutionizing the insurance
sector in India, a country set to become the second-largest Internet user market with nearly 1
billion users by 2026?

Today, we're diving into the interesting world of digital insurance, a domain where technology
seamlessly integrates with traditional insurance practices to bring about a transformative
change in the industry.

But what exactly is digital insurance? Simply put, it's the use of the internet and digital
technologies to sell and manage insurance products, making the process more accessible,
efficient, and customer-friendly. An increasing number of customers are now turning to digital
channels for their insurance needs, with a preference rate of 73% for general insurance and
62% for health insurance products as of 2020. Even agents are getting on board, with 63%
comfortable with video calls and more than half ready for conducting renewals online.

Let's look at some real-world examples to understand the impact better. ICICI Lombard's
initiative to offer personal accident insurance with every online purchase of Vega helmets in
November 2021 is a brilliant move to enhance road safety awareness. Similarly, the
collaboration between ICICI Prudential Life Insurance and NPCI Bharat BillPay to introduce
the ClickPay feature, and the digital insurance startup Acko raising US$ 255 million, elevating
its valuation to approximately US$ 1.1 billion, are indications of the sector's dynamic growth.

This shift towards digital insurance signifies not just an adaptation to emerging technologies
but a comprehensive overhaul of how insurance companies operate, compete, and serve their
customers. It challenges the traditional methods of personal selling and necessitates a more
integrated use of technology across various departments to improve efficiency and customer
service.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
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 Banking and Insurance

Dr. Ruchi Jain

Week 6_V7

E-insurance utilizes the internet and related IT technologies to create and distribute insurance
services, providing several benefits. These include the collection of reliable and cost-effective
information, quicker policy issuance and claim settlements, more flexible pricing and tailored
services, and the introduction of innovative business practices. E-insurance also offers global
access, boosts sales without the need to expand the sales force, enables immediate premium
collection and fund transfers, lowers the cost of transactions, and provides constant access to
information, supporting real-time development of a knowledge base.

To further bridge the gap between traditional and digital insurance, intranets and extranets
connect different offices and external partners, respectively, allowing for seamless internal and
external communication. The internet plays a crucial role in creating new opportunities for
forums and services accessible to all. Despite a slow start, the entry of new private insurers is
expected to transform the life and non-life insurance markets, presenting opportunities for
software professionals and the IT industry.

Kiosks and insurers' websites are pivotal in extending the reach of digital insurance. Kiosks
provide 24/7 access to information for those without internet access, and insurers' websites
offer detailed product information, educational resources, and online customer support. These
platforms also serve as online communities for insurance professionals, offering news, career
opportunities, and forums for discussion.

So what are the factors that influence the growth of Insurance?

The growth and success of e-insurance in India are influenced by factors like the increasing
number of internet users, competitive pressures, customer demand for online services, and the
initial cost implications of adopting e-insurance strategies. Over time, e-insurance is expected
to lower costs.

Now, you might be wondering how digital insurance benefits insurance sector, agents and us
as policyholders.

Benefits of Digital insurance:

Digital insurance offers several advantages to both insurers and their clients, including potential
and current policyholders, as well as to agents.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
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 Banking and Insurance

Dr. Ruchi Jain

Week 6_V7

1. First is Benefits for the Insurance Sector: Digital insurance revolutionizes the
insurance sector by ensuring the collection of reliable, superior, and cost-effective
information. This technology-driven approach significantly speeds up the entire
insurance process, from policy issuance to claim settlements, and allows for more
flexible pricing and tailored services. Digital platforms introduce innovative business
practices in a competitive environment, enabling insurers to remove geographical
constraints and offer global access. This leads to increased sales without the necessity
to expand the sales force, immediate premium collection and fund transfers, reduced
cost of transactions, and constant access to information, operating 24/7. Furthermore,
it supports the real-time development of a knowledge base, optimizing operational
efficiency and customer service.
2. Second is Benefits for Agents. For agents, digital insurance facilitates a significant
shift in how they conduct their daily tasks. With an insurer's intranet, agents can avoid
office visits for tasks such as checking the status of proposals or claims, consulting with
officers or other agents for advice, receiving all circulars and instructions directly—
thus avoiding postal delays or losses—and seeking direct clarifications on proposals,
taxes, insurability, benefits, and premiums. This digital environment enables fast and
low-cost communication with the office via email, streamlining their operations and
making their work more efficient.
3. Third is Advantages for Policyholders and Prospective Clients: Digital insurance
offers numerous advantages to policyholders and prospective clients. They can easily
access details about various insurance plans, benefits, and premiums, receive
personalized advice on suitable plans, and check policy status, premium dues, bonuses,
surrender value, available loans, revival requirements, and nearest transaction offices
without physical visits. Online platforms facilitate premium payments through direct
debits to credit cards or bank accounts, eliminating the need to queue at offices.
Additionally, insurers can offer valuable health-related information and more,
enhancing policyholder engagement and satisfaction. This digital access not only
simplifies the insurance process but also enriches the customer experience with the
brand.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
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 Banking and Insurance

Dr. Ruchi Jain

Week 6_V7

Now after looking at the benefits, let’s explore the Challenges in front of digital insurance.

Challenges in front of digital insurance : E-insurance faces both business and technological
challenges.

Business challenges include the need for companies to adapt to e-commerce by possibly
reorganizing into more virtual models, thereby reducing physical infrastructure and
streamlining operations. This adaptation could also redefine the role of insurance agents, who
may focus more on advisory services as their administrative tasks decrease.

Technologically, security is a paramount concern, with issues such as database and web server
security, protection against password sniffing, network scanning, and ensuring the physical
security of hardware. Privacy concerns also loom large as online activities increase,
emphasizing the need for secure and privacy-conscious website design and operation.

Apart from this, In the digital age, the rise of online business brings unique risks, such as data
breaches and hacking, not fully covered by traditional insurance policies. With the
liberalization of India's insurance industry, there's been an increase in innovative products and
improved customer service, along with a greater focus on cyber insurance to protect against
these online threats. This shift is crucial for addressing the specific needs of internet-based
businesses, including liability and operational risks. The Indian government and insurance
companies are adapting by offering digital-age insurance products and implementing IT
security measures, ensuring businesses can navigate e-commerce challenges securely.

As we conclude, it's clear that digital insurance is not just changing how insurance is sold and
serviced but also how it signifies a broader shift in consumer behavior, agent interaction, and
corporate strategy. This discussion sets the stage for understanding the importance of digital
insurance in today's world and its potential to make insurance more accessible and responsive
to the needs of a digitally connected population.

Thank you and enjoy learning.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
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 Banking and Insurance

Dr. Ruchi Jain

Week 6_V7

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
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