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Embedded Value: Tech adoption in insurance sector is simplifying the game for customers

19-Oct-2021

The insurance industry has traditionally been orthodox and even somewhat enigmatic for customers. But insuretech has today altered the ecosystem around this industry completely. Today, any prospective buyer of insurance or any existing policyholder can sit at home, experience transparency in respect of pricing as well as terms and conditions; and take an informed decision to best suit his needs.

Insurers have discarded their classical understanding of the business of risk and seem to be accepting the customer as the center point of their business. The new market environment forced them to adopt the latest technology and roll out capabilities for customer interfacing activities. Even large insurers who were saddled with legacy IT structures have gone for gradual adoption of more nimble software for preventing sudden redundancy. LIC is a classic example of such a wholesale transformation.

Digital transformation
The wholesale shift from an intermediary-led sale and purchase process has put the customer at the centre of strategy formulation and product development. Therefore today’s customers must know what are the tools available to them for making the best choice and taking a decision that is most appropriate at a particular stage of life.
This would however require greater awareness on the part of the insuring public. It is in the interest of insurers that the initiatives taken by them in making themselves easily accessible by the customers are publicized and the old image of being a very orthodox service provider be discarded.

The potential buyer can comfortably collect information on similar products in the market via the internet and can evaluate the premium rates being offered by different companies for similar coverage before shortlisting a few of them. The buyer can even find out the contents of the ‘fine print’ on the policy bond or the certificate of insurance by accessing sample policy bonds or detailed terms and conditions in the brochure available on the website. He can then note down the unique features of comparable products on offer by different insurers and then take a final decision.

Customer satisfaction
Technology-induced spurt in demand for insurance products definitely points to the prospect of faster growth of the insurance business in our country during the next four to five years but the new scenario will not necessarily mean more profit for the insurance companies.

The competition among the insurers will force most of them to rationalize premium rates and also to seek a greater reinsurance umbrella, especially after getting badly bruised by the Covid 19 claims. The profit margin is likely to be adversely affected through well-led companies will maintain their income rate by rationalizing expenses by leveraging technology to the optimum level and by optimising investment income.

Though technology will remain the most powerful tool in transforming the business of insurance during the current decade, potential customers too will have to play a catalytic role in order to get the best value of their investment in insurance products. Staying in touch with the insurers is much needed. Engagement with certain products and brands may substantially improve the quality of products and services.

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