Digitalisation of Sales and Servicing Process in the Insurance Industry

26th India Fellowship Seminar (IFS) Institute of Actuaries of India Digitalisation of the Sales and Servicing Process of an Insurance Company a challenge and opportunity Prepared by: Harvinder Kaur Siddharth Kumar Goel Devesh Khatri Reviewed by: Malvika Nath www.actuariesindia.org 1

Agenda Introduction Digital Sales: Opportunities Digital Sales: Challenges and Possible solutions Digital Servicing: Opportunities Digital Servicing: Challenges and Possible Solutions Standards/Professional and Ethical Requirements Way Forward QnA www.actuariesindia.org 2

Introduction Digitalisation A need for today What we intend to cover? Sales and servicing Current practice and Limitations in the Indian Insurance industry Customer need analysis and advice process Informational Asymmetry (Policyholders and Sales Persons) Processing time, costs and resolution Some Data Facts Insurance online experience lags behind Percentage of internet users in each age group who use social networking sites, over time 15.2 0 20 40 60 80 100 11.8 11.1 10.0 8.9 8.5 8.5 8.0 ~7.3 5.8 5.0 4.0 4.3 4.2 4.1 3.8 3.5 Health Care Government Telco & Insurance Apparel Electricity, Personal Automobiles Real Estate Hotels Media Retail Airlines Investments Gas, Water Merchants Supermarkets Cable Electronics Banking Providers Services Online Retail Retail Feb-05 Apr-09 Feb-12 May-13 Source: Pew Research Internet Project, BCG Analysis, Morgan Stanley Research Source: BCG digital satisfaction survey March 2013, Morgan Stanley Research 3 www.actuariesindia.org

Digital Sales: Opportunities Digitally assisted sales on tablets Meeting today s customer s expectations Insurance Sales practice Opportunities for an Insurance Company Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time - - Agents generate lead Use of social media like Facebook Reach data quality and information of each customers Data analytics E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing - Digital application process Increase transparency as status of the proposal completely trackable - - Customer s needs analysis by agent Use of mobile apps and tabs Customized solution along with transparent information disclosure Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling Proposal form filled and submitted into the office - - E-proposal form Electronic submission along with the images of other relevant documents More focused marketing strategies and better persistency Underwriting and interaction with underwriter - Auto-underwriting leading to STP (Straight Through Processing) Tracking of status through internet - Issuance of physical copy of policy bond - Dematerialization of policy information (policy bond etc) www.actuariesindia.org 4

Digital Sales: Opportunities (Continued) Advantages of digitalisation of the process - Reduced TAT (possibility of instant issuance) - Reduce cost of printing - Reduce need of resources involved in manual processing - Hassle free buying process for customers - Reduce mis-selling - Better persistency - Increase effectiveness and efficiency of sales process www.actuariesindia.org 5

Digital Sales: Challenges and Possible Solutions Digitally assisted sales on tablets Meeting today s customer s expectations Digital Sales: Challenges Possible Solutions Rapid issuance of policy using tele-underwriting Increase efficiency of sales process - Early Involvement with distributors Smooth shift towards digital sales Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time Adoption of new technology by Distributors - E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Updating IT systems a painful process - Invest to hire IT experts Digital application process Increase transparency as status of the proposal completely trackable - Arrange training to the existing staff members Easier performance appraisal of the process and bottlenecks through real time information High initial as well as upgradation cost of technology and digital sales channels development - Some industry level tools as all have similar requirements Develop in-house IT and digital distribution management team Detailed cost and benefit analysis - - www.actuariesindia.org 6

Digital Sales: Challenges and Possible Solutions (Continued) Digitally assisted sales on tablets Meeting today s customer s expectations Digital Sales: Challenges Possible Solutions Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Lack of infrastructure or less educated - Existing manual sales for rural areas Offline completion of the process and submission Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time customer base in rural areas - E-proposal forms and documents submission - Reduced cost of printing and resources involved in after getting the internet connection manual processing Non- standardisation of Product/ Proposal forms etc. leading customization of applications on regular basis - Understand changing customer s needs continuously Digital application process Increase transparency as status of the proposal completely trackable - Work in harmony with sales, underwriting and IT teams - Keep an eye on competitors action Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling www.actuariesindia.org 7

Digital Servicing: Opportunities Digitally assisted sales on tablets Meeting today s customer s expectations Insurance Servicing Areas Digital Servicing Examples - Opportunities for an Insurance Company Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time Premium payments services Mobile apps to provide - Easy premium payments E-proposal forms and documents submission - Reduced cost of printing and resources involved in - Premium reminders results in improve persistency manual processing Alterations and other after-sale services Digitally assisted - - - Saves call centre/ contact centre costs Save training and recruitment cost Relatively faster solution to customer grievances Increase transparency Improve customer s satisfaction and hence persistency High sales Digital application process Increase transparency as status of the proposal completely trackable customer-support services; Online messenger to solve customer s grievances etc - Easier performance appraisal of the process and bottlenecks through real time information - - Reduced Fraud and mis-selling More focused marketing strategies and better persistency Continuous engagement with customers Digital feedback mechanism (E-Surveys to customers) - - Help in understanding customer s needs Encouraging development of innovative and new product designs Better competitive position in the market - www.actuariesindia.org 8

Digital Servicing: Opportunities (Continued) Digitally assisted sales on tablets Meeting today s customer s expectations Insurance Servicing Areas Digital Servicing Examples - Opportunities for an Insurance Company Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time Claims management Digital and integrated IT systems for claims detection, reporting and settlement - Reduce fraudulent claims E-proposal forms and documents submission - Reduced cost of printing and resources involved in - Reduce cost of claims management - Relatively quicker settlement of claims - Increase efficiency and effectiveness of claims processing manual processing Digital application process Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Policy admin system Automated and well designed policy admin system - Helps to automatically update the policy information Easy accessibility to the information in future Improve Turn Around Time to answer customer s queries Well maintained Policy level data Improve efficiency and transparency Reduced Fraud and mis-selling - - More focused marketing strategies and better persistency - - www.actuariesindia.org 9

Digital Servicing: Challenges and Possible Solutions Digitally assisted sales on tablets Meeting today s customer s expectations Digital Servicing: Challenges Possible Solutions Rapid issuance of policy using tele-underwriting Increase efficiency of sales process - Early Involvement with IT experts Digitisation of servicing as a perceived threat Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time - Detailed analysis of cost and benefit and impact on business - Arrange trainings and seminars E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Piecemeal approach - as it takes time to move from non-digitalised to digitalised environment - - Do detailed research before implementation Ensure smooth and step-by-step transition Digital application process Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Risks due to developing regulations in the Indian insurance industry - - - Ensure the sales and other related team are updated Keep continuous eye on regulation Ensure timely implementation of changes in regulation Do research on likely impact of changes Reduced Fraud and mis-selling - www.actuariesindia.org 10

Digital Servicing: Challenges and Possible Solutions (Continued) Digitally assisted sales on tablets Meeting today s customer s expectations Digital Servicing: Challenges Possible Solutions Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Challenges of a heterogeneous IT landscape - Build a central repository for all customer data Develop a model for improved and increased consumer interaction across multiple channels Build strong data analytics capacity Ensure flexibility and speed in both front- and back-office systems Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time - E-proposal forms and documents submission - Reduced cost of printing and resources involved in - - manual processing Digital application process Increase transparency as status of the proposal completely trackable Cyber risk and data security risk - Invest in data protection software e.g. high quality anti-virus Build a team with software skills experts o support data security Make strict compliance rules within organisation Arrange internal trainings on data security and its importance Easier performance appraisal of the process and bottlenecks through real time information - Reduced Fraud and mis-selling - - More focused marketing strategies and better persistency Organisation specific challenges: Large companies - Difficulties due to lack of flexibility Small companies - Difficulties due to disproportionate investment - - Large companies use their surplus funds Smaller companies use their agility www.actuariesindia.org 11

Standards/Professional and Ethical Requirements Digitally assisted sales on tablets Meeting today s customer s expectations Area/Regulations Points of Interest Rapid issuance of policy using tele-underwriting Increase efficiency of sales process Data Protection Requirements - OECD, EU and APEC Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time - The Eight Principles E-proposal forms and documents submission - Reduced cost of printing and resources involved in Is any Advice being given? - - - Material Impact from Consumer s perspective Requirement assessment Detailed log of circumstances manual processing Digital application process Increase transparency as status of the proposal completely trackable IRDAI (Expenses of Management of Insurers transacting life insurance) - - - Limits on total expenditure classified as expenses of management. Well-documented policy for expense allocation Auditing requirements Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling IRDAI (Insurance Services by Common Service Centres) Regulations - - What is CSC? Requirements related to CSC-SPV and RAP IRDAI (Web Aggregators) Regulations - - - Requirements related to registration and operations Practice conducts Maintenance of data and data privacy www.actuariesindia.org 12

Standards/Professional and Ethical Requirements (Continued) Digitally assisted sales on tablets Meeting today s customer s expectations Area/Regulations Points of Interest Rapid issuance of policy using tele-underwriting Increase efficiency of sales process IRDAI (Insurance e-commerce) Regulations - Requirements related to registration and operations Online sales of products (Accept/Reject) Fast processing of the product and reduce selling time - Safety of data - Bridging gap between traditional methods and the new technology E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing IRDAI (Revised Guidelines on Insurance Repositories and electronic issuance of Insurance Policies) - - Insurance Repository Insurance Transaction Exchange (iTrex) Digital application process Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling www.actuariesindia.org 13

Way Forward Data Security Robo Advisors Machine learning Wearable Technology www.actuariesindia.org 14

Any Questions? QnA Quiz Time www.actuariesindia.org 15