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Corona Kavach: Implications & Opportunities for Insurers in India

5 minutes, 23 seconds read

In this unprecedented time, the announcement of the Covid Standard Health Policy by IRDAI has unlocked dual benefits. One, people who don’t have comprehensive health cover, will now have insurance covered against Covid. Two, most of the processes including distribution and claims have a digital process, which is simplifying operations for Insurers.

All health and life Insurers will start offering Corona Kavach and Corona Rakshak policies by July 10, 2020. The premiums for both the products are standard PAN India.

What is Corona Kavach policy?

Corona Kavach is a standard indemnity-based policy that will cover the cost of treatment of any comorbid conditions, including pre-existing conditions, along with the treatment for the coronavirus infection.

What is Corona Rakshak policy?

Corona Rakshak is a standard benefit-based policy, which hands out a pre-agreed lump-sum upon diagnosis. This can be used as a supplement for additional funds during a pre-insured health incident.

The main aim of these policies is to help people with better health insurance coverage in these unprecedented times of pandemic. To simplify operations, most aspects of these policies will be handled digitally. “Trusting digital” has been a serious concern for customers and a major roadblock in the Insurers’ digital transformation strategy. But this move by the Government is opening new avenues for the adoption of digital among Insurance customers.

Let’s discuss the business implications and new opportunities with the introduction of Corona Kavach and Corona Rakshak policies.

New Challenges with the Introduction of “Corona Kavach”

While customer-centricity is the main theme of announcing standard Covid policies, there lies some inherent challenges to implementation.

For instance, claims management will be an important aspect of these policies, especially when Insurers can foresee the voluminous requests. In general, nearly 80% of claims filed are manually reviewed by adjusters.

Normally, health insurance claims settlement is a document-heavy process where the claimant has to submit a number of documents like hospital discharge certificate, medical bills, prescriptions and pharmacy cash memos, FIR (for accident cases), to name some. There isn’t a standard format for all of these documents and Insurers have to manually review each of them which is time-consuming and delays the settlement process.

Insurers can leverage technologies like ICR (Intelligent Character Recognition) with handwritten document processing capabilities to improve speed & accuracy and reduce manual document processing efforts.

For example, Mantra Labs’ ICR can extract data from a 5-page handwritten Insurance form in under 30 seconds with over 90% character level accuracy in interpreting data. 

Related: Pushing the Envelope on ICR Accuracy in Hand-written Forms

However, the influx in the number of claims applications will require a robust system infrastructure that can handle thousands of claims without lag.

Another foreseen problem will be handling the sudden increase in customer queries. Normally, Insurers rely on call-centers for handling customer queries. However, in this difficult time, when most of the staff is working remotely, it is difficult for Insurers to coordinate and scale. For the success of this scheme, Insurers need to focus on reducing the pressure on customer support centers through automation solutions like chatbots. Insurance chatbots have been found to reduce human intervention for routine queries by 10x.

New Opportunities for Insurers amidst Covid-19

Covid-19 has accelerated the adoption of digital as well as increased affinity towards buying insurance. According to a survey conducted by Swiss Re, Indian consumers are seeking insurance driven by financial and mental health concerns.

ChinaIndiaJapanMarket Avg*
Searched for new policies73%62%13%28%
Bought a new policy56%28%7%15%
Made a claim
(those who hold a policy)
*Singapore, Hong Kong, Australia

1. Mark Presence in Digital Insurance Marketplaces & Expand Portfolio

These policies aim to cater to people who don’t have a holistic health insurance policy. Given the continuously increasing cases of Covid and reliance on private medical facilities and the undetermined cost of treatment, people are inclined towards buying insurance policies to cover basic treatment costs.

Apart from benefiting individuals and health insurers, this move by the Government can also improve the market for life and non-life Insurers. This is also a great opportunity for Insurers to reach out to prospects in rural areas.

IRDAI has approved all possible distribution channels (physical and digital) including Micro Insurance Agents, Point of sale persons and Common Public Service Centers.

With no restriction on the distribution channels, Insurers have an opportunity to experiment online selling on existing popular marketplaces like PolicyBazaar, Gramcover, BankBazaar and PayTM.

2. Opportunity to Up-sell/cross-sell

“Insurance is not bought but sold” is the bitter fact. Making customers invest in a product that they might need in the future is somewhat hard to sell.

The Covid situation has made people aware of the benefits of insurance in mitigating their financial burden. With more customers, there’s a better chance to up-sell and cross-sell insurance products.

3. Awareness for Micro Insurance Products in India

Indians are accustomed to comprehensive insurance policies and prefer buying policies through insurance agents. Accelerating the change in buyer preferences, Covid Kavach opens opportunities for micro and usage-based insurance products.

Instead of comprehensive insurance policies, Microinsurance products are cost-effective and address the immediate need of customers. Small investments are comparatively easier and this opens the market for microinsurance products in the low and medium-income groups.

4. Digital Policy Documents

Earlier, as per IRDAI norms, Insurers were required to provide policy documents to customers in a physical form.

However, to reduce operational costs, IRDAI has allowed Insurers to issue the policy contract of Corona Kavach Policy in electronic/digital format through email/web link. This will not only help Insurers reduce the cost of operations but also encourage customers to trust duly signed digital documents.

Leveraging the Opportunity

When it comes to scalability, digital is the solution. Although every Insurer has a digital presence, not everyone has deployed automation for their core operations.

For example, most of the queries during this time will be regarding policy coverage, tenure, claims, etc. Self-service chatbots can help customers with immediate response and at the same time automate the claims filing process, policy renewal, raise tickets, and more. Moreover, NLP-based vernacular chatbots can converse with people in their local regional languages.

Related: Mantra Labs launches Multilingual AI chatbot with Video Calling for SMEs

The next step in the preparation for a digital future involves leveraging technologies like Artificial Intelligence. AI can help Insures to precisely understand different personas, policy preferences and customer journeys. It can help Insurance adjusters, claims managers, and other stakeholders with the knowledge about claimants and their current situation, hence delivering a more empathetic experience.

Related: How can Artificial Intelligence settle Insurance Claims in five minutes?

We build AI-First Solutions for the new age Digital Insurer across the entire Insurance Lifecycle. Please feel free to reach out to us for your specific requirements at hello@mantralabsglobal.com.


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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

Chart, line chart

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

Chart, sunburst chart

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.


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