It was hard to predict the extent of damage that the COVID-19 pandemic might cause to the whole world. As several economies across continents came spiraling down, various industries have been badly hit. Sectors such as healthcare, travel, hospitality, etc. have incurred huge losses. This has put a lot of pressure on the Insurance sector in terms of claims processing, operations, customer support, etc. To go one step deeper and get a sense of how Insurance and InsureTech industries are coping with this crisis, we interviewed Mr. KB Vijaya Srinivas — the insurance industry veteran and former Chairman cum Managing Director of United India Insurance Company Ltd.

Mr. KB Vijaya Srinivas is a renowned insurance industry expert with vast experience spanning around four decades. Mr. Srinivas retired after holding Joint Additional charge of United India Insurance Company Ltd. as Chairman cum Managing Director. He joined United India Insurance in 1981 as a direct recruit officer and has served in various metropolitan cities, in various capacities encompassing almost all the different aspects of the organization. 

Mr. Srinivas served National Insurance Company as a General Manager. He later became the Chief Marketing Officer and held charge of many other portfolios like foreign operations, crop insurance, rural insurance, publicity, CSR, estate, administration, to name some. 

He has been a recipient of awards on many occasions from the Insurance Institute of India for essays on various topics. Now, he is a freelance writer, trainer, consultant, and also director of MDIndia Networx and MDIndia TPA. 

Excerpt from the interview- 

Navigating the New Normal in Insurance

How is the Indian Insurance Industry addressing the impact of the COVID-19 pandemic? How are Insurers navigating the ‘new normal’?

Mr. Srinivas: Insurance follows the economy. If the economy goes up, insurance also does well and vice-versa. Due to the lockdowns, businesses across industries are not doing well. This has led to a decline in the demand for insurance. Due to a lack of adequate income, people are delaying buying insurance or being selective in their insurance requirements. 

However, on the brighter side, due to the pandemic, more people are looking towards buying health insurance. When one enters in one type of insurance, then there’s a tendency to explore other lines of insurance products as well.

There’s a possibility of introducing a new line of insurance such as Pandemic insurance. Pandemic insurance is available internationally but not in India. Following the recent example of Wimbledon, where they bought pandemic insurance in 2003 during the SARS outbreak, they now got a compensation close to 140 million euros due to this year’s cancellation of the event.

[Related: The Biggest Insurance Payouts in History]

In India, IRDAI and the General Insurance Council took some proactive steps. The General Insurance Council came out with some guidelines such as waving of the clause in Fire Insurance during the lockdown which states that if a factory is closed without notice for more than 30 days, the insurance cover will cease to exist. Spot Survey in accident policy has become lenient — such as survey through photos instead of in-person surveys at the accident spot is allowed. IRDAI has also relaxed the payment of premiums and claims processing of COVID cases within 2 hours. 

Processing of COVID-19 based claims

With the IRDAI placing special instructions for COVID-19 based claims, such as authorization of cashless requests within two hours, and processing of claims within shorter time frames — Insurers are trying to settle claims as quickly and without hassle as possible — Has this put undue burden on ‘claims processing systems’?

Mr. Srinivas: Health insurance incidentally constitutes a significant number of claims and amount of premiums in the insurance industry. Major portion of the claims process has already been digitized. This will make things faster especially for COVID patients. I believe that claims processing in the current times has not put a huge strain on health insurance. Certainly, due to lockdowns and remote working, things will be slightly delayed but once the lockdowns are lifted, they’ll be able to serve their customers better.

COVID-19: An impetus to going Digital?

Is the ongoing pandemic, going to be the impetus for insurance to move completely online (digital)?

Mr. Srinivas:  Definitely, this pandemic will give a special thrust to insurance towards going online. Moreover, customers will prefer online transactions rather than standing in line and submitting physical documents. IT and Telecommunication companies should come up with technologies that can make these digital processes seamless.

[Related: The role of AI in enhancing claims experience for Insurance customers]

Protecting the Demand side during the Lockdown

Given that physical selling (via agents) has been severely affected by lockdown restrictions and social distancing norms, we are starting to hear that the Insurance advisory is now turning to digital to stay in touch with their customers — What steps do Insurers need to take to build and protect the demand side?

Mr. Srinivas: For many years now, insurance has been a product that is sold and not voluntarily bought. There has certainly been a thrust to digital platforms for sales and marketing however, agents still contribute to a major chunk of the premiums. All companies have online agent portals through which they operate. 

A survey shows that around 75% of people still trust agents for buying a policy. They’ll be a dominating factor for many years to come. Collecting premiums and making payments have already been happening online, and it will accelerate in the future. Agents will also rely on online platforms for sales and marketing. Due to social distancing, in-person sales will drop down but agents will certainly protect their customer’s interests through other channels.

How can Insurers equip their agents to generate sales in this pandemic?

Mr. Srinivas: There’s a tremendous amount of work to be done in this area. Insurance agents are very diverse. Some are from rural areas with no knowledge about insurance and some are on the other end of the spectrum such as highly qualified Chartered Accountants. 

Today, a good number of agents still survive on the traditional line of insurances such as Motor or Health. First, insurance companies should educate their agents on the types of insurance available. Second, they should train their agents on how to sell the insurance products. Motor insurance is easy to sell as it is a standardized product but event cancellation insurance is hard to sell.

Insurance for Rural India

“Taking Insurance to Bharat” was a main theme entering into 2020. Going forward, what can Insurers do to reach Rural India?

Mr. Srinivas: In 1972, insurance was nationalized. Before which it was in the private sector and very urban-centered. The objective behind nationalizing the insurance sector was to take insurance to the deepest parts of India. There were so many districts where not a single person had insurance. So we had to open offices in these rural areas. It was a tough job but we opened offices in those districts. 

The second initiative was starting a single-person office to take insurance further into the deep pockets of rural India. In 2013-14, the government brought in new guidelines where offices were opened depending on the population in the area. Many less populated areas did not have offices. Offices were opened in those areas. 

Digitization has taken insurance one step further. New marketing channels have opened. In remote locations, along with agents, Point-of-Sales persons sell insurance. From 10th pass person to small shop owners, anyone can become a Point-of-Sales person. 

Schemes such as Pradhan Mantri Suraksha Bima Yojna which is an accident policy has more than 15 cr people under it. Ayushman Bharat covers around 10 cr. families (around 50 cr.) people across the country. Pradhan Mantri Jeevan Jyoti Yojna (a life insurance policy) and Pradhan Mantri Fasal Bima Yojna (crop insurance) have connected India to Bharat in a very big way. Perhaps it has not been projected in a constructive way however they have made significant progress. 

On-set of COVID-19, many states have said Ayushman Bharat which was previously limited to BPL strata (Below Poverty Line) is now providing coverage for the entire state. Things are happening silently but effectively.

Product Innovation

Before the ongoing crisis, the IRDAI had recently set up sandboxes for experimenting with new innovative motor and health products. What kind of new insurance products are being/need to be built during the Pandemic crisis?

Mr. Srinivas: Pandemic insurance is available internationally but not many have taken it. In India, this policy can be easily built and will have wider acceptance. For example, the Business Interruption policy states that claims can be filed for loss due to fire or breakdown of machinery ultimately leading to loss of revenue or profit. This policy was earlier called the Loss of Profit. Pandemics are not covered under this policy. 

There has been a lot of debate over this topic internationally as well whether claims should be processed or not. Time has come to develop a policy that includes business interruption due to pandemics causing loss of revenue. Limited travel due to the pandemic crisis has affected the various industries such as airline, shipping, hospitality, etc. There is no insurance cover for the losses incurred by these businesses. Spoilage of goods due to deterioration during the lockdowns, non-use of vehicle and machinery also cause a huge loss. It’s time to have policies or clauses in place for losses due to these reasons. 

Role of AI in Operational Continuity

Will AI have a role to play for Insurers trying to maintain operational continuity during this COVID-19 Pandemic? 

Mr. Srinivas: Most definitely. In 2015, during Pradhan Mantri Fasal Bima Yojna there was a challenge of handling huge volumes of data for which we had to make use of technology like satellite imagery and drones to assess the loss for claims processing. AI will have a larger role to play in insurance for its success. 

[Related: Embrace the New Normal | Business Continuity Solutions]

Closing Note

This exciting interaction gave a deep insight into the history of insurance in India and provided some useful insights on paving the way forward in the New Normal. Mr. KB Vijaya Srinivas also highlighted the importance of InsurTechs in the New normal and spoke about new insurance lines and policy coverages being introduced as a result of this pandemic.

AI is going to be essential for Insurers to gain that competitive edge in the post-pandemic world. Check out Hitee — an Insurance specific chatbot for driving customer engagement. For your specific requirements, please feel free to write to us at hello@mantralabsglobal.com. 

Podcasts in this series:

• KV Dipu: Protecting the Demand-side in the New Normal
• Deepak Singhvi: Covid-19 & the Disruption in Supply Chain Management
• Steve Tunstall: The Role of Insurance in Restoring SMEs
• Alex Jimenez: Now is the Time to Revise Digital Customer Experiences
• Andrew Warburton: Delivering value-added experiences in the New Normal