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InsurTalks Podcast with KB Srinivas: The Road to Recovery for Indian Insurance Beyond Covid-19

8 minutes, 40 seconds read

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:

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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.

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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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