Technological advancements in India have created enormous opportunities for insurers to modernize and create new insurance products and services, and revamp their business models. Companies have started to implement technological developments in their business operations, making it easier for customers to be integrated with their insurance provider. Moreover, we have stepped in to an era where online purchase and selection of insurance policies have become much easier.
As per a recent report by Statista, the total value of gross premiums written by motor insurance companies in India alone is expected to reach approximately USD 17.4 billion by 2025. With these stats in place, it’s not difficult to understand that the Indian motor insurance industry is growing at a rapid speed, and in order to match this pace, it is important to implement innovative tech trends in business operations. One thing that motor insurance companies must embrace is that offering personalized services and ensuring digital touch-points has become a norm now.
Usage-based Car Insurance to Take Centre Stage
By 2020, insurance companies would have adopted a concept known as the ‘Usage Base Insurance’ or UBI, where IoT technology (internet of things) would be integrated to monitor the risk associated with a driver. It would monitor the driving patterns of the driver in order to determine the premium amount they are liable to pay. This will be done by plugging in an OBD Device, interlinked to an IoT cellular in the car that would detect the driving patterns and then send the data to the insurance provider. The adoption of telematics in the car insurance segment would levy a fair price on the customer as it would increase affordability for low risk drivers and encourage safe driving practices. It would help insurers to accurately estimate accident damages and reduce fraud by enabling them to analyze the driving data.
However, as it is costly and resource intensive, it may take a while for insurance companies to adopt a UBI Model using telematics. Moreover, regulatory bodies have to create a strong foundation enabling the adoption of new innovations. Multi industry collaboration is also required for such an innovation to become lucrative.
Apps and More
Insurance companies are always looking for a competitive advantage that would appeal to a generation that is ever demanding. This is the generation that wants transactions done digitally and instantly. Innovation in insurance has always been welcomed and one such example of technological advancement helping make quicker processing is the Self-Claim Video process that makes the processing of claims faster. IoT is another aspect that has drastically impacted the motor insurance market in India. The technology is being used widely for offering seamless connectivity and built-in safety technology in cars. Such technological advancements in the insure tech arena is surely set to transform motor insurance in India.
Blockchain in Motor Insurance
Many new-age motor insurance service providers have started integrating blockchain technology into the existing workflows. Blockchain plays a key role in transferring smart contracts and KYC (know-your-customer) data across various channels, making it easier for motor insurance companies to alleviate issues regarding the time it takes to verify the motor policies.
Many companies are even looking to integrate car security with blockchain technology. This would help in addressing issues related to a single point of failure. The technology will further help in building a system where data can be securely exchanged between vehicles and software vendors while ensuring data integrity.
In the past, it took a lot of time for insurance underwriters and claim adjusters to assess how much a policy would cost or how much claim is to be made. It also involved a lot of documentation to go through before the policy was issued, but today with the help of advancements in the field of analytics, the processing has been made more convenient. Insurance companies are now also able to provide more accurate underwriting by being able to tap into online databases and verify information such as car ownership records to reduce cases of fraudulent activity by claimants.
Starting from digital platforms that help an individual to compare and buy policies to the launch of an application that helps in making the claims process faster, and now to laying the foundation of bringing in telematics into the car insurance industry, we can clearly determine how immense technological advancement will come into the motor insurance industry. The insurance industry is set to move towards a more digitalized attitude to reach out to their customers and to make their own operative more plausible.
Tarun Mathur is the Chief Business Officer, General Insurance, Policybazaar.com
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