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17 August, 2019 23:06 IST
Digitisation of insurance policies - scope and its future
Source: IRIS | 14 Oct, 2015, 12.16PM
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Digitisation, as we know, has brought a phenomenal change in the way enterprises around the world think and execute their business. It has bought transformation from the scratch in the processes not just in making policies, but also on the front of marketing and branding, selling products, improving relationships, not just with customers but also with fellow stakeholders, improving the business in terms of increasing sales, improving customer satisfaction by enhancing quality of the product and hence its utility as well, and in providing after-sales service to the customer.

Not even one industry is to be found today that remains untouched by the revolution digitisation has brought. The insurance industry in India has already been a dynamic one. It has been developing, transforming and flourishing ever since it has come into the existence. Then how would it not be affected by the ever-booming digital growth? If you think that digitization of insurance policies will just cut the cost of insurance companies which they incur on the paperwork involved in selling and servicing the policies, then you need to read ahead.

Digitization is much more, beyond converting paper into soft documents. It is about organizing the processes in the entire value chain. It is about finding instant results and getting connected with the customer in the most efficient way. It’s not just the customer who would be benefitted but the transformation will derive monetary value for the insurance companies in various ways and keep them one step ahead of the competition.

What's next?

Every insurer is aware now what digitization is all about. They know they need to change their ways of operating and providing service but from where to start, was a big challenge.

In the year 2014, KPMG International came to a conclusion through a research that insurers across the globe are facing certain challenges. These challenges are related with executing of their insurance business in line with digitization. Insurers know that a huge potential remains untapped if they do not transform their way of operating as per the new digital world. The revolution has made customers s
marter and they expect something beyond the conventional service and the way it is delivered. KPMG concluded that insurers are facing the following challenges:

> What does it mean to be digital when it comes to insurance?

> How to derive maximum value out of the data generated by the digital worl

> How to defeat and break in the challenges of complex web of legacy systems?

> How not to become vulnerable to the increased cyber security threats?

> How to attract and retain the staff needed to bring the change expected?

Besides the challenges on digitization front, insurance companies have to face their industry-respective issues as well. According to the reports of Newgen, a leading global provider of Business Process Management 
 (BPM), Enterprise Content management (ECM) & Customer Communication Management (CCM), the insurance industry has to pass through the challenges like:

> How to optimize operational expenses and reduce customer acquisition cost

> How to underwrite in a better way so as to increase profitability and reduce the number of claims

> How to increase customer retention and loyalty

> How to improve relationship with agents and other partners to increase market penetration

> How to handle documents for future use and minimize their loss 

> How to improve customer servicing till the end

> How to adapt to constantly changing regulatory norms

> How to manage frauds and grievances in an efficient manner

Interestingly, digitization of policies has the solution for each of the above-mentioned issues in a never-before-thought manner.

Scope of digitization

Digitization can assist insurance industry to grow on two bases.

Optimizing business value

Many of the insurers have been scanning paper documents and saving data for decades, still a large amount of paper flows in and out. There are various kinds of paper documents i.e. faxes, cards, envelopes, cheques etc. Insurers have captured them to deliver electronically. This has also helped tremendously in reaching out efficiently. If each one of them is digitally transformed at the initial 
 stage, it will optimize the business and customer experience by eliminating unnecessary delays in sales and service as well as in errors made during transcription and filling.

Digitization of policies is not just bringing efficiency in the processes but it is also making organizations more responsive and developing the environment for growth and consequently enabling them to deliver better and in a more profitable manner.

Enhancing customer experience

Policyholders are increasingly demanding electronic policies. This has also reduced the to and fro of documents. There were legal restrictions pertaining to signatures and then storing those documents as records. Digitization and customer input through electronic way has cleared these barriers. The only obstacle that comes up is through customer preference as some customers still want physical documents. However, the number of such customers continues to decrease.

Another way to enhance customer experience is through digitizing the unstructured information. While the scope of digitizing lies in the entire value chain, insurers are making sure that they digitize each touch point with the customer. Digitizing helps insurers to leverage maximum benefit from internet of things like social media and smart phones, which helps them t
o see a complete picture and improve the service at both- top and bottom lines.

Future of digitization in insurance industry

Digitization has of course brought changes in a big way until now. However, this is not the end. In fact, it is the beginning. Not even half of the transformation is realized if we actually gauge the potential of insurance industry due to digitisation and the internet of things. The future growth of the insurance industry through digitisation lies in three facets.

Electronic to be the way at origination

Capturing information in a digital way should be the focus from the very beginning, that is, when the brochures are sent out. The potential would be realized when insurer takes advantage of digitization from the front end of business processes, that is as early as possible. This will ensure grouping of documents and indexing them in a systematic way and key information would be extracted instantly. This will eliminate delay that generally is caused due to manual operations and business value would be achieved at a maximum level.

Creating e-delivery environment

Every touch point with customers should be digitized. Insurers with the vision to create an e-delivery environment will have to evaluate their existing system and tools through which they are connected to their customers. Various documents like policies, renewal letters and bills are churned out by the administration team. Besides
, there are documents relating to sales, underwriting, customer service etc. If all these documents are developed and delivered electronically, insurers can leverage the maximum out of their communication system and provide additional value to the customer.

Enhancing relationships

It is not just policyholders that insurers are looking to improve relationships with. Agents and distribution partners also hold an important place for insurers as they are the one who bring a substantial amount of business in some of the cases. From policyholders’ perspective, if the customer prefers, he would be able to communicate with the insurer only through the electronic way. That is, whether it is inbound communication or outbound communication, it would be conducted electronically.

From agents'/brokers’/distribution partners' perspective, agents and other partners will be able to create digital copies of documents on their end to communicate with the insurer. Sales and underwriting processes will take place by merely entering details via portal or any other digital platform. This would capture information digitally and data can be extracted and can be personalized for correspondence with prospective customers and existing customers.

(Contributed by Naval Goel, CEO & Founder,

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