‘We are analog beings living in a digital world, facing a quantum future’ says Neil Turok, a renowned physicist from South Africa. Digital mediums have taken the world by storm in every way possible. More and more businesses are switching from analogue to digital to cope up with ever transitioning communication and influencing channels. Be it any niche – finance, marketing or insurance, digital media has become a vital component in the functioning of an organization or to be precise – the entire industry. After all, you don’t compete with products alone anymore, but rather with digital ideation. Nowadays, a brand’s image in the industry depends upon digitization to quite an extent.
What is digitization?
Well, it’s nothing but the process of changing information into the digital format. With each passing year, digitization is leaving its imprint on every sector including the insurance industry. Since 2005, when people first started searching for digital insurance plans, digitization has consistently increased in strength in influencing the masses. Fast forward a decade and you can now buy digital policies online within a few minutes. You can find insurers everywhere, selling digital insurance online using social media prowess and achieving resounding success.
The digital insurance market in the country is witnessing a compound annual growth rate of 25.36%. Digital media is undoubtedly playing a huge part in this spectacular growth by becoming the right market platform to drive the change and set the blueprint for digital insurance plans. Insurance companies embrace the digitization process with regards to proper digital norms as Insurance Regulatory and Development Authority (IRDA) spearheads this empowering movement.
What do the people gain from going digital for life insurance policies?
Insurance policies like any other investments are prone to security risks which causes inconvenience to the insurance buyers. Apart from security there are many other issues which will be resolved due to Digitization of insurance policies. What is the solution? How is it related to Digitization?
- Document portability: One of the major solutions offered by Digitization is; the insured will get an e-copy of the documents related to the digital policies in question. Managing Documents has always been a hassle for policy holders and majority of them end up losing premium receipts, policy cards and other related documents. Though these documents may seem insignificant but if you plan on availing tax deduction they can be a golden egg, but since the insurance period ranges for more than 5 years, losing documents during such a long period of time may seem logical but is simply unacceptable. Here is where digital insurance comes into play. Since, e-copies are stored in cloud-based data-servers; they can be preserved and acquired without putting much effort. The documents are easily available on any digital device capable of reading and displaying the data.
- Better customer service: When people visit the insurance providers for any clarification or data related queries, they are given a date and are told to come on that day. When you ask them for a reason for this delay, the simply tell you, “Sir, we will have to contact with the back-office team and once they find your file, we will give you a call.” This solution may not be suitable for the people who need the documents immediately to file a return or to claim the insurance money. With a digitized management not only, the conservation of the data would be easy but providing the customers with the necessary information will be at the push of a button. With a proper formulated digitization, the process handling consumer queries like generating premium calendars, claims and premium records, online payment of premiums and tracking consumer request will gain a faster pace leading to more satisfied customers.
- No need to provide KYC for a new policy: When applying for any other type of insurance from the same company, the consumers are often asked for their KYC documents as identity proof. Here, Digitalization might be one of the most convenient solutions for consumers. With their KYC data stored in the company’s repository, all the company must do is overwrite the (Digital) application form with the data cached in their repository.
- Monetary Efficiency: Not only do the providers who profit from digital insurance, but also the buyers experience ease in transaction. Digital insurance can help the term insurance buyers save money on premiums with a 35-40% difference margin. How? When people buy term insurance, they usually buy it from an agent or a broker who adds brokerage or commission which is 30% of the insurance amount on the term insurance premiums. However, when you purchase a term insurance online, you get insurance without any brokerage or commission added to the premium which saves you a margin of 30% easily.
Future of digital insurance
Insurance, in most developed countries, is mandatory for every individual. Whereas, in India, certain policies like vehicle insurance, property insurance and Mediclaim are availed only by people in urban areas. The insurance industry however, is booming with success despite the facts. According to the reports from the BCG by the year 2020, a growth of 2,000 percent is predicted from its current state, while the turnover from the same ranging up to RS. 15,000 crore.
In a consumer trend analysis conducted by Google, there has been a significant 450 percent growth of searches related to life insurance and health insurance since 2008. On the other hand, the insurance industry itself has witnessed a 600 percent growth in the past five years. Experts believe, in the coming 2-3 years, 75 percent of insurance policy purchase all over the world will be done through digital channels.
Digitization might be an elaborated process as most of the companies have employees who are not accustomed to the new digital procedures. On the other hand, it might need to be regulated with proper guidelines and rules to protect both the insurer and the insured against data misuse. One can say, Digitization will give a fair experience to each policy holder.