R.Uppily MBA.,M.Phil.,CAIIB,MBM,FIII, PGDGILP, - Research Scholar Deputy Vice President Indusind Bank Limited

Transcription

1 Digital Distribution Strategies for Life Insurance R.Uppily MBA.,M.Phil.,CAIIB,MBM,FIII, PGDGILP, - Research Scholar Deputy Vice President Indusind Bank Limited Abstract Themainobjectiveofthestudyis to analyze how digitalization can be used in insurance distribution channel.the theme based on which this article is conscripted is Insurance on a Click. There are five new approaches suggested, each one has a unique way of approaching the customer for insurance business, The five digital distribution startergies are a. Insurance Office on Tab b. Insurance on Mobile c. Any Time policy Kioks (ATP) d. Insurance on Online retail portal e. Insurance exchange Statistical informations clearly shows that technology will play a very vital role in the insurance distributon mechanism in the years to come KeyWords:Internet, GPRS, Distribution Introduction Indian Life Insurance industry has been a distributor driven industry. Life insurance Productsare predominantly sold vide Bancassurance channel or the individual / corporate broker channel. If we analyse there is a huge potential /market for selling insurance products. The below table shows details of uninsured persons, it is clearly evident that there is a huge market to tap. Source :Source National council of applied economic research

2 Insurance companies must start focusing on alternate channels to increase the sale of life insurance polices. With digitalization becoming a necessity factor, Insurance companies must focus on Digital distribution strategies. The below table shows the % of increase in internet users in 2014, It is clearly evident that India has grown by 14% (YOY). Source : internetlivestats.com People today are techno savvy and this is evident from their life style. Key elements to assess the technological changes are, a. Usage of internet b. Use of smart phones c. Use of tab d. Number of IRCTC bookings All the above aspects are in rapid increasing trend as far as India is concerned Life insurance Distribution A digital Way In this article, attempt is made to visualise and bring out 5 important technological tool that can be used for distribution of life insurance policies. Each concept mentioned below has unique approach. The unique theme behind all these approcahes are Insurance on a Click. Certain approaches can be used in Rural areas and certain in urban area. Detailed process of each and every approach are discussed below 96

3 Insurance on TAB Insurance on Tab is a Digital distribution strategy that can be used in the rural market. This would be a very cost effective strategy. There is no requirement of having office to distribute life insurance policy. This model can be worked out by appointing a direct sourcing executive or TAB can be provided to distributor also. The flow suggested is as follows Customer approaches the insurance executive or distributor in that area or vice versa Details of the customer is collected using application available in the TAB His need analysis and risk exposure are done and a policy is suggested to him If customer is interested, his KYC documents are scanned (by taking a photo vide TAB camera) and payment is initiated through the payment gateway Customer can make payment using his credit / debit card / Net banking options Data moves from TAB vide GPRS (Tab carries a GPRS enabled sim card for transferring data) to the insurance company server Documents, details and payment is scrutinized by underwriting team and OPS team and decision is conveyed to customer on whether he can be issued a policy / whether he need to go for medical check up or payment of extra premium is required / whether the proposal is rejected. Customer receives SMS confirmation at various stages to intimate the progress of the transaction Copies of the documents and neatly filled proposal form will be sent to the nearest processing office for record storage and audit purposes SWOT analysis 97

4 Process flow Diagram Insurance on Mobile Insurance on Mobile is a Digital distribution strategy that can be used in the urban market for a technology savvy customer and High Net worth Individuals. This would be a very effective to cut the distribution cost my moving closer to the customer. The flow suggested is as follows Customer downloads the life insurance application through Play store and installs it in his mobile Customer logs in and starts his need analysis and identifies his risk exposure and selects a suitable policy. He attaches his KYC documents by taking a photo vide TAB camera and payment is initiated through the payment gateway Customer can make payment using his credit / debit card / Net banking options Data moves from mobile application vide GPRS to the insurance company server Documents, details and payment is scrutinized by underwriting team and OPS team and decision is conveyed to customer on whether he can be issued a policy / whether he need to go for medical check up or payment of extra premium is required / whether the proposal is rejected. Customer receives SMS confirmation at various stages to intimate the progress of the transaction Copies of the documents and neatly filled proposal form will be sent to the nearest processing office for record storage and audit purposes Customer can use this mobile application for other facilities like cancellation, premium payment, updation of contact details etc. 98

5 SWOT analysis Any Time policy Kiosks Insurance on Kiosk can become one of the important digital distribution channel if used properly. This strategy can be used in the Rural market and Urban market. This would be a very cost effective strategy. There is no requirement of having office to distribute life insurance policy. This model 99

6 would depend on the place at which the Kiosk is going to be installed. The flow suggested is as follows Customer goes to the Kiosk and completes his need analysis and risk exposure form and a suitable policy is suggested to him If customer is interested, his KYC documents are uploaded into the kiosk Payment can be initiated through the payment gateway or in offline mode If Customer selects payment gateway he can make payment using his credit / debit card / Net banking options If customer selects offline mode then he can enter the mode, take a printout of the proposal details filled in the kiosk He must approach the bank specified (Insurance company can have a CMS account tie up with a bank) and deposit cash by submitting the proposal details printed at the kiosk Since it is core banking funds would be available for insurance company utilization and the payment details would travel to Insurance company server Data moves from Kiosk to insurance server vide GPRS / Lease line Documents, details and payment is scrutinized by underwriting team and OPS team and decision is conveyed to customer on whether he can be issued a policy / whether he need to go for medical check up or payment of extra premium is required / whether the proposal is rejected. Customer receives SMS confirmation at various stages to intimate the progress of the transaction Copies of the proposal form will be sent to the nearest processing office for record storage and audit purposes through post by the customer This model requires customer education and publicity. Other than applying for new policy other features like payment of premium, service requests can be handled vide kiosks. Rather than creating separate kiosks, Co branding can be done with Bank ATM / Non Banks ATM / Payment system for the above mentioned activities. SWOT analysis 100

7 Insurance on Online Retail Portal Insurance on Online Retail portal is a Digital distribution strategy that can be used in the Urban market. The target audience would be the online buyers from Flipkart, Snapdeal, Amazon and other popular retail merchandizing websites. Life Insurance company can make tie up with them for distributing their products. With online purchase from these websites gaining momentum day by day there are higher chances of people buying insurance through these websites. The flow suggested is as follows Customer visits sites like Flipkart.com,snapdeal.com or amazon.com for doing an online purchase. While completing their purchase a pop up will emerge saying Do you require Life insurance if the customer says Yes, then he will be redirected to the proposal form after capturing the information relating to risk and his need. Based on the need and risk suitable policy details would get displayed and the customer can select a scheme Customer can attach his KYC documents and proceed to payment gateway for making payment Customer can make payment using his credit / debit card / Net banking options Data moves from vendor site to the insurance company server online Documents, details and payment is scrutinized by underwriting team and OPS team and decision is conveyed to customer on whether he can be issued a policy / whether he need to 101

8 go for medical check up or payment of extra premium is required / whether the proposal is rejected. Customer receives SMS confirmation at various stages to intimate the progress of the transaction Copies of the documents and neatly filled proposal form will be collected by the vendor when he delivers the goods to the customer house and hand over the same to insurance company for records SWOT analysis Insurance Exchange Insurance exchange as a concept has to emerge soon or later. IRDA has to create an exchange for insurance products similar to the stock exchange. This is need of the hour as customers are finding 102

9 difficulty in tracking insurance policy taken from various insurers. The idea behind this exchange would be to a. Provide login to broker or customers where they can purchase life insurance policies of all insurance companies. (Broker can buy on behalf of the customer) b. Customer can view all his previous policies under one roof c. He can make premium payment for all the Life insurance policies irrespective of the company in which they have taken the policy d. Customer can link all his policies which he has taken earlier by providing a unique ID say Pan number This initiative can help Insurance industry to a great extent. It would help in improving the customer service Conclusion The insurance sector as such is undergoing a transformation which would finally lead to significant change in How customer buy insurance products. Insurance company must focus on alternate channels to reach customer at their doorstep. Growth in electronic channels would not only move the insurance company closer to the customer, it would help in providing quick and efficient service to the customer. Digital distribution would be the channel to concentrate as it would gain momentum in country like India within next 3 to 4 years. Reference Dr. Shashidharan K. Kutty, (2008), Managing Life Insurance, Prentice Hall ofindia Private Limited, New Delhi. Dr. Shashidharan K. Kutty, Indian Life insurance The Millennial decade.insurance institute of India Journal July Dec