We all know that the BFSI sector overall is among the early adopters of IT,
but there's enough action in the insurance sector (the "I" of BFSI) alone to
merit analysis. All this was evident from various entries from insurance sector
in Best IT Implementation Awards 2010. Before we drill any deeper, let's learn a
few facts about the insurance sector in India. Starting from 18th century, the
insurance sector in India has completed a full circle from liberalized setup to
nationalization and then back to liberalization. India being the second most
populated country in the world, with 70 percent population in rural parts, there
is huge untapped marked for both life insurance and general insurance. With the
Government's liberalization of this sector, there is huge opportunity for both
private and public players. In fact it is predicted that life insurance sector
in India would grow at 30 to 34% annually from 2008 to 2011. Currently India is
the fifth largest insurance market in world.
There are two important aspects to keep in mind when talking about life and
general insurance. While general insurance is done for a short period of time,
life insurance is done for longer period. It's important to realize this because
there's a greater need to focus on customer retention in general insurance. In
general, every insurance company has a core application that is used for
generating insurance policies (like CMC's Life/ASIA). Now, the processes
revolving around this core system need to be automated to reduce time taken for
policy processing, which in turn directly affects the company's business.
Normally insurance companies have a base of agents who pitch insurance products
to customers. Once a customer agrees for a product, all the customer's documents
are sent to the local office where a background check is done, and a policy is
issued if the customer is found eligible. There are a lot of sub-processes in
this process. Therefore, the more automation is done in this system, the better
for the insurance company. Isurance companies use specialized workflow software
like Savvion, and instead of moving physical documents, their digital scans are
taken for quick processing and transfer, etc.
History of insurance sector in India
Life 1818: Establishment of Oriental Insurance 1912: The Indian Life Assurance Companies Act 1928: The Indian Insurance Companies Act enacted 1938: Earlier legislation consolidated and 1956: 245 Indian and foreign insurers and General Insurance 1850: Triton Insurance Company Ltd. was 1907: The Indian Mercantile Insurance Ltd. set 41957: General Insurance Council, a wing of the 41968: The Insurance Act amended to regulate 41972: The General Insurance Business 4107 insurers amalgamated and grouped into four |
Graph showing implementation trends in insurance vertical, one can clearly see spike in BPM&A and Web based solutions |
Implementation Trends
From all the project nominations we received from the insurance sector,
majority of them are either business process automation or web-based solutions.
A lot of insurance companies are automating processes using their workflows that
automatically assign work and generate alerts if required. This data not only
helps companies do more work, it also gives greater visibility to the management
about how much is being done and by whom. Now if a customer care representative
receives a call from a customer complaining about delay in policy receipt, he
can immediately check out in the workflow who was working on the concerned
policy and its status. So, a complete process automation reduces turnaround time
for customer queries and cuts down chances of error, especially the duplication
of customers, which is one of the biggest concerns for any insurance company.
The other clear trend is in selling policies quickly. Most insurance companies
including those in public sector are selling their products online. This step
clearly is to enhance penetration into the market and give customers easy to
choose options if they're interested. So besides offering an interface to update
customers about the latest policies, these sites also provide a channel for
purchasing policies. Simple online tools built on these portals also give
customers options to explore ideal insurance premiums, and also help them
compare different products. So, we can say, insurance companies have achieved
differnet levels of automation. Those who've already established online
presence, are now proceeding further and plugging innovative components into the
same. For instance, Kotak Life Insurance has created an online application for
its agents, whereby different incentive schemes can be given based on an agent's
performance. On the other hand, agents can also check their status to know how
much they have achieved. All this brings transparency in incentivizing agents
and also gives the management a clear view of the agent's performance. Insurance
companies have a pretty heavy back-end infrastructure. So, a lot of
consolidation of this IT infrastructure is also happening to reduce the
complexity.
What according to you are some of the key challenges In the life insurance space, it is the retail segment R Raghavan General Insurance |
Among the many challenges are; managing product Going ahead we first want to sustain it for long Parvinder Singh, Corporate VP & Head - IT |
Tech Used
When we analyzed the various technologies that were used by the insurance
sector this time, we found a balance between the usage of Microsoft's .NET
platform and Oracles's Java. While on the database side, there was again a
similar usage between Oracle and Microsoft's SQL server. Other than these
platforms for business process automation many insurance companies were
customizing Savvion BPM solution. Other major technologies used include
Documentum for document management and Tivoli Workload Scheduler for batch
processing. We already received couple of nominations in Best IT from this
sector who used standard SAP and Microsoft's Dynamic packages.
Online tools that help customer choose ideal insurance amount are common these days |
Future Outlook
Automation seems to be the key area in the insurance sector. In the future
also, we would see more processes being automated. Customer engagement via
online is also bound to increase as private companies are coming in this
business and established brands need to keep an edge over these new comers.
Other key future trends in this vertical include implementation of business
intelligence for up selling and cross selling of different products. Besides
these trends, insurance companies like other non IT companies are moving towards
SOA and Cloud based setups to focus on their core business instead of spending
time in managing IT.