Howz IT Improving the Business of Insurance

PCQ Bureau
New Update

Opening up of the Indian insurance sector to private players has led to a

flurry of activity. There's cut-throat competition for one, with companies

coming out with innovative ways of reaching out to customers. As most private

players have foreign partners, they bring in new processes, practices, and a

level of IT usage that till date was unheard of in this segment. This spells

good news for all stakeholders in the insurance sector, be it customers,

employees of insurance companies, insurance agents, etc. Many insurance

companies for instance, allow customers to literally design their own policies

based on their specific needs. Further, they can top it up with additional

riders, or completely switch to a new plan whenever they want, just as one would

do in the mobile phone world! They can track their policies online, have

premiums automatically deducted from their bank accounts so they never have to

worry about missing a premium due date again, etc. All this is a welcome change

because one could have never imagined doing all this in past.


But this is only the beginning. There's a lot more that needs to be done in

this segment, and IT will play a significant role in shaping its future.

Thankfully, insurance companies have woken up to the fact and have started

leveraging IT heavily for the same. We've seen insurance companies consolidate

their IT infrastructures into data centers, connect their branch offices over

high-speed MPLS VPN links, and improve their internal efficiencies by deploying

workflow automation solutions. Besides the basic IT infrastructure, we've also

seen insurance companies put IT to some innovative use as well. HDFC Standard

Life insurance for instance, gives its employees two monitors to work on. One is

kept in portrait mode to make it easy for employees to read scanned customer

documents. The other one is kept in normal landscape mode for regular work.

A few years ago, another insurance company, ICICI Lombard had done GIS

mapping of areas that it covered under insurance to evaluate risk management. It

could pull out a lot of interesting data from this map, such as the amount of

traffic in that area, the number of accidents that occur, whether an area is

prone to water logging during rains, etc. All this helps the company calculate

the risk associated with the area so that the right insurance premium could be

calculated. Similarly, insurance companies are putting IT to a lot of other

innovative uses, and with more than 80% of the Indian population still

uninsured, there's plenty of scope for doing more. The list of things that can

be done is endless. All this of course, means more workload for the IT heads of

insurance companies. They need to constantly stay in tune with the changes

taking place in the world outside, so that they can increase the profitability

for their company. How do they look at all the challenges and excitement and

what kind of solutions have they implemented? Let's discuss all this in detail.

Improving customer experience

Anybody managing IT in an insurance company needs to understand that there

are two aspects that IT must handle when it comes to an insurance customer.

First is to leverage IT for enhancing customer experience, and second is to help

the insurance company generate more business from existing as well as new

customers. Both are equally important for an insurance company. The reasons for

this are simple. When an insurance company acquires a new customer, it acquires

him/her for life. Therefore, it must ensure that the customer's experience

throughout this long journey is as comfortable and hasslefree as possible. While

IT can definintely help in managing this experience, there are several

challenges involved. One is the attrition rate of the IT team itself. While the

customer will remain with the company for 15-20 years, the IT staff won't The

insurance company would have changed its IT staff many times over this period.

The company must ensure that all its IT proceses are well in place and



The technologies for enhancing customer experience are not new and are in

fact, pretty well known. Web portals, online payment gateways, etc have become

common place. Every insurance company worth its name already offers all these

facilities. Most of them give their customers online accounts, just like a bank.

The trouble is that customers won't operate their insurance policy accounts as

frequently as they would operate their bank accounts. They would only operate

when there's a real need to do so, like when a policy needs to be tracked, or

there's a need to switch to a different fund, etc. But it doesn't have to be

that way. If the IT division can work out innovative options to drive more

traffic towards the insurance portal, then it could translate to more business

opportunities. There are many technologies available for the job. A good CRM

package clubbed with a BI tool for instance, can help understand the customer

profile better and customize offerings. These offers can be made available to

customers who access their online accounts. Customers who've invested in market

linked insurance plans can be sent SMS alerts on the status of their insurance

plans. Most insurance companies today require you to register online to get an

account. It might make more sense to give them an online account at the time of

issuing a policy.

Banks are already doing that today. Whenever a customer opens a bank account,

he/she gets login details to access the bank's facilities through various

channels, like ATM, Internet, mobile banking, etc. All these channels may not be

relevant for an insurance company, but there would be other options. Collection

of insurance premiums for instance can be automated. Some banks are already

doing it for EMI collection from rural customers. They hand out a mobile device

that can print out an EMI receipt and immediately update the records over a GSM

network. A similar system can be deployed for collecting insurance premiums as


Using IT to acquire new customers

Besides engaging existing customers, the other area where IT can play a major

role is in acquiring new customers. Selling an insurance policy to a customer is

not an easy job. Actually, it's never been easy, and yet, more than 80% of

India's population is still uninsured. That's a huge market remaining to be

tapped, and there are many ways in which IT can help. One way is to empower the

sales force with IT. Every insurance company needs a strong sales force to be

present in the market to get new customers.


A good enterprise mobility solution for this sales force can do wonders. How

quickly can one of your insurance agents access information about the latest

policies? Moreover, how well can the insurance company track the performance of

its sales force and agents? Can it for instance, quickly find out who's done how

many sales calls a day? Can it find out who's brought in the maximum business

and how? All this requires several things in place. One of course is a strong

MIS of customers and prospects. Second is a strong communictions setup, which

also connects to this MIS and other backend applications. Third are devices that

the sales force can use to access this MIS. The rest depends upon how you want

to use the setup. Can this setup be further integrated with your online portal

and IVRS system so that all requests that come in from customers over these

channels are automatically passed on to the sales team? This could help in lead

generation. Likewise, can it be integrated with the ERP or accounting system to

send out details of customers whose premiums have not yet come in? Can it be

linked to a BI system that can dig out cross-sell opportunities and transfer

them to the insurance company's contact center executives?

All this is possible, and companies are doing so in bits and pieces. For

instance, most private insurance companies have setup their own toll free

numbers, but there are others who haven't even done that, and are still

providing different numbers for different locations. Most insurance companies

allow their agents to access information on their web portals. But what some

have done additionally, is to provide them with a secure UID to access

information related to their customers' policies. Some companies have even gone

to the extent of providing PDAs and laptops with wireless cards to tech savvy

agents. This enhances the mobility of the agent as he can have unfrittered

access to company resources. However, due to cost constraints, these are still

not popular amongst the majority. In addition, companies also grant them access

to separate access numbers for anytime, anywhere access to information.

While all this is happening in parts, further down the line, companies will

need to integrate their communications channels if they want to reach out to

customers more effectively.


Workflow automation and improving policy issuance speed

Some insurance companies have integrated document imaging along with workflow

automation to ensure a paperless document management environment. Apart from

scanned images, e-mails, faxes and even conversations in call centers, those by

the sales force can also be stored as transcripts or audio/video records

attached to electronic documents. For security reasons, such documents need to

be stored and transmitted in encrypted form. As compared to traditional paper

based environments, paperless systems support varied operating systems and are

easy to deploy across branches. This is all the more useful nowadays as

companies have a large number of branch offices spread across different

locations. But electronic documentation means we need to have a secure way of

data archival. A time stamped audit trail would allow authorized users to view

past versions of electronic records.

 However, saving paper costs through electronic means should not mean

bypassing or modifying audit records. For safety, companies should maintain both

versions of documents--paper and electronic, within their business validity. By

collapsing data capturing templates and forms you can not only save costs but

also speed up policy management for easier review and analysis. By integrating

systems and business lines, and moving them into a central service that can be

shared across various departments, companies are able to increase information

processing speed and streamline retrieval and storage mechanism.


What good is a paperless office without efficient workflow automation in

place? To ensure this, information needs to be properly sorted and classified. A

meaningful grouping of data helps in generating meaningful reminders and

developing escalation rules that keep workflow archiving and retrieval processes

on path. Whatever system you use for Business Intelligence, it should be able to


ad-hoc queries based on various fields and adapt to your business processes.

But not the other way round. However, if the software requires you to change

your current reporting/business intelligence tools, or if it requires you to

change your current reporting/business intelligence source code or to pay for

expensive pre-configuration modifications then it's no good. The electronic

documents should be easily scalable within the organization so that there is

proper monitoring and timeliness attached to various processesINGENIUM, the core

policy administration system, is amongst the most popular insurance tools used

by companies in India. It requires a Windows 2003 Server and SQL Server 2000.

The software itself has a browser-based customer service interface that is

helpful in providing information to customers and distributors through portals.

Ensuring scalability across branches

With growing business needs, insurance companies need improved bandwidth over

their WAN links, greater amount of scalability, and with scattered IT skills,

they need to ensure a high-rate of mobility for their workforce. All this can be

ensured by moving from the legacy TDM-based network to an MPLS-based network.

Drawbacks of a point-to-point lease line connectivity across all locations

include fixed bandwidth, lack of scalability, network complexity, too many

active components to terminate the WAN link and high running costs with low

bandwidth. The migration to MPLS technology provides benefits such as bandwidth

scalability, cost saving, any-to-any communication, QoS and traffic isolation

amongst multiple clients. The companies could also reduce the lead time

interconnectivity of new offices to the main data center. MPLS allows a service

provider to have complete control over parameters that are critical to offering

its customers service guarantees with regard to bandwidth throughputs, latencies

and availability. One benefit of using MPLS based VPNs is that they reduce

complexity of a customer's network. So, instead of setting up and managing

individual point-to-point circuits between each office using a pair of leased

lines, MPLS-VPN customers need to provide only one connection from their office

router to a service provider's edge router.

Innovation in non-life insurance

An insurance company plays on public fear related to loss of life, motor

vehicles; accidents; fire; floods; earthquakes and so on to earn money. So,

containing and calculating the risk precisely is a critical requirement. What

are the unique ways in which companies calculate the risk associated with the

insured person/object? Underwriting of policies today is far more imaginative

than it used to be in the past. Typically, for motor vehicles risk was

calculated on the basis of the age and condition of the vehicle. But companies

today take into consideration other parameters such as driver's health,

geographical location of the area in which the vehicle is most likely to be

driven, theft record of the locality in which the owner resides or works, the

routes on which he drives and so on. Similarly, for life insurance, underwriters

take the smoking/drinking habits of an individual, his lifestyle, the area where

he resides or works, the vehicle he uses for traveling, whether he is a frequent

traveler or not, the stress his profession puts on his health, etc. If we look

at the above situations carefully, we find that geographical location is one

common parameter. These days many insurance companies are using Geographical

Information System (GIS)-based risk management systems. These systems work by

identifying each point on Earth as a latitude and longitude pair. This pair can

be linked to other geographic parameters such as demographic data, weather

patterns, flood susceptibility, seismic zone classification on a broader level;

and conditions of roads and intersections, theft statistics and distance from

the nearest fire station at the local level. A GIS represents geographical

information as layers of visual maps, each layer representing a separate

geographical parameter. This information can be mapped with the location of

objects insured to get a valuable insight into fixing policy premiums. Another

benefit of such a system is in tracking down potential customers for marketing

new policies in areas where such policies might be less popular. Data in the

form of visual maps presents a very simplified picture in front of sales

personnel who would otherwise not be very comfortable with analyzing complex


What future promises

As the 21st century grows on us, insurance companies need to adopt enterprise

application integration to come out with quality products on time to match stiff

competition. For this, companies will need to explore new product distribution

channels and use IT innovatively across, just like its counterparts in the

banking segment have done. Service Oriented Architecture can play a major role

in streamlining business processes. On-demand insurance is another innovative

solution mooted for the insurance sector. Here a company can distribute products

through readymade channels such as banks, post-offices, supermarkets, kiosks, on

a pay-as-you-go basis. This can also be achieved through mobile devices such as

smart cards, mobile phones, where the customer might be charged a little bit for

enjoying 'on the move' insurance services. This way of providing insurance

together with business process outsourcing is the way to go in future.



Director Transformation & Services, Aviva India

What are the prominent challenges that

your company faces? How can IT help overcome those?

We introduce new products to suit the diverse

needs of our customers. The main challenge here is to offer flexibility and

yet offer uniformity in operational processes. To meet this challenge, we

have systems that offer the desired flexibility in launching customized

products and campaigns for specific markets/customers.

Aviva has 156 branches, spread across the

length and breadth of the country. We have systems, developed on multiple

technologies, that require scalability and geographical extensibility. In

addition, some core systems, due to inherent technology limitations, cannot

be deployed on the Web, which again leads to inevitable operational issues. To combat this, we plan our IT infrastructure in such a way that it meets

our business and geographical expansions plans for at least the next 5 to 7

years. As our business reach is spread across cities and towns, controls

over the various transactions/processes and catering to the audit needs are

crucial. Our IT system is built in such a way that it tracks each business

process electronically, minimizing manual intervention.

What are the key technologies/solutions

that are used to speed up internal processes across various branch offices?

The existing application landscape is a mix

of third party and homegrown systems. Lissia is our policy administration

system, which is used for all individual products and captures basic

customer information required for under writing and policy issuance. We have

a workflow and integrated data entry module for high-speed offline policy

data capture. This application has allowed us to reduce the turnaround time

and reduce costs at the same time. Instead of couriering all policy

documents from various branches, images move electronically over data lines

to the centralized data entry shop. The application is integrated with

Lissia and is the entry point of all policies into Lissia.

Financial Health Check (FHC) is another

application that helps our customers in identifying right products based on

their needs. The software gives a complete picture a person's financial

health by taking into consideration his income, expenditure, assets,

liabilities and plans for the future. FHC gives areas of over and under

investment and throws up the required levels of investment given a person's

financial priorities (retirement planning, children's education, loan

repayment, etc).

What solutions have you deployed or are

planning to deploy to ensure faster service to customers?

As mentioned, we have an imaging and workflow

module for high-speed offline policy data capture. This application has

allowed us to reduce the turnaround time for policy issuance and reduce

costs at the same time. We are also upgrading our contact center

infrastructure to include features such as Multi-channel Integration-mail,

voice, SMS, chat; Interactive Voice Response; Predictive Dialing System;

Automated Outbound Dialing; and Quality Monitoring and Recording equipment.

We have deployed Talisma, a CRM as well as contact management application,

which is a key system for the call center since all queries and issues are

first logged in it. This allows Aviva to get a single view of all customer


What are the various means through which

advisors can get a quick and easy access to policy details?

We have Policy Quotation Illustration Systems

(PQIS) that help advisors to provide a POS quote and an illustration of

benefits to the customer. The advisors & customers also have access to our

websites that provide most of the policy details. This is a very

comprehensive suite of services that allows clients to get latest updates of

their policies. It includes fund-switching, redirection, updating details

(telephone, email etc) as well as provides a current snapshot of relevant

policy details for the client.

Amit Kumar

Group CIO-Max New York Insurance and Max Healthcare

Where does the Indian insurance sector

stand today vis-à-vis global markets?

In India the biggest advantage we have is

that we don't have legacy systems as opposed to the US. This helps in

deploying the latest in technology. Most companies in India including Max

New York use INGENIUM as the core policy administration system while other

markets have multiple systems for different parts of their business. So,

this system acts as the core business model for us. Moreover, the progress

in IT and Telecom has helped in the penetration of Internet deep in to India

which in turn has helped in providing new and innovative ways of reaching

out to customers.

What are the challenges unique to the

Insurance Industry?

Well, the insurance business is growing very

rapidly. So, the first challenge for IT is to run faster than the business

itself. And if my business is going at 100%, my system should be scalable

enough to meet that. Insurance Industry depends on IT and if IT based

systems don't work well, processing of policies will come to a grinding

halt. So, we regularly test for scalability of our core systems using load

testers and rational performance systems. And guess what? We are lagging

behind. But we have time at our disposal to come up with new solutions.

What measures have you taken to address


We have set up toll free call centers and

back-end systems to track customer queries. We also reach out to customers

through SMSes. Our agent advisors act as the front-end for customers. To

keep advisors updated, we have implemented Sun One Access Manager to create

unique UIDs for them. Using these accounts, they can access our

systems to
get information regarding policies of their customers, product features and

new policies, and access to commission details. In addition, we have

provided separate access numbers to agents to contact the company. Shortly,

we'll be coming up with SMS- based solutions for customers. With the growth

in business, we have to find ways to manage our growing database. So, we

plant to implement a new database archival tool in 2008.

How do you manage a distributed

environment with branch offices spread across the length and breadth of the


All of our branch offices are connected

through a WAN. So, communication is not a problem. In addition, we have

empowered different branch offices. They have access to most of the

information that we have. We have used Citrix solutions to ensure a faster

response time for network users. All our systems are Web enabled, so we

don't need to install systems separately at each branch office. The users

just need to connect their systems to the Internet and they boom. All our

data is centralized and can be accessed from anywhere. Ours is largely a

leased line based network with speeds up to 2 Mbps.

How do you ensure that various

stakeholders are actually benefited by these solutions? Additionally, what

kind of technologies would be used in future?

We track usage of various applications by

different stakeholders using a Management Information Systems (MIS). We even

have a usage MIS for checking the kind of Smses going out. Our data shows

that the preferred

mode of contact used by customers is call center based
systems. Internet and Web technologies will play a very important role

compounded with handheld devices. And for agents, handheld devices, Internet

and wireless access will be important tools to service customers.

Adeesh Sharma and Anil Chopra