Howz IT Improving the Business of Insurance

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
documented.

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
well.

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
perform
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
reports.

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.

Abhay Johorey 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 interactions. 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 customercomplaints? 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 country? 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