IT in the Indian Insurance Sector

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.

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.

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.