A new generation of insurtechs will emerge in 2022

5 Jan 2022 , 10:35 AM

At its core, the insurance industry is an information processing industry. Product design based on actuarial calculations, underwriting, and claims processing involve gathering information and taking decisions based on information. Supporting processes such as sales, premium collection, servicing, investment and payment of claims are also information intensive. Insurtech refers to the use of technology innovations to improve reach, customer experience and information gathering at reduced costs through simplification and automation.

COVID-19 has changed the Indian insurtech scenario considerably. Barriers against physical interaction and physical exchange of paper and money, shifted interactions and transactions to the online world. This has resulted in a jump in adoption of insurtechs that were in various stages of experimentation, as well as creating a platform for more insurtechs to emerge.

In the rest of this article, I will focus on health insurtech in India, as this has the highest potential for technology innovation.  Insurtech will begin to address the three main challenges of the Indian health industry:

• Expanding reach
• Reducing complexity
• Streamlining claims

Expanding reach: A large majority of the Indian population remains either uninsured or underinsured. The erstwhile brick-and-mortal business model might not be economically or practically viable in the long run for both insurance providers as well as seekers; the cost of maintaining a large team of agents at multiple branches eventually trickle down to the end buyer, making it more expensive for them to buy and maintain a plan year-on-year. Instead, insurtech will help to bring down distribution costs while widening reach in the following manner:

1. Harnessing social media: Social network platforms such as Facebook, Twitter, Instagram, LinkedIn, YouTube and others will be capitalized for maximum reach and real-time correspondence.
2. Multilingual interface: In order to improve insurance reach to tap remote locations, providing and exchanging information in regional languages will be explored more intensely by insurtech companies next year.
3. Omnichannel information exchange: In particular, the use of chatbots is likely to increase for automated and interactive communication with insurance seekers.

Reducing complexity: Insurance terminologies are complicated and are often misunderstood or missed out by the average person. Moreover, narrowing down the best fitting plan amongst hundreds of options can often be a daunting experience. Insurtech can enable the following critical aspects to enable informed and convenient decision making:

1. High-class experience: New-age insurtech companies will launch easily navigable websites that facilitate upfront access to requisite information. This will be supported by exceptional phygital purchase journey with trained professionals for timely advice and troubleshooting.
2. Demystifying jargon: Consumers will be empowered by tech firms that break down elaborate insurance nomenclatures into simple bite-size information, thereby being able to make an informed decision.
3. Multiple choice: Employing smart technologies that present the consumer with assorted options of plans matching their requirements and highlighting unique features for easy visual representation will aid in the selection process.
4. Personalized recommendations: To relieve the problem of plenty in the choices available, progressive insurtech companies will utilize intelligent rules engines to generate top few suggestions of best-fitting plans in line with the buyers’ needs.
5. Building trust: Insurance distribution has been riddled with numerous cases of misselling, leaving consumers wary of and weary from the negative experience. Insurtech that provide unbiased advice free of any underlying or hidden agenda will gain prominence, through the use of smart computing that minimizes human errors.

Streamlining Claims: Cashless claims processing has reduced the paperwork required from customers.  However, reimbursement claims still involve a lot of paperwork and delays.  Insurtech that will minimize this paperwork will emerge and help reduce the hassles faced by customers:

1. Claims Intimation — Insurtech that allows users to inform the insurer/TPA about their claims — through apps or messenger apps such as Whatsapp — will gain prominence. 
2. Submission of Documents — Insurtech to support direct upload of scanned documents through apps or messenger apps will become the norm.  APIs with TPAs and insurers for electronic submission of documents and monitoring of claims status will become the norm.
3. Electronic Exchange of Health Records — Early stage insurtech providers are already working on technology to help hospitals electronically submit hospitalization records to insurers and TPAs.  The National Digital Health Mission has also started rolling out a platform that supports electronic exchange of health records.  Once these platforms are fully adopted, paperless processing of reimbursement claims will become a reality.

The author of this article is Srinath Mukherji is the Co-Founder of SANA Insurance Brokers Pvt. Ltd. (SANA.Insure)

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com