Digital De-mystified

Opportunities for
Indian Insurance
Contents
Foreword 3

1 Key Customer Digital Trends 5

1.1 Retail Segment Digital Trends 6

1.2 SME Segment Digital Trends 12

Box Item: Government actions resulting in Digital push 15

2 Market Opportunities for Insurance 17

2.1 International Trends in Digital Customer Propositions 18

2.2 Every day Insurer 26

2.3 Size of the Digital Opportunity in India- Enhanced revenues and

efficient operations 29

3 Operating Model Imperatives for Insurance Companies 33

3.1 Key Operating Differentiators of Digitally successful firms 34

3.2 Digital interventions along the Value Chain 38

2
Foreword
The digital boom in India has affected almost all retail focused industries. Starting with
transportation and retail, it has now even spread to niche segments such as salons and
tiffin services. All these industries are driven by the need to build direct bridges with the
end consumer through the smart phone in order to survive in an era where the customer is
using the phone as the primary medium of communication with the rest of the world.
The trend in India has been fast
paced driven partly due to the large
base of phone users and partly due
to lesser weight of legacy systems
(for eg. radio cabs). This made Indian
consumers increasingly depend
on their smart phones for reasons
beyond just communication or
entertainment. While initially, digital
spread was limited to metro and
Tier 1 cities, recent data has begun
to show signs of breaking that
barrier, and growth into semi-
urban towns and villages. In this,
government efforts to increase use
of digital across the country have
also begin to pay dividends for
greater penetration.
The imperatives for the insurance
industry can be looked at in two
ways. On one hand we see a threat-
that of insurers losing any connect
that they have with their consumer
if they do not begin interacting with
the customer through the digital
medium. On the other hand we
also see an opportunity for insurers
to establish a direct connect with
more customers than they have
had till now without the use of
traditional channels. In addition, is
the opportunity for cost reduction
of anywhere between 15%-20% of
their opex base.
While the response of insurers to
the digital trends has been varied
till now, it can, at best, be termed as
inadequate. A handful of insurers
have taken up the challenge of realize that by not going beyond a
connecting with customers directly transactional approach of engaging
through mobile apps. Social the customer, it could lose the plot
media, as a coherent strategy to completely to a new player (like the
understand customer preferences e-retail or the phone companies).
is almost wholly missing. The most
Our report this year focusses on
that most insurers have managed
the digital trends in the Indian
are online and mobile based
insurance industry in India. In
solutions for tactical transactions
order to do so, we first show how
-policy purchase or renewals. A
digital is re-shaping the daily lives
holistic approach to connect with
of retail and SME segments in
the customers and graduate towards
India, followed by how the business
a more daily-risk management
opportunities that these trends
relationship is still not considered.
open up for them. In the final
At the back end, technology-of section, the report goes on to detail
the disruptive kind-is necessary how insurance companies would
to put in place an agile company need to change their operations
that is ready to quickly adapt along their entire value chain in
to a new trend. While there has order to successfully tap into these
been some movement in Indian opportunities.
insurance companies, the extent
is often limited to tactical process Roopen Roy
improvements in policy issuance or President,
claims rather than fundamentally Indian Chamber of Commerce
changing the way to doing business
in a more efficient and (digital) Samir Bali
customer centric manner. Managing Director
Financial Services
It is true that insurers start out with Accenture India
a disadvantage when it comes to
customer connect-their relationship
is traditionally linked to a one-
a-year connect during the time
of policy purchase or renewal (as
against that of a bank which has
almost daily transactions with the
customer). In addition, it is linked to
negative events and consequences.
However, the industry needs to
3
4
1. Key Customer
Digital Trends
Growth in digital penetration in India is
a well-known and visible phenomenon.
However, the exact extent and nature of this
phenomenon is little understood. Everyone
remotely connected (or unconnected) to the
Digital phenomenon has an independent
view on the size of this inflection point.
Add to this, the absence of single source of
public data for the entire digital footprint
of Indian customers makes approximations
necessary.

Our first section of this report aims to

provide an objective view of the trends
prevalent in the Indian consumer segments
of Retail and SME. Subsequently, we make
an attempt at quantifying the size of the
Digital footprint in these segments in India
and the nature of this footprint.

5
 1.1 Retail Segment community with 50% of the GDP
and more than 70% of organized
Digital Trends retail (Figure 1).
The Indian ecommerce industry has
evolved significantly in the last
5-7 years with digitization lending a
disruptive edge to many businesses
and impacting the ecosystems
around which such businesses
operated. Notably amongst these
have been travel, e-tailing including
fashion, apparel and electronics,
classifieds and financial services. 8.1m
1.6m Delhi
Ecommerce in India has grown Jaipur
exponentially from a little under 2.8m
Ahmedabad
$2 bn in 20071 to $20 bn by
20152. However, it gets dwarfed 2.4m 4.4m
in comparison with the developed Surat Kolkata
economies like China and USA
which are estimated to be over 2.7m
$250 bn. Nevertheless, taking into Pune
account the recent growth and 4.7m
12m
favorable factors and enablers that Hyderabad
Mumbai
the country has to offer, future
growth in ecommerce appears 4.5m
3.8m
Chennai
sustainable and impressive. Detailed Bangalore
below are some of the key trends
and factors that are expected to
impact this growth.
(2011 GDP Internet Internet Internet
Large favorable Census) (USDBn) users users
(2015)
demography for a India 1237.0 1842 17% 213 256

Digital push 1 Delhi 21.8 167 37% 8.1 9.7

2 Mumbai 20.7 209 58% 12.0 14.4
India is the second most populous
8.1m
Delhi 3 Kolkata 14.6 150 30% 4.4 5.3
country in the world with a
aipur 1.6m 4 Chennai 8.9 66 51% 4.5 5.4
population of ~1.25 bn but more
5 Bangalore 8.7 83 44% 3.8 4.6
importantly, it is home to the
2.8m Ahmedabad
4.4m 6
youngest population
2.4m Surat
in the world.
Kolkata Hyderabad 7.7 74 61% 4.7 5.6

75% of Indias online population 7 Ahmedabad 6.4 64 44% 2.8 3.4

0m 2.7m is under the age of 35 years as
Pune 8 Pune 5.0 48 54% 2.7 3.2
compared
4.7m to other BRIC nations
Hyderabad
9 Surat 4.6 40 52% 2.4 2.9
mbai
like Brazil (60%), China (59%) and 10 Jaipur 3.1 24 52% 1.6 1.9
ngalore 3.8m Russia4.5m (56%) 3
.
Chennai
Top 10 Cities 101.5 925 46% 47.0 56.4

In India, however, the digital push Top 20 Cities 122.4 1060 47% 57.1 68.5

has been largely limited to the 20%

CAGR
urban region with Indias top 10
cities providing access to a digital
Figure 1: Current levels of Concentration of Digital Footprint in urban areas

6
The Indian demography being
a complex diaspora, has been
Internet usage, in minutes per day
witnessing interesting digital Internet users by gender
by age/gender

trends across different age barriers, 12.8 13.1

12.0
13.7
11.6 11.6
10.7
genders, and socio-economic 29% 9.7 10.4 10.8

classes. Notable among these are

71%
increase in users over the age of 50
years adopting mobile broadband
either to pursue a hobby late in life, 15-24 25-34 35-44 45-54 55+
Female Male Males Females
migratory users from low income
Access to internet in urban Access to internet in rural
backgrounds able to stay connected environments environments
56% 70%
with their families or rising internet 57%
40% 38%
usage driven by socio and image 26%
conscious aspirations. Analysis of 15% 12%
26% 22%
8%
such trends, (as shown in Figure 2)
are being exploited by businesses to Home Cybercafe On the go Office Friends /
relatives
School /
College
Home Cybercafe On the go Office Friends /
relatives
School /
College

design new customer offerings with

focused and educated efforts.
Figure 2: Key Retail Digital trends
Mobile First
The smartphone mobile broadband
revolution in India began in key
metropolitan areas, and continues
to be dominant in these places.
While metros offer a wide choice of
recreational facilities, in contrast, 304
smaller cities and towns have fewer
entertainment options such as
digital theatres, large retail chains
and shopping malls. Consumers in
smaller cities and towns are rapidly
embracing smartphones and mobile 204
internet to bridge the gap and bring
new, affordable entertainment.
For many, mobile technology 151
represents an easy to carry and
118
less expensive alternative to other
Minutes

personal technology devices. Figure

3 represents average time spent by
the internet users with the media.

This is also important for

industries that have a low reach
in the consumer segment or lack
awareness, as it can offer need
based products to the consumers Average daily Average daily Average daily Average daily
and provide multiple touch points use of internet use of internet use of social television
and engage with them. on PC/tablet on mobile media on any viewing time
device

1
ASSOCHAM Figure 3: Modes of Entertainment in Indian Retail segment
2
Fast and furious, e-commerce, Motilal Oswal
3
Comscore
7
Deep penetration of
Digital solutions
Doing businesses the traditional
way involving physical market place
is becoming increasingly difficult
due to lack of differentiation in
offerings, high real estate cost,
data collation and security and
geographic limitations. This is where
the digital market place scores over
the current brick and mortar way
of doing business. For some of the
leading Indian online shopping
retailers, over 50% of mobile traffic
comes from Tier II & III cities,
showing that their its core audience
is in the smaller cities.
One of the most significant
advantages of digital industry is its
reach. Mobile penetration in India
currently stands at 70% making it
the third largest market for active
mobile internet users. Key enablers cog of the digital market place
for this growth are low cost of because more than 90% of them
internet and cheaper entry level use smartphones for searching
feature phones and smart phones. local content and researching
Current penetration of smartphones products and over 50% of them use
stands at 30%6 amongst mobile smartphones to make purchases8.
phone. The number of smartphone The graphics below represents a
users is expected to reach 2 billion brief snapshot of major usage of
by 2016 according to eMarketer. Indian online population.
But smartphone sales in India
grew by over 100% year-on-year,
with over 40 million units shipped
to the country. India is expected
to house the second highest
number of smartphone users by
20167 on account of increasing
popularity of social media, gaming,
entertainment, purchases and data
streaming.
The popularity will increase on
account of improvement in
telecom infrastructure, lower data
cost and onset of 3G/4G services.
Smartphone users are an important

172 108 80 80 30 28 28

Social Online Retail Travel Telecom Sports Matrimonial Professional

Networking Development
Facebook has more 21% buy Consumer 29% of all travel 70%-80% of In 2013, 250 Matrimonial Websites such as
than 100 Mil users in electronics and booked online is for online traffic to million people websites attract LinkedIn, Monster
India alone. Almost another 21% buy Flights, 20% for Telco websites is watched IPL175 around and Naukri are the
86% of the internet media products, train travel, 18% for for bill payments on TV and 2.5 on 28 Mil major Professional
users access Social 11% go online to accommodation & and pre paid mobile. Online users in a year development
Networking sites. buy apparels. 12% is for holiday recharge. viewership websites
packages. increased from
48 Mil in 2012 to
72.5 Mil in 2013

Top Users Top Users Top Users Top Users Top Users Top Users Top Users
Sites Sites Sites Sites Sites Sites Sites
Figure 4: Internet usage Pattern in Indian Retail Segment
100 M 18 M 13 M 5M 20 M 11 M
195 M

4
Global Web Index, 5 M of internet users
50 MQ4 2014, Based on a survey 8M aged 16-64, March 2015 1M 8.5 M 15M
141 M
5
India Stat, Internet Live Stats, Stat Counter, IAMAI
6
India Continues As One Of The Fastest Growing Smartphone Markets In Asia Pacific In 1Q 2014, IDC
7 33 M
Marketer research 10 M 3M 121 M 0.5 M 1.6 M 25 M
8
Googles Our Mobile Planet report

8
9
Emerging technologies
enabling increasing
adoption
There have been significant
technological advances in the
telecom industry which has resulted
in revolutionizing the entire value
change of telecom domain.
The cost of handsets-be it a basic
phone, a feature phone or a smart
phone, has reduced significantly.
Increasing competition and price
wars between the domestic and
international mobile manufactures
have spoilt the customers for choice.
In fact, today the cost of buying a
desktop or a laptop is often higher
than buying a high end smartphone
or even a tablet if the end use is
limited to browsing, content viewing
and social media. The usage pattern
for the devices too has evolved
from being primarily for making
calls to a more evolved use of video
streaming, instant messaging and
data sharing. This is evident from
the growth of the companies like
Youtube, Facebook, WhatsApp,
Instagram and Twitter.
Businesses are designing special
mobile based applications to tap
the target market with special focus
on friendly graphical user interface.
Though low on penetration, the
popularity of smart phones and
tablets is eminent from the fact
that they account for 70% share
9
Company statements, Media reports
10
of web traffic (page views). Many
companies offer special discounts
and offers for app-based users
to increase their digital footprint.
Multiple Indian online shopping
retailers have begun to migrated
to a mobile app-only model The
root causes for this being that 95%
of internet traffic comes through
mobile and that 70% of sales are
generated through smartphones9.
Companies are taking additional
efforts to improve digital literacy to
ensure customers feel comfortable
while transacting online and
creating awareness against online
frauds and fishing. Multi-layered
secured transaction models have
evolved which has brought the
reluctant anxious consumers into
the mainstream. One of the most
impactful event is the emergence of
Mobile wallet as an alternative to
the traditional payment methods in
the country. The number of active
m-wallet users in the country last
year surpassed the total number of
credit cards issued by banks. Mobile
wallet offers multiple advantages
like ease of transfer, flexibility of use
and most important safety. Apart
from the acceptance by the urban
users, this can truly change the way
rural users adapt to mobile internet
because of the lack of penetration
of other established means of
financial transactions and the ease
of handling such transactions.
Data capture and Analytics
The above mentioned enablers
will force the businesses across
industries to evolve and adapt
to newer business models built
around digitization and accordingly
develop robust systems with checks
and balances in place. One of the
largest advantages of focusing on
a digitization supported business
is the ease of data capture on
customers, their preferences
and needs. A quick analysis of
the customer history can help
companies suggest customized
value added offerings to the
consumers and generate
customer loyalty.
Legacy layer
New gen.
sales layer
Broker Banca
Digital assurance Agenziale Center
Layer
Legacy layer
Core company system (Life and non-life)
for service delivery
Figure 5: Building Analytics layers in an existing Technology environment
The opportunities and possibilities
are unlimited and across industries.
For example, while auto insurance
is based on the age of driver,
emerging data capturing techniques
(telematics) and analytics can help
insurance companies track the
travel hours clocked by a particular
driver and accordingly underwrite
the insurance with appropriate
premium. In fact, recruiters
traditionally were dependent on
personal interactions and references
to understand the personality traits
of the candidates. Today, many
recruiters use the social footprint
as part of the pre-screening of
prospective candidates during the
recruitment process.
Customer Web Mobility Social
Service Network
Rete Contact
Community
Clients Prospect clients
through multiple
channels
New gen. sales layer Digital layer
Integrated Multi-channels to stregthen Digital components for a better customer
relationships with customers insight customer experience and new
streamlining processes
11
1.2 SME Segment
Digital Trends
SME Contribution to
Indian Economy
Outpacing the industrial sector
growth rate, Indias SME sector
has been one of the major growth
drivers of the Indian economy
contributing 45% to the industrial
output. SMEs contribute heavily to
the GDP and employment in India.
In fact, Indias strong resilience
to the financial crisis of 2008
and commendable growth rate
compared to the global economy
in general thereafter is attributed
to the strong SME base. While
the big corporates cut down on
their investments, it was the SME
12
segment that stepped up and
contributed heavily to the GDP.
Quite aptly, the much needed thrust
has been provided to this segment
in the Union Budget.
Internet has played a very important
role in the growth of SMEs across
the globe and this is directly
impacted by the retail penetration of
internet. Thus, as seen in the above
section, as the retail penetration
is growing exponentially, impact
of internet on the SMEs will be
much more pronounced in the
years to come and we will witness
more SMEs joining the mobility
bandwagon. A great opportunity
beckons for this sector to transform
their business model leveraging
technology.
The SME Digital
Opportunity
India houses a strong MSME base
of 51 Million. Four major factors
that augment the strong SME base
and provide for a great digital
opportunity are-
Increasing penetrationAffordable
phones and tablets and high
adoption levels and expected
universal adoption by 2020
Thriving EcosystemIncreasing
focus on mobile applications and
pay per use based cloud services
augurs well for the SMEs business
model
Digital customer trends
Rising digital penetration and
exponential rate of adoption by
the retail segment
Government Initiatives-
Strong government focus on
e-governance, digital India and
push for digital infrastructure,
digital services delivery and digital
literacy.
Technology helps SMEs address two
major pain points It helps them
grow and it helps them achieve
operational efficiency. Thus it is a
key differentiator. SMEs are different
from big corporates in terms of
their spending on technology.
SMEs typically face funding issues
and hence face cash crunch. Thus
there are inherent differences in
the digital solutions that the SMEs
adopt when compared to what the
big corporates use.
The key areas where SMEs are
investing in Technology are:
MarketingSocial networking
platforms, CRM tools and
SEO techniques help SMEs in
enhancing their online visibility
and targeting customers.
AccountingSME business
typically involves credit sales and
hence needs to be appropriately
accounted. Invoicing, payment
collection, account maintenance,
working cycle management
are some of the issues that the
SME has to deal with apart from
handling the core business.
Electronic accounting solutions
like Tally help SMEs manage their
accounting needs with ease.
Cloud servicesCloud services
augurs well for the SME
community especially because of
its inherent pay per use nature
and emergence of SaaS (Software
as a Service).

Broadband Smartphone O.S Android Phone Internet Cable

Devices
Connections 90% on 93% Phones
2.5 per SME
56% of SMEs Android O.S Growth Rate 70% Nokia

Internet-capable phones
~4.3 Mn
Feature Phone
~450K
Mobile Phones
~8.7 Mn
Smart Phone
~4.4 Mn
Internet
enabled SMEs* ~850 K
~7.7 Mn Laptops
~7.7 Mn
(69% of SMEs)

Tablets
~3.3 Mn

Figure 6: Internet connectivity of Indian SMEs
Source: Internets Role in the Performance of Indias Small and
Medium Enterprise,(Nathan, FICCI) JULY 2013
* Reflects digital penetration of organised Small and Medium
enterprises only (Total 11 Mn), excludes micro enterprises
13
SME digital penetration
Indias digital SME population is
connecting to internet to access
emails, conduct internet banking
and ecommerce. Figure 7 shows
the usage percentage of major
categories for SMEs
We see how the digital acceptance
rate has grown exponentially over
the last few years in the Indian
Retail and the SME segments.
Moving ahead, a favorable
demography and the rapidly
changing consumer lifestyle is
expected to increase the pace of this
acceptance. Almost all businesses
need to realize the potential of
this changing landscape and make
concerted efforts in redefining their
business strategy and processes to
align with the new digital customer.

SMEs in India, End of 2013 for major usage categories (in %)

95% 77% >58% 46% 27% 23% 43% -

E-mail1 Internet Information & Social E-Commerce1 Foreign ERP2 Payment

Banking1 Insights1 Media1 Trade1 Gateways

95% of the Most of SMEs Information 46% of the B2B-S$ 420 Mn 23% of the 43% of the Of the total
SMEs have deal with 2-3 on trends in SMEs are B2B market place SMEs are SMEs have ERP SMEs using
access to banks at the domestic and engaged in for SMEs growing engaged in installed. Of payment
emails. same time. International Social Media at 61% YoY. 80% Foreign Trade that, SAP and gateways,
SBI, ICICI, market and Activities such of the market Activities Oracle together 60-70% of
AXIS are the conducting as engaging in captured by have 80% merchants
large banks Competitors B2B forums. Indiamart.com and market share. use
operating in intelligence tradeindia.com. players are CCAvenue.
SME space. Microsoft, IFS, Bank
Infor Global Payment
Solutions, gateways
Ramco and are primarily
Tally. used by large
players as
qualification
criteria is
higher.

Figure 7: Internet usage pattern in Indian SMEs

14
Box Item: Government actions resulting in
Digital push
The Government of India has attached a large significance to build and improve the digital
literacy of the Indian populace. An enhanced E-governance environment in the country has
helped launched the Digital India program aimed at transforming India into digitally empowered
society and knowledge economy. This program entails an outlay of over $20 bn1 and help India
prepare for a knowledge based transformation and delivering good governance to citizens by a
synchronized and coordinated engagement of both the Central and the State Government. Digital
India has three core componentsdigital infrastructure, digital services delivery and digital literacy.
completely to a new player (like the e-retail or the phone companies).

This umbrella program is built electronic databases, IT Electronics Manufacturing-

around the following initiatives
which combine many of the
existing and new government
schemes 2
Broadband Highways-
National optical fiber
network (NOFN) connectivity
to all the 2.5 lakh gram
panchayats in the country
Universal Access to Mobile
connectivity-Ensuring
mobile access in around
44,000 uncovered villages in
the country
Public Internet Access-
Expand the coverage of
common services center
(CSC) from 1.35 lakhs to 1.5
lakhs, i.e. one per panchayat
e-Governance-Improve
process and service delivery
through business process
re-engineering, integration
of services and platforms,
1
http://www.cmai.asia/digitalindia/index.php accessed on 16 June 2015
2
Government presentations on Digital India (http://deity.gov.in/)
based public grievance
redressal to resolve
persistent problems
e-Kranti-Electronic delivery
of services, including
- EducationBroadband
connectivity, Digital
Literacy Program
- HealthOnline medical
records and consultation
- AgricultureReal time
price information, mobile
banking
- Financial inclusion
mobile banking and micro
ATM program, inclusion of
post offices
Global Information-
Online hosting of data
and proactive engagement
through social media and
web based platforms like
MyGov
target net zero imports by
2020 for electronic items
IT Training for Jobs-Train
one crore students from
small towns and villages for
IT sector
Early Harvest Programmes-
Deploy Aadhaar Enabled
Biometric Attendance
System to enable online
recording of attendance and
its viewing by the concerned
stakeholders
Further, the Government has
also unveiled its Smart Cities
Vision 2022 and committed
to develop 100 smart cities in
the country which are built
on high performance digitally
driven robust infrastructure
network. The market for
smart cities globally has
been growing steadily with
focus on sustainability and
development.
15
16
2. Market Opportunities
for Insurance

Digitalization presents a growing

opportunity to improve market share and
profitability for the insurers. It also urges
insurers to apply digital technologies in new
ways and offer tangible value to customers.
After having elucidated the extent of
digitization in the country in the previous
section, we now present the possible
opportunities of digitalization for insurers
& customers and digital trends in Insurance
industry worldwide.

17
2.1 International Trends An empowered buying
in Digital Customer process by Insurance
Propositions customers Discover

Conversations with more than 140 As discussed in the previous

CXO level insurance executives over
the last year clearly point towards
digital transformation featuring
high on their agenda for the next
five years. Digital transformation
of insurance industry worldwide is
being impacted by four major levers
An increasingly empowered
customer buying process
Greater digitalization in
distribution of insurance products an operating model that delivers to
Value chain transformation for
increasing efficiency
Potential for business growth in
terms of revenues and costs
The following sections detail each of customer is the first challenge for
the above four levers.
sections, todays customers are
digitally enabled and so more
empowered. This power stems from
easy access to a range of competitor Consider
products, ability to easily compare
these products and ability to voice
their opinions and concerns through
consumer forums and social media.
This makes todays customers much
more difficult to win over without a Evaluate
clear differentiating proposition and
expectations. Competition in the
market and digital technologies
are increasing expectations by the
day as customers are demanding Purchase
cheaper, faster and more customized
products. If winning over the
the insurer, retaining him/her is an
equally challenging task.
Use

Figure 8: Traditional Customer journey

18
 According to Accenture Digital Innovation Survey
2014, 84% executives feel that digitalization is
changing customer expectations.
Traditional Insurance
Customer Journey
Traditionally, a customer would
discover policies available through
various channels like agents,
brokers, banca and insurance
offices. The policies would
then be considered for fit with
requirements and evaluated for
price to arrive at purchase choice.
Once the traditional insurance
customer chose the policy he/
she would largely continue to use
same insurance provider (baring
a negative experience) and would
rarely revisit other options available
in the market.
Empowered by digital media, todays
customer is continuously revisiting
choices. A purchase decision once
made is almost never final. Many
customers consider switching to
Discover
Expectation
Promise
Consider
Figure 9: The Accenture Dynamic Customer Experience Model
a new policy or insurer near every
renewal. The changing information
environment also allows the
customer to now re-compare and
chose a product more suited to the
needs. In the Global Consumer Pulse
Research conducted by Accenture in
2014, this change in the dynamics
of insurance customers was clearly
observed. Only 26% life insurance
customers and 19% non-life
insurance customers perceive
switching to be a hassle. Only 22%
insurance customers feel loyal to
their insurer. 34% life and 39%
non-life insurance customers have
switched partially or completely in
the last 6-12 months.
Insurers need to recognize that
customers are not buying insurance
the way they did in the past. They
need to adopt a new customer
connect model thats more relevant
Purchase
Reality
Evaluate
Delivery
Use
84%
to customers digital behavior.
Todays customer is continuously
discovering and considering
products available in the market
based on expectations from the
product and the promises made
by the insurer. He/she is making
purchase decisions or continuing
usage decisions based on the reality
and actual value delivery done by
the insurer.
To summarize, the path to purchase
used to be linear. Now, the customer
journey is dynamic, continuous
and accessible. Dynamic, because
decision paths are multi-directional
and at different speeds. Continuous,
because evaluation, not purchase, is
central; promise is now as important
as delivery. Accessible, because
influence of open content is
pervasive and difficult to control.
19
Digitalization in
distribution of
insurance products

According to Accenture Digital Innovation Survey

2014, 59% believe that they will be challenged in
59%
the existing distribution space due to increasing
Digitalization.

Almost 60% executives feel that
new technologies will radically
change traditional practices and
agree that digital technologies
will transform the way they
interact with their channels. In
the traditional insurance setup,
insurers reached customers through
agents, brokers, banca and (in only
few cases) directly. Digitalization is
providing an enormous opportunity
to reach the customer directly
without any of these middle men.
The digital insurer can use online,
mobile apps etc. to create this direct
connect.
Where digital transformation the customers appropriately. The
is expected to impact all the insurer needs to build a holistic
distribution players, insurers are distribution network with symmetric
expected to gain the maximum. In information and support across
this aspect insurance companies all channels. Insurance industrys
have globally begun to create the organizational silos, multiple
largest impact on distribution distribution channels and legacy
models. technology considerations make
the task at hand challenging and
Also, customers are increasingly
time taking. Digitalization across the
using more than one channel to
network also presents the insurers
research products that fit their
with a new opportunity to adopt
requirements. While they may
cost-effective distribution network
use digital sources to gather
by determining which customer
information, many customers still
segment can be reached through
prefer to make the actual purchase
which channel mix effectively.
through a distributor. Therefore, it
is important for the insurer to make
sure the distributors themselves
are digitally equipped to serve

62% 59% 57%

47%

26%
20%
12%

Insurance Online Service Price Banks Independent Retailers Car dealers

Companies providers comparators brokers and
agents

Figure 10: % Companies expected to gain the biggest increase in share of distribution in the next 3 years

20
21
Digitalization
along the value chain
of insurance

According to Accenture Digital Innovation Survey

2014, 75% executives expect major transformation of
75%
the insurance operating value chain within the next 5
years

Having realized the importance
of digitalization, companies think
a radical change of the insurance
value chain is key to success in
the digital world. Companies have
already started strengthening their
digital foot-print along all the links
of the value chain. According to
the Accenture Digital Innovation
Survey, 82% executives expect
insurers to make acquisitions to
better position themselves within in
the digital world. 43% have made or
are planning acquisitions of start-
ups or innovative players. This not
only opens up opportunities for
Insurers but also for a whole digital
ecosystem. Many insurers have
added, or are considering adding,
a wide range of non-insurance
products to their customer offerings
in an effort to develop customer
intimacy and ultimately position
themselves as lifestyle partners.

66%
63%

56%
53% 53%

41% 41%

Loyalty Home Lifestyle Motoring Opening up Range of Other

Rewards services based needs supply chain to location financial
services customers based offers services
and discounts

Figure 11: % Companies having plans for non-insurance products

22
Digital initiatives
generating additional
growth
Digital transformation is not
only redefining the market but
also promising value to the
investors. Our estimations based
on the Accenture Consumer
Driven Innovation Survey, 2014
survey results indicate that digital
transformation can increase the
insurers sales by 10-15%. Sustained
combined ratio can be expected to
improve by 4-6%.
More results from the survey show
that life insurers are expecting an
annualized 7% revenue growth
whereas the non-life insurers
are expecting an annualized 5%
revenue growth through their
digital initiatives over the next 3-5
years. Innovation is being seen
as a key driver of market-share
growth. Existing players that are
innovating can look for growth
than even new entrants. 24%
of insurers expect innovation to
increase market share by up to 10
percentage points. At the same time,
one-third of respondent companies
expect usage-based auto insurance
to account for >6% of premium
income in 3 years time. It is
interesting to see that almost 29%
of respondents expect premium
growth to come from expanding
their customer base using digital
channels rather than only upselling
existing products to their existing
customers.
Becoming a digital insurer can
significantly improve finances
by activating new value creation
levers. Increase in sales revenue
could be achieved through three
levers: generating e-sales, improving
sales of traditional channels and
creating a new brand. E-sales could
be generated by targeting new
customers due to the new digital
value proposition, by optimizing
online subscription funnel through
analytics and by developing offers/
additional services as described
for everyday insurer. Sales from
traditional channels also could
be increased by capturing new
leads, cross-selling, up-selling
and increased cross channel
transformation. Creating a new
brand is another way to increase
sales revenues. The insurer may
choose to create a new brand or
chose to define a new range for the
existing brand.
Increased profitability could be
achieved through increase in gross
technical margin and reduction
in costs. Gross technical margin
can be expected to grow through
improved pricing and promotional
methods, managing risks and frauds
and developing loyalty to retain
customers. Further to this, costs
could be reduced through end-to-
end digitized processes, self-care
and optimizing customer processing
channel & distributor commissions.
23
24
Lever Examples of initiatives

Digital sales Optimizing sales process: search-engine visibility

Social media: monitoring company image and proactive responses
Online sales optimization: multi-variant testing, analysis of online journey
Multi-channel customer experience: Internet, mobile and call center.
Design a 360 view of the customer in real time
Sales and aftersales services online, enrich online relationship with the
customers
Digital product and service offering

Traditional sales lead increase Online-channels design to generate leads

Targeting customers and prospects: static and predictive scoring
Industrialized approach reducing response time for digital quotes
Next product to buy-pop up suggestion based on past behavior

Traditional sales Cross sell Needs-based diagnostic tool

Sales-efficiency tool delivering improved sales methodology

Traditional sales Conversion One-stop shop: digital signature at the point of sale
Better sales preparation using artificial intelligence

Table1: Levers to increase sales revenue

Lever Examples of initiatives

Select risks/ detect fraud Precise segmentation of prospects: making best use of external data plus data
on consumer behavior on every channel (including telematics)
Real-time analysis of contracts at risk and predictive analysis of when claims
occur during underwriting process

Improve commercial pricing and Manage promotions based on success rate and customer value
promotion Integrate a large volume of external data in pricing criteria
Adapt online pricing in real time based on competitors best offer

Improve retention and loyalty Multi-channel capability to fight churn

Use of predictive churn scores based on customer events

Enhance customer channels and Salesforce commissioning revamp based on channel of origin
commissions Customer routing to the appropriate channel based on preferences and value

Implement self-service Move most time-consuming operations out of agencies/branches

Monitor claims status online

Digitize processes Review processes to automate administrative tasks burdening salesforce

Implement digital straight-through processing
Automate processes and make them paperless; implement collaborative tools
with support functions

Make costs variable Identify IT functions to be obtained as a service via the cloud, thus linking cost
to usage (variable costs)

Table 2: Levers to increase profitability

25
2.2 Every day Insurer
To cater to increasingly demanding This non-commoditized proposition
customers requirements and to the consumer is a bundled
to keep growing in the market, proposition to provide the consumer
todays insurers have to provide with traditional insurance products
a unique customer experience. coupled with short and long term
The traditional insurance market risk management for all aspects
is a commoditized market. To be of life. Built around an ecosystem
able to compete in the future and of customers, insurer and third-
to be relevant in the customers party providers, Everyday Insurance
eyes, insurers need to engage their touches the customers life in
customers directly, building a more various spheres and through various
direct and sustainable relationship media. It not only supports the
with customers. The proposition customers traditional insurance
of Everyday Insurance is targeted requirements, but also helps him/
to make the insurer create this her manage his/her other related
footprint in the customers digital or non-related activities through
world. the insurers support. An everyday
insurer rises above todays
customers expectations by linking
insurance services to the customers
current ecosystem.

Everyday Insurance
My Workforce
My Risk
My Tax Online Manpower My
Mgmt. Systems
Ecosystem partners Product Enquiry
Online SME Tax on my Phone Proposal Form
reporting Online filing of form
My Home and uploading
Online Home Third Party Insurer photos
Monitoring Systems Provider
Everyday Insurer

My Car My Policy
Driving Physical meeting STP of policy issuance /
Call/video conference online payments and
Performance Telepresence
Measurement Customer Chat Agent delivery
...
My Renewal
My Family Auto reminders and one
Online health touch renewal payment
tagging of elderly Insurer automating
Insurer Providing
family members insurance services My Claim
non-Insurance App based claim intimation
My Travel and interaction for
services through and progress updates
Travel Updates customer
third party tie-ups
convenience

Omnichannel customer experience

Digital enablers

360advanced analytics

Product innovation Campaign Social media

& bundling marketing engine listening

Ecosystem management and governance

Technology Enablement

10
Figure 12: The architecture of an Everyday Insurer

26
27
Value proposition
The everyday insurers value
proposition to the customer has two beyond the traditional insurance
main components
The traditional insurance product,
provided digitally
Ecosystem risk management
Insurance support
Built on digital enablers,
everyday insurers automated
insurance services enable the
customer to manage his/her
policies, renewals, claims, proposal
forms and risks. This change takes
multiple forms through the policy
life cycle. During sales product
information and needs analysis
can be provided in an interactive
manner digitally. During policy
issuance, customer KYC details can
be taken online resulting in real
time policies. For claims, notification Architecture of an
can be done online by filling up an
online form and uploading pictures
where necessary. Claim status can
also be tracked online. Auto-renewal proposition an insurer needs
reminders can be sent to customers to develop a comprehensive
near their renewal date. One click
renewal is made possible through
the bank account linked with the
policy records. Insurer could also
proactively pitch for upselling. The
list can be endless as the industry
moves towards digitization of its
entire value chain.
28
Ecosystem support
However, engaging the customer
product would need to be done
in order to position the insurance
company in the consumers mind.
The proposition could range from
home security systems connected
directly to the customers mobile
phone to a tax reporting portal
for an SME customer. Providing
customized traffic updates,
speeding warnings while driving,
health condition updates of elderly
members of the family etc. are just
a few examples of non-insurance
support insurers could provide to
engage the customer and increase
loyalty. The Everyday Insurer would
need to partner with various third
party providers to provide these
non-insurance services.
everyday Insurer
To provide the described value
understanding of the customer
and should be able to reach
the customer through various
routes. This section describes the
capabilities an insurer needs to
develop in order to evolve as an
everyday insurer.
360o customer view
Comprehensive understanding of
the customer can be made possible
through a 360o customer view
enabled by advanced analytics.
Tapping into a customers
records available in the policy
administration system, his/her
social media presence and other
digital footprints, analytics has the
power to understand the customer
beyond insurance product and
predict customer behavior. Analytics
uses data related to customers
likes, dislikes, recent purchases, GPS
navigation, events planned etc. to
assess his/her purchase interests
and intents. This allows the insurer
to treat each individual customer
as a unique customer segment- a
customer segment of one. Insurer
is thus empowered to run very
specific campaigns to its customers
within very low budgets. A deep
understanding of each customers
behavior also can be fed into
product innovation and bundling to
enrich the product portfolio. Social
media listening can be employed
in proactive grievance handling to
provide customer delight.
Omni- channel presence
A digitally enabled insurer is well
equipped to provide the customer
a truly omni-channel experience.
Omni-channel presence is the
use of a variety of channels and
combination of such channels in a
customers shopping experience. The
channels include agencies, brokers,
banca, direct through website,
mobile stores, mobile app, consumer
forums and other channels of
transactions. This entails providing
the customer a holistic and unified
product experience through all
the aforementioned channels. The
customer would be facilitated
to reach the insurer for policy
purchase, renewal, claim or any
other query by just a click or a call.
2.3 Size of the Digital
Opportunity in India-
Enhanced revenues and
efficient operations
In a digital world, winning and
retaining customers hinges on
creating value for them that
enhances the convenience and
quality of their everyday lives
beyond mere transactions. With
increased interactions, comes a
larger opportunity for selling and
hence increase in sales revenues.
Additionally, the same digital also
provides prospects for developing
more efficient operations and hence
increased profitability. The following
paragraphs detail the magnitude
of these opportunities for Indian
insurers.
Increase in sales revenues digital means to book sales. These
digitally enabled sales today make
The impact of digital on sales up a significant portion (almost
revenues is two-fold:
20%) of retail insurance purchase.
through digitally bought policies We believe that the trend of digitally
and influenced sales being larger than
directly bought digital policies will
through digitally influenced
continue well into the next five
policies.
years.
Policies are currently bought
Digitally enabled insurance sales
digitally through a combination
are expected to grow by 8 times
of insurance websites, aggregator
in the coming 5 years. In FY 15,
websites and online sites of
digitally enabled non-life policies
insurance brokers. However, the
are estimated to be ~Rs 6200 Cr
need for advice in insurance still
and digitally enabled life policies
means that digital consumers prefer
(new) are expected to be ~Rs 4000
to research insurance options online
Cr. Online renewals of existing life
before actually purchasing through
insurance are expected to become
traditional channels. This online
35-50% in the next 5 years from
research includes a combination of
10-15% in FY 15. This will result in a
visits to community forums, blogs
5X increase in online renewals of life
and even news websites. Digital
insurance policies by 2020.
influence in sales also comes during
with traditional channels using

Poor Mass Emerging Affluent High Net Total

Affluent Worth
Segmentation Criteria (Annual Household income <150 150-500 500-2000 2000-10,000 >10,000
in Rs 000)
Households (in Million) 162 85 17 3.6 0.25 ~270
Retail Health Policies (Approx.) 7 23 40 15 2 85
Retail Motor Policies (Approx.) 4 390 160 33 2 590
Retail Accident Policies (Approx.) 40 20 2 60
Retail Travel Policies (Approx.) 8 20 2 30
Total Non-life Policies (Approx.) 11 410 250 90 8 765

Potential Digitally influenced Non- life sales 0 0.8-0.9 1.7-1.8 3.3-3.4 0.3-0.4 6.1-6.5
Retail Life Policies-New (Approx.) 640 1520 660 170 10 3000

Potential Digitally influenced Life sales 0 0 1.4-1.5 1.8-1.9 0.60-0.63 3.8-4

Total Digitally influenced sales 0 0.8-0.9 3-3.2 5-5.2 ~1 10-11

Total Digitally influenced sales (2020) 0 6-7 25-26 41-42 7.8-8 80-83

Online Renewals of life Insurance 4-5 10-11 4.5-5 1-1.2 0.08-0.09 20-23

Online Renewals life Insurance (2020) 22-23 53-54 23-24 6-7 0.4-0.45 104-108

Table 3: Potential digital sales in five years Source: IRDA Annual Reports, Accenture Analysis
Note:
Sales in Rs 000 Crore
Policies in lakhs
All numbers are estimated for FY 15 unless mentioned otherwise
29
30
Digitally Influenced Insurance Sales Online renewals of life Insurance
(Life & Non-life) (Rs 000 Cr )
(Rs 000 Cr )
80 105

8x
5x

20
10

2015 2020 2015 2020

Figure 13: Digitally enabled insurance sales by 2020

Increase in profitability Operating Expenses of Insurers (Rs 000 Cr)

Life Non-life
Various digital initiatives as listed
45
in the previous section represent
an incredible potential source 40 38.5
of profitability, demonstrating
Potential Savings
that one of the main benefits 35
5.5
with digitalization
of digital transformation is cost
leadership. Insurers can optimize 30
their operating models as suggested
and bring down their cost ratio. 25
Of the total operating expenses,
Information Technology expenses 20
16.6
can be expected to decrease by
Potential Savings
~10% and other administrative 15 2.5
with digitalization
expenses by ~15%. Therefore
8.0
creating a potential to enhance 10
bottom-line performance of the 2.5
industry by ~8000 Cr. 5
5.5
0
Life Non-Life Total Savings

Figure 14: Potential cost savings from Note:

digitization (on the base of FY15 Expenses in 000 Rs Crore
numbers) All numbers are estimated for FY 15

31
32
3. Operating Model
Imperatives for
Insurance Companies

Having understood the changing behavior

of the new age digital consumer and the
increased importance that the companies
are giving to the digital transformation of
the business, we now dwell on some of the
imperatives that must be incorporated in
the operating model of insurance companies
to successfully tread on the digital
transformation path. While technology will
remain at the core of this new operating
model, it is critical to build systems that
are resilient and capable of working on
data from varied sources at high velocity to
provide highly scalable solutions.

33
3.1 Key Operating
Differentiators of
Digitally successful
firms
Digital, mobility and social media
have had a profound impact on
the lives of the consumers globally.
Companies, too having taken note
of the same, are changing their
business models to accommodate
the changing consumer behavior.
Companies who have been agile
and have been able to transform
the earliest are the ones who are
occupying the major chunk the
market pie. Thus, it is the agility
and the speed of companies and
not their size that is helping them
address the new market needs
through innovative business model.
The tipping point has already been
reached and digital/technology
could no longer be exploited only
to foster operational efficiency;
companies need to focus on
leveraging digital to offer greater
customer value. Traditional business
models have been disrupted across
industries giving rise to a range of
new capabilities, competition and
hence value proposition.
34
The Choice
The Clear Choice -Doing it Better vs. Doing it Differently
Improve
Operations
Structural
Incremental Business Value
High
Do It
better
Low
Low
Figure 15: The clear choice
We have reached an inflection point
of digitization where companies
have a clear choice available of
Playing to win against Playing
not to lose. We have seen enough
examples of disruptive business
models that have completely
transformed the industry. A case in
point is the recent spurt in online
marketplaces. Unlike the traditional
business, the online marketplace has
no inventory, warehouses or huge
organization set up. The secret of its
extremely lean operating model is
an excellent smartphone application
with customer convenience at its
focus.
Change & Transform
the Business
Change & Transform
the Industry
Change the
Game
Do It
Differently
Breadth of Impact and Leveragability High
What we learn is that-for a
successful business model you need
the agility to transfer your core
value proposition from source to
the destination. Digitization and
mobility are the quickest means that
help you achieve that. By doing so
companies are not just transferring
the core proposition differently
but are essentially changing and
transforming the industry. Thus it is
imperative to view every business
as technology business and keep
customer convenience at the core.
Technology Trends
in Insurance
Insurers have to ride the next
big digital disruption wave and
hence must be cognizant of the
opportunities and threats that this
wave brings.
Those that win the race to
transform into digital insurers
will find opportunities to disrupt
their existing markets as well as to
drive new revenues and profits in
industries and customer segments
where they have not traditionally
competed. Those that dont get
out of the starting blocks quickly
enough will be outrun by more
aggressive insurersand they may
also lose market share and profits
to tech companies, automotive
manufacturers, and other
companies pioneering emerging
technologies that undermine the
traditional insurance business model
at its foundations. The choice is a
stark one: become a disrupter or be
disrupted.
We believe for the insurers to Play
To Win, they have to consider 5 key
imperatives described here.
Digital Physical Blur: Extending Cloud is being used to share
Intelligence to the edge data as amount of data increases
exponentially even as the prices
of these devices fall and quality
improves
Digital Physical blur to help
insurers get contextual data that
can help refine risk, products and
transform customer relationships
Carriers that started off with pay-
per-use insurance offerings are
moving toward mobile, contextual
and behavior-based products
Example-In India, Policybazaar.com
has carved out a new business for
The real world is coming online as itself by using Chleons insurance
smart objects, devices and machines telematics- as-a-service to calculate
increase our insight into and control future motor insurance premiums
over the physical world. Its a new for car drivers. With the drivers
layer of connected intelligence that permission, his or her personal
augments employees, automates driving score can be provided to
processes, and incorporates insurance companies that have
machines into our lives. accepted this score as a rating
From wearable devices to home factor
sensors and vehicle telematics,
intelligent interfaces are blurring
the physical and digital
There is unprecedented
connectedness as these edge
devices touch each other
35
Data Supply Chain-Putting For example, an auto insurer could Focus on hardware-Build scalable
information into circulation leverage traffic data in its mobile systems
app or data from another vehicle
in close proximity to warn insured
drivers of accident hotspots or
traffic congestion
Build embedded teams with
knowledge of the business
problems

Data is the most valuable assets for
insurance firms. It has to be treated
more as supply chain-enabling it
to be accessed and then to flow
easily and usefully through the
entire organizationand eventually
throughout the organizations
ecosystem of partners too.
Few insurance companies have
mastered the concepts at the
foundation of modern data
management ideas such as the
mobility and portability of data, its
structure and velocity, and data as a
saleable product or monetization.
More uses of data
Capitalize on the business value
from the external data obtained
from partners, data-as-a-service
providers, or open data sources
Augment these sources with social
media sentiment, weather data,
and more and make informed
decisions while also adding value
to the customers life
Cognitive Computing
Leverage machine learning
capabilities incorporating
components of artificial
intelligence-Cognitive Computing,
to manage the scale and
complexity of data supply
Insurers could use natural
language processing to transform
unstructured data, such as social
media posts or claims submitted
in free text, into insights
Streaming data-ranging from
news to weather information-
could help insurers to better
respond to catastrophes
Monetizing Data
Realize the latent value of the
data collected by forging new
partnerships to creating new
revenue streams, or even entering
new markets
Monetize data-sell data insights
directly, share them through
partnerships, or develop entire
ecosystems around them, but in a
way that is sensitive to the issue
of data privacy
Insurers could even sell data to
their own customers or offer it to Insurers will need to look at the
them as a value-addfor example,
usage patterns of commercial
vehicle fleets
Eclipsed by more than a decade
of innovation in software, the
hardware world is now a hotbed of
new development as demand soars
for bigger, faster, more efficient data
centers
Benefits of hyper scale
innovation will trickle into the
data center in the form of cost
reduction
Legacy IT systems will be
threatened by a deluge of
unpresented amount of data
As all of this information begins
to be collected every hour, and, in
extreme cases, multiple times per
second, large systems are required
to store and analyze this data
Hyper scale computing designed
to crunch through vast volumes,
variety, and velocity of data at
rapid speeds and with great
efficiency are required
latest innovations in the world
of hardware to enable the digital
transformation of their businesses
Correct recipe of commodity
versus specialized hardware
and private versus public cloud
architecture will be required

36
App ecosystem-Be a part of the
thriving ecosystem
Mimicking the shift in the consumer
world, enterprises are rapidly
moving from applications to apps.
As organizations push for greater
operational agility, there is a sharp
shift toward simpler, more modular
and analytics-enabled apps.
Mimicking the appetite for mobile
apps in the consumer market,
enterprises are starting to deploy
lighter, simpler, more modular and
analytics-enabled apps to end-users
within their organizations as well
as to their customers and business
partners.
It is imperative for insurers
to rapidly develop, or partner
to create and launch new
applications and be positioned
to innovate, collaborate, improve
customer experiences, and enrich
personal interactions
Considering apps for reducing the
customer churn rates
Lifestyle apps that encourage
risk friendly consumer behavior-
for example, regular exercise as
monitored by fitness trackers
could help improve customer
retention and reduce the
frequency and size of claims
With mobile apps, the insurer is
there with the customer when he
or she needs risk management
advice or even impromptu risk
cover
Architecting Resilience-All time
availability
In the digital era, businesses are
expected to support the nonstop
demands that their employees and
stakeholders place on business
processes, services and systems. As a
result, todays IT leaders must ensure
that their systemsand to some
extent those of their key business
partnersare designed for resilience
under failure rather than designed
to spec. Hence,
Insurers need to be able to gather
and operationalize big data
uninterrupted and at speed and
provide uninterrupted services to
their partner ecosystems
Business continuity and systems
availability are of paramount
importance
To provide a range of everyday
services to connected customers,
insurers must begin to consider
how they will architect their IT
infrastructures to support nonstop
business processes, services and
applications
CIOs must use a business-driven
strategy to manage risk across
the enterprise, understanding
which assets are critical and then
prioritizing resilience and active
defense measures accordingly
A wholesale shift in mindset to
the idea of 100 percent uptime
37
3.2 Digital interventions Insurers need to take cognizance of
three areas to identify the strategy
along the Value Chain that would help them identify the
Due to the digitization and challenges in the current operating
disruptions in other industries model and leverage mobility to
customers have been found wanting convert those challenges into
more in other industries including opportunity.
insurance. Thus, time has come Below we present the typical
for the insurance industry players insurance value chain and follow
to take cognizance of this fact it up with various challenges that
and start their efforts towards the traditional model has and also
providing mobility solutions to suggest various mobility solutions
their customers and capture the along those dimensions.
market share and reap first mover
advantages.

Product Development Distribution & Underwriting Policy Holder Claims & Benefits Investment
& Pricing Marketing & Producer Admin /
Servicing

3 C
6 F
2 B 7 G
5 E
Analyze Market & Branding & Lead
Customer Needs Generation 1 A

1 A 4 D Ongoing Customer & Agent Service

Captive Agent
Insurance Co.

Driven
Configure / Deploy Distribution Rate/Quote/ First Notification
Policy Issuance
/ Maintain Product Independent Illustration Of Loss
Agent Driven
Distribution 1ST & 3RD Party
Billing Injury / Property
Damage

Payments &
Policy Renewal Payments
Processing
Secure Investment
Returns
8 H

Risk and Regulatory Compliance Management Business Challenge

Mobility Opportunity

Figure 16: Mobility solutions along the Source: Accenture Insurances Business Services Analysis & High
value chain of insurers Performance Industry Architecture for Insurance

38
39
 Theme No. Challenge
1 Consumers have become lot more demanding
Seek transparency
Expect availability of self service options
Attach a lot of significance to convenience
Evaluation before buying requires them to
have immediate access to information
Mobile Consumer Engagement in a Digital Age
2 Pricing the insurance products is definitely one
of the most difficult ask for the insurers
Every customer behavioral attributes are
different, a condition which is aggragvated
due to moral hazard
Insurance companies have to invest a lot to
balance the rewards and risks of their policies
Retention of the right/profitable customers
becomes a challenge
3 Diverse customer segments makes it
increasingly difficult for the insurance
companies to segment their customers and
provide personalized product offerings
Lack of granular customer segmentation and
Growth Driven by the Always-on Consumer
risk profiles makes it difficult to retain and
acquire customers
4 Inherent limitations of the physical delivery
channels for insurers thereby limiting
Ability to capture market
New opportunities to sell their products
40
Opportunity
A mobile application that provides all the information
required by the customers over the lifecycle of their
insurance policy will
Provide convenience to the customer
Facilitate action at each stage through Omni channel
experience
Mobile enabled enrollment process and instant
feedback and notifications as the policy passes through
different stages
E.g. Notification about traffic congestions, travel
planning, personal finance management, weather
warnings based on customer geolocation etc.
Employing content listening tools and analytics to
understand the behavior and create risk and profitability
profile
Capturing client behavioral data and activities using
mobile technologies and analyzing these with an
analytics engine to manage risk and pricing with
appropriate premiums
E.g. Using telematics to offer customized premiums
based on driving behavior ensures the right pricing
which would ensure right risk reward returns and also
help in retaining clients
Mobile technologies-location services, notifications and
applications can help determine opportune moment
to sell policies and capturing customer characteristics
and offering personalized products based on customer
behavior with real time insurance quotes
Customers could be allowed to configure insurance to
meet their requirements
Customers could also be allowed to make quick micro
insurance purchases based on the situations through
their mobile devices
Additional channel options
Seamless integration with the social media platforms
like Facebook employing a customer centric approach
 5 Attrition is a pain point for the insurance firms Mobility helps agents remain relevant in the digital age
allowing them to perform their functions effectively
Aggravated if the currently digital savvy
and efficiently
workforce is not given the tools and systems
that would enable them to effectively and They can use tablets to create customer specific
Back-office Optimization through Automated Underwriting and Policy

efficiently dispense their work presentations, proposals, do real time what if scenarios,
provide real time quotes and capture digital signatures
Paper based manual processes are extremely
thereby reducing errors giving customers a delightful
time consuming and costly
experience
Also on the customer end, it causes servicing
issues if the customers are not given the
policy premium calculation details in real
time

6 Huge cost overhead owing to inefficient and
obsolete transaction processing
Competition is further driving the cost
overhead in fight for sustaining the market
share by providing door step customer service
and capturing client documentation
Administration
Companies can integrate the processing systems with
mobiles and tablets
Customer could be provided with self-service tools to
upload relevant documentation thereby reducing cost
overhead
Online application processing can help in data

Limited application validation is error prone validation and reducing errors

and further increases rework
Underwriting process could also be streamlined
resulting in faster policy issues

7 Insurance companies grapple with unexpected Event based communication to policy holders of say an
events which will impact its portfolio of assets impending hailstorm could help in reducing the damage
Challenge to be able to forecast the losses Allowing the customers to access the insurance
Next Generation Claims

due to such events and manage financial application and upload images from the accident/issue
investments accordingly sight would not only help the insurers in easy collection
Management

of data and validation but will also further help in

Costs involved in collecting data after the
controlling any further damage and organization of
event are huge and data validation issue also
help based on situations
remains

Table 4: Opportunities for Customer Experience improvement and cost reduction along the value chain

The time has gone for the insurance The choice for most insurance
organizations to start their digital carriers is to transform into a
journeys. While many have adopted risk manager, advisor and value
technologies such as digital aggregator at the center of a digital
distribution, grafted their digital ecosystem that delivers high-value
strategies onto legacy systems, services to customers every day, or
business processes and business be pushed to the periphery as an
models, it is imperative for them interchangeable, commodity service
to plot the stages of their digital provider with limited control over
journeys where they will transform your destiny.
their businesses more thoroughly.

41
42
Conclusion
The Indian insurance industry is
not new to changing consumer
preferences. Indian consumer
preferences have known to change
with rising and falling economic
growth (eg. stock market booms),
social communication trends (eg.
advent of the mobile) and structural
(eg. rise of the motor OEMs).
However, the push towards Digital
stands apart from all these changes
in terms if the size and speed of
the change. Till now, insurance
companies largely had an ability to
tackle these changes, absorb them
into their operating models and
hence, have a revised customer
proposition in quick time.
Probably for the first time, the
market change has left the
insurance industry well behind in a
very short period. Over the last three
years insurers have begun to feel
the need to relook at the way they
can position themselves in front
of the client in a fundamentally
new manner. This is especially a
challenge for the industry as the
direct customer touchpoints with
insurance companies are few.
The Digital push brings three
types of opportunities for insurers
currently drive todays insurance
companies. As a result, we also see
in India. The first is in terms of a clear focus of insurers on the
repositioning themselves in front of revenue enhancement side and
the customer. The opportunity stems little or no focus on digitizing their
from the fact that insurers now operating models.
have a channel to directly reach out
to the customer. Creation of a new In the short to medium term,
ecosystem, or being a part of one we expect to see new insurance
would be essential to stay relevant companies (more so in the non-life
in a customers mind. However, in segment) looking to tap into the
order to do the same, insurers would Digital space while existing insurers
need to break the barrier of low- ready themselves to innovate
awareness for risk management and deliver new propositions.
These companies would test the
The second opportunity is in terms
boundaries of what products,
of helping improve revenues by
increasing the number of insurance channels and processes can actually
be digitized and to what extent the
customers and by increasing risk
management products being sold to industry will continue to be driven
existing customers. Given the nature through traditional ways of doing
business.
of products, the non-life insurance
segment is better suited to tap into
Digital based revenue growth.
The third opportunity is in terms of
reducing operating and distribution
costs. While the business case for
cost reduction is fairly obvious in
Digital, implementation and value
accretion has been a challenge
for insurers. The key constraint to
implementing changes for a Digital
value chain are the legacy systems
(manpower and technology) that
43
Contact
Samir Bali
Managing Director
Financial Services , Accenture India
samir.bali@accenture.com
Naman Vidyarthi
Principal, Accenture Strategy
Accenture India
naman.vidyarthi@accenture.com
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