Demonetization has quickened the pace of digital transformation in the insurance industry.
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The impact of demonetization on the insurance industry

The insurance industry in India is already in the midst of a digital revolution. With internet penetration and adoption of smart phone users growing rapidly, India already has a very conducive environment to support digitization of the insurance industry. The recent demonetization policy has only made the situation more favorable for the industry.

According to the Insurance Regulatory and Development Authority of India (IRDAI), the individual single premiums collected for life insurers in November grew by 507% to Rs. 6,692 crore from Rs. 1,103 crore last year. There has been a significant month-on- month growth post demonetization. The segment grew 170% in November from Rs. 2,481 crore in October.

Over all the industry also witnessed a noteworthy 40% jump in November as compared to the average monthly growth of 28%. Government initiatives such as discounts offered on e-purchase of insurance policies or for making premium payments online is further strengthening the industry’s move towards digitization.

According to Victor Sen, SVP, India Operations, AXA Business Services, "Demonetization has quickened the pace of digital transformation in the insurance industry and boosted the need to embrace an online economy. Adopting a digital approach is crucial for insurers to achieve improved operations, assure greater customer service and improve revenues. Business models will continue to undergo fundamental transformations while new products tailored to suit consumer needs will be introduced to the market. Digital will both have a business-first and consumer-first impact on the industry. It will streamline operations and reduce cost per acquisition on the business front. For customers the impact would be on the ease of access to both purchase and getting their policies serviced online with faster resolution time. This will be a significant benefit especially for consumers in the tier 2 and 3 cities where internet adoption is fast growing.”

Insurers are better placed to offer direct-to- customer sales and services through web portals and apps. These are highly instrumental in improving customer engagement and driving a seamless experience. For instance, Bharti-AXA has partnered with Airtel Payment Bank, the first company in India to launch a payment bank on the user’s mobile phone, offering personal accident insurance to all of its new customers for free as long as they use their account once a month. Similarly, the AXA Drive App helps drivers analyze, understand and improve their driving behaviors. This becomes substantial when applying for car insurance that offers discounts based on the person’s driving skill. But more importantly, it focusses on the safety.

Digitization is also paving way for increased collaboration within the industry. In a recent study, more than 70% of respondents (insurers) mentioned that digital is a strategic means to envision, design and devise tactical enablers to ease the operational hassles of their customers, employees and partners alike.

Source : APAC’s Digital Insurance Transformers: Illuminating the Way Forward - Cognizant

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