AS the Indian economy limps back on the path of recovery, businesses now will look for making up for lost time in the year 2020 and focus back on growth. Considering the challenges the world faced in 2020, Indian Insurance industry has done reasonably well, more or less maintaining its performance in the FY 19-20. The objective in the FY 20-21 was to survive by keeping both Capex & Opex under check. As a result, Insurers delayed & deferred strategic initiatives requiring large Capex and spent money only on what was absolutely necessary. Now as the corporate budgets for FY 21-22 get discussed & finalised, here is my take on Technology initiatives Insurers will spend money on in the upcoming year (not necessarily in the order stated below):
1. Digital Transformation of Customer Acquisition processes:
India has always been ahead of its Asian if not Global peers, when it comes to adoption of tech in Customer acquisition processes. The reasons for this are 2. First, Insurance Industry opened up in India coinciding with Internet revolution around the turn of the millennium and, 2nd, when mobile revolution started Industry was still young with fairly open and flexible IT architectures. But its almost 6-8 years since industry first started implementing mobile tech. Technology has further evolved over this course and there is a renewed demand for further digitisation of the customer acquisition processes. As a result I expect some insurers to look at their existing technologies / platforms to be replaced by more modern platforms (e.g. Microservices based, AI/ML enabled, Cloud friendly) for Customer Acquisition, while others may carry on with patch work. But I expect Insurers to continue to spend significant money on initiatives in this space.
2. Integration with Distribution Partners for New Business, Policy Servicing & Claims Processes:
Developments in Integration Technologies have really made possible for enterprises to extend their processes beyond their boundaries & integrate with their suppliers and distributors so as to offer seamless experience to their customers. Such integrated operations and supply chains right upto the sales, delivery & service points for the end consumers do exist in many industries. However, despite the buzz about Process & Data Integration with Distribution Partners, not much work has happened in this space largely due to lack of priority / technology maturity of the distributors or due to regulatory challenges. Initiatives in this space are mostly led by distributors which are Insurtechs. However, with the need for digitised processes, I expect some momentum and spending by Insurers for initiatives around Partner Integrations.
3. Back office Process Automation:
Process Automation has been largely driven by implementation of BPM Systems, Rules Engines or point applications or solutions such as Auto Underwriting tools. However, there is a new kid (actually not really new considering we that live in the digital age) on the block: Robotics Process Automation (RPA). RPA space is fast evolving. Some players are bundling RPA, BPM and AI/ML as part of their platforms to offer what some analyst firms define as HYPER RPA platforms. Whether its RPA or Hyper RPA, this is going to be an exciting space offering new avenues for the Insurers to improve process efficiency & productivity in their back office operations and also functions such as Finance, Actuarial, Legal & Compliance.
4. Automation of Claims Management process:
Claims Management has been an are of low priority. Factors such as Changing operations models in case of Health Insurers, Size of the business of the Life Insurers, and regulatory requirements are pushing Insurers to look for Claims Systems that support digital & paperless process flow & decision making. Many insurers are now evaluating platforms and systems to automate & modernise their Claims processes.
5. Data Management & Data Quality Management:
Data Quality & Management is the foundation for Single Version of Truth. But pursuit of growth and strategic initiatives to enable this growth have always meant that Technology teams of the Insurers have been too stretched to give any meaningful attention to Data Flow, Data Quality and overall Data Management within the company. However, as AI/ML and Advanced Analytics initiatives take priority within the companies, it has become necessary for Insurers to invest in Data Management & Data Quality platform & technologies.