Opinion: Insurance Disrupted Through Exponential Technologies

The rate of technological change is accelerating so fast that our ability to understand the implications of it has never been so challenging and important. Start-up companies unburdened by inertia or market expectations are growing faster than ever - and displacing incumbents in record time. Over the next five years, financial services will be dramatically disrupted, primarily by greater customer empowerment and technology-driven innovation.

Recognising and embracing exponential opportunities sets apart successful leaders from linear thinkers. There are a number of key exponential domains that are emerging in the marketplace and in this article, we will focus on some of these exponentials that are disrupting the insurance sector.

Rise of conversational chatbots

Companies have used chatbots for customer service for a number of years. A number of factors like advancement in cognitive technologies are ushering in a new era for chatbots which are making it possible to provide increasingly accurate and relevant automated dialogues. With the emerging trend of "app fatigue" - a declining willingness among consumers to install and use new mobile apps, chatbots are set to become the new standard for customer interactions. As consumers become more tech savvy, chatbots are set to become the new norm for forging sustained loyalty between customers and brands.

Wearables and IoT (Internet of Things)

Wearable technology has become an increasingly popular trend over the past few years and these devices have the prospective feature to elevate brand engagement to new heights. The emerging use of these devices in the insurance industry will require a strong futuristic-driven approach to make it a success. Insurers will require planning the inclusion of such devices in their product lines and determine the critical points to consider sensory data input for pricing these products. Insurers will need to distill the strategically important data out of all the noise and build robust data and network infrastructure to handle the volume and velocity of data.

On-demand insurance

The new age internet insurance companies are looking at revenue streams which were traditionally untapped by the established insurance companies. On-demand is the expectation of the connected generations and insuretech companies like Trov and Sure are offering insurance enabled by smartphones and allowing the customers to get the policy on-demand rather than annual coverage.

Sharing economy

The concept of the sharing economy surfaced roughly 15 years ago. Since then, it has disrupted many industries by redefining their core business models. Insurance start-ups like Lemonade borrow from the on-demand, sharing-economy ethos of Uber and Airbnb. The company is one of few start-ups offering peer-to-peer (P2P) insurance which operates by pooling insurance premiums from people who know and trust one another. That pot of money is used to pay members' claims, and members then keep any unused cash.

On the surface, the easiest customer segment to access for P2P might be the urbanites and SME owners but the largest opportunity clearly lies with the uninsured Indians.

Blockchain

Blockchain is a technology that is ready for exploration by insurers. Blockchain promises a unique potential for insurers to efficiently serve emerging markets with P2P micro-insurances, develop products for the IoT market, or reliably share data for fraud detection or automation of claims handling.

Individual insurance companies should start with a holistic understanding of customer needs and their own pain points to identify the high-impact blockchain use cases. They can take up low-risk, internal proof of concepts in the short term and later expand to broader deployments involving partners and third-party networks. At an industry level, community can be formed to explore use cases such as checks for agent recruitment, detecting AML violations, improving customer outreach for unclaimed amounts, and curtailing claims fraud.

Robots are here

Over the past few years, businesses of all types have rushed towards robotics. The greatest focus has been around Robotics Process Automation or RPA, particularly in functions like finance where processes are highly repeatable, regular and routine. Some of the specific examples of insurance processes that are being automated through RPA are first notice of loss, fraud checking and policy renewal.

While there are several debates around robots taking away jobs, tax on robots etc., it is clear that the onward march of the robots is inevitable and we believe that the time is ripe for business leaders to join the RPA bandwagon and embrace this wave of the digital workforce revolution before it's too late.

Riding the wave of exponential innovation

This article highlights some of the key exponential technologies that are disrupting the insurance sector around the world. Some of these might seem like a fad at the moment but the wave of exponential innovations is here and it is a matter of time before some of these will enter the Indian insurance market. The time is right for insurance providers to size up opportunities and identify the exponential technologies that can be put to work in their own organisations.

(Rajarshi Sengupta is Chief Innovation Officer and Sudeepta Veerapaneni is Senior Manager, Innovation at Deloitte Touche Tohmatsu India LLP)

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