Digitalisation of the Sales and Servicing 26th India Fellowship Seminar (IFS) Institute of Actuaries of India Digitalisation of the Sales and Servicing Process of an Insurance Company – a challenge and opportunity Prepared by: Harvinder Kaur Siddharth Kumar Goel Devesh Khatri Reviewed by: Malvika Nath www.actuariesindia.org

Agenda Introduction Digital Sales: Opportunities Digital Sales: Challenges and Possible solutions Digital Servicing: Opportunities Digital Servicing: Challenges and Possible Solutions Standards/Professional and Ethical Requirements Way Forward QnA www.actuariesindia.org

Introduction www.actuariesindia.org Digitalisation – A need for today What we intend to cover? – Sales and servicing Current practice and Limitations in the Indian Insurance industry Customer need analysis and advice process Informational Asymmetry (Policyholders and Sales Persons) Processing time, costs and resolution Some Data Facts Percentage of internet users in each age group who use social networking sites, over time Insurance online experience lags behind 0 20 40 60 80 100 15.2 4.0 11.8 11.1 10.0 8.9 8.5 8.0 5.8 ~7.3 5.0 4.3 4.2 4.1 3.8 3.5 Personal Banking Online Merchants Media Retail Electronics Apparel Retail Airlines Retail Investments Hotels Supermarkets Electricity, Gas, Water Automobiles Government Services Health Care Providers   Insurance Real Estate Telco & Cable   Feb-05 Apr-09 Feb-12 May-13 Source: Pew Research Internet Project, BCG Analysis, Morgan Stanley Research Source: BCG digital satisfaction survey March 2013, Morgan Stanley Research www.actuariesindia.org

Digital Sales: Opportunities Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling More focused marketing strategies and better persistency Insurance Sales practice Opportunities for an Insurance Company Agents generate lead Use of social media like “Facebook” Reach data quality and information of each customers Data analytics Customer’s needs analysis by agent Use of mobile apps and tabs Customized solution along with transparent information disclosure Proposal form filled and submitted into the office E-proposal form Electronic submission along with the images of other relevant documents Underwriting and interaction with underwriter Auto-underwriting leading to STP (Straight Through Processing) Tracking of status through internet Issuance of physical copy of policy bond Dematerialization of policy information (policy bond etc) www.actuariesindia.org

Digital Sales: Opportunities (Continued) Advantages of digitalisation of the process Reduced TAT (possibility of instant issuance) Reduce cost of printing Reduce need of resources involved in manual processing Hassle free buying process for customers Reduce mis-selling Better persistency Increase effectiveness and efficiency of sales process www.actuariesindia.org

Digital Sales: Challenges and Possible Solutions Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Digital Sales: Challenges Possible Solutions Adoption of new technology by Distributors Early Involvement with distributors Smooth shift towards digital sales Updating IT systems – a painful process Invest to hire IT experts Arrange training to the existing staff members High initial as well as upgradation cost of technology and digital sales channels development Some industry level tools as all have similar requirements Develop in-house IT and digital distribution management team Detailed cost and benefit analysis www.actuariesindia.org

Digital Sales: Challenges and Possible Solutions (Continued) Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling Digital Sales: Challenges Possible Solutions Lack of infrastructure or less educated customer base in rural areas Existing manual sales for rural areas Offline completion of the process and submission after getting the internet connection Non- standardisation of Product/ Proposal forms etc. leading customization of applications on regular basis Understand changing customer’s needs continuously Work in harmony with sales, underwriting and IT teams Keep an eye on competitors’ action www.actuariesindia.org

Digital Servicing: Opportunities Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling More focused marketing strategies and better persistency Insurance Servicing Areas Examples - Digital Servicing Opportunities for an Insurance Company Premium payments Mobile apps to provide services Easy premium payments Premium reminders results in improve persistency Alterations and other after-sale services Digitally assisted customer-support services; Online messenger to solve customer’s grievances etc Saves call centre/ contact centre costs Save training and recruitment cost Relatively faster solution to customer grievances Increase transparency Improve customer’s satisfaction and hence persistency High sales Continuous engagement with customers Digital feedback mechanism (E-Surveys to customers) Help in understanding customer’s needs Encouraging development of innovative and new product designs Better competitive position in the market www.actuariesindia.org

Digital Servicing: Opportunities (Continued) Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling More focused marketing strategies and better persistency Insurance Servicing Areas Examples - Digital Servicing Opportunities for an Insurance Company Claims management Digital and integrated IT systems for claims detection, reporting and settlement Reduce fraudulent claims Reduce cost of claims management Relatively quicker settlement of claims Increase efficiency and effectiveness of claims processing Policy admin system Automated and well designed policy admin system Helps to automatically update the policy information Easy accessibility to the information in future Improve Turn Around Time to answer customer’s queries Well maintained Policy level data Improve efficiency and transparency www.actuariesindia.org

Digital Servicing: Challenges and Possible Solutions Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling Digital Servicing: Challenges Possible Solutions Digitisation of servicing as a perceived threat Early Involvement with IT experts Detailed analysis of cost and benefit and impact on business Arrange trainings and seminars Piecemeal approach - as it takes time to move from non-digitalised to digitalised environment Do detailed research before implementation Ensure smooth and step-by-step transition Risks due to developing regulations in the Indian insurance industry Ensure the sales and other related team are updated Keep continuous eye on regulation Ensure timely implementation of changes in regulation Do research on likely impact of changes www.actuariesindia.org

Digital Servicing: Challenges and Possible Solutions (Continued) Challenges of a heterogeneous IT landscape Build a central repository for all customer data Develop a model for improved and increased consumer interaction across multiple channels Build strong data analytics capacity Ensure flexibility and speed in both front- and back-office systems Cyber risk and data security risk Invest in data protection software e.g. high quality anti-virus Build a team with software skills experts o support data security Make strict compliance rules within organisation Arrange internal trainings on data security and its importance Organisation specific challenges: Large companies - Difficulties due to lack of flexibility Small companies - Difficulties due to disproportionate investment Large companies – use their surplus funds Smaller companies – use their ‘agility’ Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling More focused marketing strategies and better persistency www.actuariesindia.org

Standards/Professional and Ethical Requirements Area/Regulations Points of Interest Data Protection Requirements OECD, EU and APEC The Eight Principles Is any Advice being given? Material Impact from Consumer’s perspective Requirement assessment Detailed log of circumstances IRDAI (Expenses of Management of Insurers transacting life insurance) Limits on total expenditure classified as expenses of management. Well-documented policy for expense allocation Auditing requirements IRDAI (Insurance Services by Common Service Centres) Regulations What is CSC? Requirements related to CSC-SPV and RAP IRDAI (Web Aggregators) Regulations Requirements related to registration and operations Practice conducts Maintenance of data and data privacy Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling www.actuariesindia.org

Standards/Professional and Ethical Requirements (Continued) Digitally assisted sales on tablets – Meeting today’s customer’s expectations Rapid issuance of policy using tele-underwriting – Increase efficiency of sales process Online sales of products (Accept/Reject) – Fast processing of the product and reduce selling time E-proposal forms and documents submission - Reduced cost of printing and resources involved in manual processing Digital application process – Increase transparency as status of the proposal completely trackable Easier performance appraisal of the process and bottlenecks through real time information Reduced Fraud and mis-selling Area/Regulations Points of Interest IRDAI (Insurance e-commerce) Regulations Requirements related to registration and operations Safety of data Bridging gap between traditional methods and the new technology IRDAI (Revised Guidelines on Insurance Repositories and electronic issuance of Insurance Policies) Insurance Repository Insurance Transaction Exchange (iTrex) www.actuariesindia.org

Way Forward www.actuariesindia.org Data Security Robo Advisors Machine learning Wearable Technology www.actuariesindia.org

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