Banking Insurance

breathe-easy

Fri Aug 09 14:56:43 IST 2019

As per the Global Burden of Disease Study 1990-2016, there are 93.2 million patients in India with asthma and chronic obstructive pulmonary disease. Increasing urbanisation, poor infrastructure and worsening pollution levels only add to the conundrum. Also, according to a World Health Organization report, in a test unit of not-so-well managed asthma patients, 42 per cent had to be given emergency treatment at least five times a year and 18 per cent had to be hospitalised twice or thrice. Asthma patients are at a high risk of developing conditions such as stroke, pneumonia and gastroesophageal reflux.

Hence, ongoing and timely management is absolutely critical and, if the condition is managed properly, the patient can live a healthy life without any barriers. It, therefore, becomes imperative for asthma and COPD patients to buy health insurance.

Below are five points patients should consider before purchasing health insurance:

Know the coverage: As an asthma patient, one would need a health cover that funds the outpatient expenditure, offer services of an experienced coach who can engage with the patient continuously to keep the condition well managed and covers hospitalisation, if needed. There are such condition-specific health insurance policies that offer comprehensive coverage. Thus, before purchasing health insurance, you need to know which type of plan best suits you and your budget.

Consider out-of-pocket costs: Health insurance does not cover certain elements of medical costs. There could be co-payments, deductibles, sub-limits and non-payable items. Co-payment is a specified percentage of admissible claim cost that the customer bears each time during a claim. Deductibles are the amount one pays for covered services in a given year before the insurer pays. Non-payable costs are those which the insurance won’t pay. Sub-limits are caps on amounts payable for specified items in the policy coverage. Therefore, it becomes vital to understand these costs before buying a health insurance policy.

Check if the drugs and doctor's outpatient consultations are covered: When choosing between options, the information provided may not be necessarily sufficient to know which one covers asthma best. After narrowing down your plan, it is recommended to call the insurance company to ensure if the doctor’s fees, medications and hospital charges are comprehensively covered. A good health insurance plan covers the expenses of the numerous tests along with doctor’s consultation fee and the cost of medication even if the patient is not hospitalised.

Hassle-free treatment and recovery: Asthma can make an individual go through the worst transitions, while the financial stress can cause depression, which usually hampers the recovery process. A good health insurance cover meets all the aforementioned asthma-related costs and aspects so that a patient can focus on her health and be rest assured that she is backed up by a financial safety net. Please check that you are comfortable with the brand of the insurance company and its past record of claims payment and turnaround times.

Check for other covers or services: There are products that offer services of a qualified health coach who guides an asthma patient to manage her condition well and ensures that she adheres to the treatment protocol. Relationship with a health coach is like that with a family doctor owing to the personalised attention.

It is important to be wise while investing in a health insurance plan. Please invest in a policy that can be a partner with you in health and illness and ensure that your health is well-managed to minimise hospitalisation. This will not only provide comprehensive financial protection, but also give peace of mind to you and your family.

Sriram is chief actuary, Aditya Birla Health Insurance Co. Ltd.

plan-of-action

Fri Jun 07 17:55:16 IST 2019

To answer the most pertinent question about life insurance—how much sum assured or life cover is enough—it is important to first realise one’s need. As per the recent ABSLI Protection Survey, 84 per cent Indians feel uncertain about their lives and these uncertainties have increased sharply over the last five years. Interestingly, 83 per cent people realise that life insurance, along with other investment tools, can help in managing these uncertainties better. Unfortunately, in spite of this revelation, an average Indian today is covered only 1.67 times their gross income. In other words, an average Indian is insured for Rs8 lakh while he or she requires a minimum cover of Rs75 lakh. This data highlights severe underinsurance which can be attributed to low awareness and the widespread fixation on insurance-cum-investment products.

It is important to treat life insurance as income insurance and not death insurance. Hence, this question—have I insured my current as well as future income? The biggest truth is that no one knows what the future beholds and uncertainty looms large. It is vital that you protect your income and plan for your finances. For that it is prudent to first decide how much is enough. What was your money doing and what were your plans? In case of income loss, what was the impact? Key to these answers is robust planning. Also, analysing well as to which financial instrument will best fulfil your financial requirements.

Speaking of life insurance, there are several products which offer diverse benefits. These policies must take care of the essential expenses that your family will incur, like standard of living, child’s education and marriage, and other liabilities like loans and debts. Asking yourself the following questions will take you a step closer to determining the ideal sum assured:

What is my income potential?

Life insurance works best as an income replacement tool. Take into account inflation, basic financial needs and your future aspirations to do the math. Therefore, it is important to consider your current and potential income until retirement. As per financial experts, life cover should be 10 to 15 times the gross annual earnings. Ensure the value is enough even after years from when you start.

What are my financial goals and liabilities?

While you decide on your income potential and decide on the total amount needed, do not forget to consider your financial goals and liabilities. They play a decisive role in choosing the appropriate cover, as a higher sum might be required towards protecting your finances completely while gunning for your dreams and aspirations. For instance, if you purchase a cover of 050 lakh, it may be insufficient after 10 years, considering factors like inflation, increasing financial needs and your existing liabilities like loans.

How long do I intend to work?

With millennials and Gen Z coming to the workforce, gone are the days when people would retire at 60. Many desire to pursue their dreams, start on their own, while some would want to work beyond retirement age. A well-planned life insurance cover can make it easy. It can be a second income or a substitute to salary as per one’s plan. Therefore, decide a cover amount that can help you plan your retirement or pursue your dreams at the right time, without the concerns of finances.

How healthy am I?

Its prudent to be realistic about your health conditions and lifestyle. The medical history of you and your family should be considered before deciding on your life cover. It is best to opt for an adequate sum assured at the prime of your health at a competitive and lower price. Higher probability of health risks can lead to draining of finances. It is best to plan and prepare for it, and ensure that it does not eat up your savings or interfere with other financial goals.

Can I augment my cover with need based plans?

Riders will be the answer to your question. These plans alleviate your primary sum assured with need-based covers. While your life insurance amount will protect your income and desired goals, the riders will come into action with lump sum benefits in case of a specific eventuality like critical illness, disability or death due to accident. Riders hand out a lump sum payment upon the occurrence of the event, over and above the base sum assured.

If your life insurance cover is insufficient, then the whole idea of securing your family is defeated. What is the use of a sum that would not even fulfil your future requirements? Answering these questions will guide you towards the adequate amount to truly protect your money.

Singh is chief actuarial officer at Aditya Birla Sun Life Insurance.

double-indemnity

Fri Jun 07 17:52:10 IST 2019

Chandigarh-based Arjun Chaudhary met with an accident resulting in a fracture that required three months of bed rest. The prolonged absence from work resulted in loss of pay. Arjun's health insurance policy only covered hospital expenses and did not offer income replacement. As a result, meeting his family's monthly expenses became a difficult task. A life insurance policy with a personal accident rider covering temporary disability would have been an answer to Arjun’s problems. Such riders offer a fixed sum to the insured person for a few weeks to months.

Life insurance policies are purchased with a vision to protect the financial future of the family in case of the unexpected demise of the breadwinner. Thus, they act as an income replacement device. A term insurance policy basically offers a death benefit—a lump sum to the family of the insured. Hence, such policies are the best tools to compensate for the early loss of an earning member.

However, purchasing an insurance policy merely to protect one’s family from one's death does not serve its purpose entirely. Apart from death, there are sundry other unanticipated threats, like total or partial disability due to an accident and critical illness. Thus, one must be equipped to face these challenges and have enough backing to guard against them.

The probability of risks varies from person to person, and so do insurance needs. Insurance riders are one of the most effective ways to customise one’s life insurance plans and thus opt for complete coverage. Riders are one of the distinctive features of term insurance that offer added protection and coverage for a marginally higher premium. Riders are available for diverse purposes, and they can be added to the term insurance policy to garner extended benefits.

Here are some of the most vital riders:

WAIVER OF PREMIUM

Several insurance policies cease to be active if you are unable to pay premiums for a specific period of time. This rider ensures that your policy does not become inactive if you default on a payment owing to disability. In such cases, the future premiums would be waived, but your policy remains.

CRITICAL ILLNESS

This rider offers a supplementary cover for critical illnesses like heart attack, stroke, cancer, kidney failure and paralysis. This rider goes a long way in protecting policyholders from any major medical expense and ensures that medical attention is not deferred due to lack of finances. Policyholders become eligible to receive a predetermined lump sum as soon as a critical illness is diagnosed.

DEATH IN AN ACCIDENT

Death of an earning member may burden the family with medical bills and unfulfilled financial liabilities. This rider offers the family additional benefits in such an eventuality.

PARTIAL AND PERMANENT DISABILITY

There may be times when policyholders suffer from partial or permanent disability owing to accident. In such scenarios, several policies pay you a percentage of the sum assured for the next five to ten years. This is to compensate for the possible loss of income because of the disability. Total disability gives you full sum assured, while partial disability gives partial sum assured. You can, thus, rely on this rider to substitute your regular income source.

INCOME BENEFIT RIDER

The aim of this rider is to provide regular income for the family of a deceased policyholder. Payment is usually made as some percentage of the total sum assured, and acts as an additional income for dependents. If an individual adds this rider, the policyholder’s family gets an auxiliary income for five to 10 years along with the regular sum assured. For instance, 10 per cent of sum assured for the subsequent ten years.

Riders are great financial tools to assist you to plan prudently for adverse and unanticipated events in your life. These events may not happen, but, planning for them is the best strategy to keep yourself and your family safe at all times and under all circumstances.

Anil Kumar Singh is chief actuarial officer, Aditya Birla Sun Life Insurance.

scare-free-sojourns

Fri Jun 07 17:48:09 IST 2019

Nirmal Kumar, a Bengaluru-based IT professional, was en route from Delhi to Haridwar with his family when his baggage, which had some costly items, was stolen. Luckily, he had bought travel insurance even for this short domestic holiday, and recovered his losses. Like Kumar, 32, more and more people have started opting for travel insurance for domestic travel.

“Flight delay or cancellation, loss of passport or baggage, and medical emergencies are still the biggest challenges for travellers, for which there is an utmost need to buy travel insurance,” Dr Shreeraj Deshpande, principal officer and CEO (officiating), Future Generali India Insurance Company Limited, told THE WEEK. “Also, in any unexpected incident, where a traveller might be held financially and legally responsible for damages caused to another person or their property, travel insurance can be helpful.”

Deshpande said there is a growing demand for international travel insurance as most countries insist on visitors having sufficient coverage. “For international travel, the expenses are often very high if a person is trapped in any unforeseen event or suffers any medical emergency,” he said. “Domestic travel insurance is also booming with growing travel within India, especially in metros and tier 2 cities.”

Younger travellers, especially students who travel overseas, were the driving factor behind upgrading travel insurance, he said. “We have the travel 'Student Suraksha' plan, which will totally take care of all the needs of students travelling abroad,” said Deshpande. “It also covers any unforeseen event that require prompt assistance, immediate evacuation or medical intervention from the insurer, as per benefits and other conditions of policy. A new traveller class is forcing many of these service upgrades.”

Broadly, experts agree that it is absolutely imperative for travellers to buy travel insurance depending on the nature and duration of the trip. “There are various risks that a person is exposed to while travelling, right from trip cancellation because of inclement weather to loss of checked-in baggage,” Gurdeep Singh Batra, national head, retail underwriting, Bajaj Allianz General Insurance, told THE WEEK. “Such risks are completely unpredictable and in case a person does not have adequate travel insurance, one may be caught unawares in an unknown city or in a country with no guidance. Travel insurance acts as a safety net that covers medical expenses in case of emergency hospitalisation, accidents arising out of participation in adventure sports, medical evacuation, repatriation of mortal remains, flight delay or cancellation, loss of baggage, loss of passport, trip cancellation, emergency cash advance, home burglary cover, etc. Thus, [insurance] ensures that people have a fun-filled [vacation], by negating the possible risks.”

One of the major reasons people opt for travel insurance is to cover medical expenses for emergency hospitalisation, considering the prohibitive medical costs abroad; some countries even have a double-digit medical inflation. Some of the other challenges are inclement weather, leading to travel cancellation, delays and missed connections. There is also increasing political turmoil and threat of terrorism, for which insurance coverage is a must.

“Many people opt for travel insurance as it is mandatory in many countries,” said Batra. “And, with the medical costs abroad, people feel compelled to get insurance to secure their international travel. However, with increasing awareness about the benefits of travel insurance and uncertainty during travel, people are increasingly securing their domestic travel, especially for covers like adventure sports.”

As per a latest survey, 8 per cent of Indian travellers buy travel insurance to cover medical emergencies, 15 per cent for loss of baggage, 8 per cent for accidental death and 11 per cent for cancelled flights. “The trip cancellation feature under a travel insurance policy falls under the pre-departure coverage, wherein the policyholder is reimbursed (up to the covered amount) for pre-paid, non-refundable trip costs,” said Tarun Mathur, chief business officer, Policybazaar.com. "The trip cancellation feature reimburses you for the cost of your entire package, up to the total sum insured. The covered expenses include travel tickets, hotel reservations, and any other activities for which you have paid in advance."

He added that Indians mostly prefer buying travel insurance for an international trip rather than for a domestic trip because many of them already have health and life insurance cover. “However, it is suggested that you buy travel insurance for domestic trips as unusual things can occur any moment,” said Mathur. “And buying domestic travel insurance, which comes at a minimum cost of 0200, will not harm travellers.”

winning-claim

Sat Apr 06 11:24:17 IST 2019

As a tool to mitigate risks related to financial worries, insurance is gaining prominence. With the availability of a variety of policies and with increased awareness about insurance, it has become common to find people who have multiple insurance policies—especially health insurance and personal accident cover. Many of us end up with multiple covers through employers, individual policies or under floater covers of parents, which might be bought through agents, banks or online. While having multiple policies can ensure appropriate coverage as per the needs of the customers, one also needs to understand the claim procedure to make claim in multiple policies, so that it is approved without hassles.

Below are a few things one needs to keep in mind while making claims in multiple polices of health insurance and personal accident (PA) cover:

HEALTH INSURANCE

Generally people are covered under employer’s group medical policies. They may also have individual health insurance policies. In some cases, a person may have individual cover and may also be covered under their parents' policy. Let us take two scenarios:

A person is covered under group policy with employer and also has personal health cover. The personal health cover may be a base cover or top-up. In this scenario, it is always beneficial to claim under group policy first as the cover is more inclusive. Also the cumulative bonus under the personal policy remains untouched. In case the expenses cross the group sum assured, other cover or top-up can be triggered. However, it is completely up to the customer to decide on which policy to claim from first.

A person has two different base covers or a base + top-up policy. In such a scenario, the person can claim under his policy of choice depending on room rent and other facilities offered. The other policy may be utilised after exhausting the first cover. Top-up policy always triggers after expiry of base cover only.

The basic rule is same expenses cannot be claimed under two different policies. If the claim amount is more than the sum insured under the policy on which the claim has been made, the balance amount can be claimed from the second health insurance policy. For this, the customer should submit attested claim documents and the settlement letter specifying the amount settled under the first policy to claim for the remaining amount from the second policy.

However, it is typically noted that most customers who buy two health policies go in for a top-up policy as their second, so that if their base sum insured is exhausted the top-up can take over seamlessly. It is important to note that the base policy and the top-up can be taken from different insurers keeping in mind aggregate deductible limits. Additionally, people should always look to upgrade their health insurance in line with medical inflation rather than add new policies. Better to be safe than sorry!

PERSONAL ACCIDENT COVER

Personal accident insurance gives financial protection to the policyholder and family in case of an unfortunate accident that may lead to death or disability. Unlike other general insurance policies which are indemnity based, PA cover is a benefit policy and claim can be made under all the PA policies unless the policy has a cap on maximum payment. Claim can be made from multiple PA policies on the basis of submission of photocopies of the necessary claim documents like FIR, death certificate and original claim form.

No matter how many policies you have; always opt for adequate cover. Regardless of the number of policies, it should be declared in good faith to the insurer while buying a new policy. This helps you get an appropriate premium and a hassle-free claims experience.

The author is head, health & travel administration team, Bajaj Allianz General Insurance.

better-together

Fri Apr 05 15:00:08 IST 2019

There is significant interest in fintech (computer programmes and technology to support banking and financial services) globally, and its ongoing evolution—the word fintech is now officially in Oxford dictionary. The fintech ecosystem in India has caught up fast with its global peers in terms of adoption and is expected to reach US$2.4 billion by 2020. Fintech firms are undoubtedly having a good time.

Fintech-driven alternative lending is the second most-funded and one of the fastest-growing segments in the Indian fintech space. There are about 20 digital alternative lending companies, each with its version of the truth, and probably another twenty in the stealth mode.

One thing common with most new-age lending companies is that they rightly understand that they have a better chance of succeeding by collaborating with the existing lenders like banks and non banking financial companies.

Banks and NBFCs have also reciprocated these sentiments and are actively tying up with fintech lenders.

How are these partnerships faring?

Many traditional lenders are finding it difficult to “let go” and adapt. They are still second-guessing, and, in spite of various tech solutions, they want to “eyeball” physical documents. Fintech lending is so much more than just another distribution channel, it is an opportunity for banks to reimagine themselves digitally.

As an ex-banker and now a fintech founder, I feel that banking and NBFC partners have to start by de-learning and adopt fintech lending truly. Every single process needs to be challenged, if it is not adding value the same must be dispensed. Open innovation is the core of digital revolution.

In their short journey, fintech in India has made credit process simpler. It is cost-effective and offers better risk assessment. However, while partnering with traditional lenders, they are often expected to carry forward their archaic pre-credit and post approval processes.

There are some gaps that need to be filled:

✤ Traditional lenders still expect physical business verifications, though there are solutions like work email and domain validation

✤ Instead of on-ground visits, use GPS tagging as an effective tool for residence verification

✤ Application forms and pre-credit documents are often required in physical format, though soft copies are available

✤ In spite of eKYC facility, physical copies of KYC are required

✤ Most of the existing lenders have not adopted e-agreements

✤ For traditional lenders, fintech is an opportunity to innovate and do away with artificially restrictive processes and documentation that have been embraced by their risk departments. They must see themselves as a stakeholder in fintech success

✤ Traditional lenders have an inherent advantage which fintech companies do not have. Similarly, fintech companies have nimbleness and technology which acts as a great equaliser.

A MATCH MADE IN HEAVEN

Fintech lenders have a responsibility to deliver on their promises. A quick look around and all you can hear is big data and machine learning. Credit grows extremely fast in good times, but can also contract suddenly and if not prepared, it may be overwhelming.

As an eternal optimist, I am sure traditional lenders like banks and fintech firms get better at working together. This is essential to reap the full benefits of innovation.

Hopefully, these are starting troubles and this partnership will eventually thrive. All it needs is a real sense of commitment to re-imagine the business model.

Anand is founder and CEO of Shubh Loans (Datasigns Technologies).

safe-and-steady

Sat Feb 09 11:42:33 IST 2019

Insurance is an industry that makes a real difference to people’s lives, especially in their dire hours of need. Unfortunately, though, the industry has quite a negative perception. Customers are worried that insurers are out to make profit and that they never settle claims.

This perception, however, is far from the reality. The combined ratio of the general insurance industry is over 120 per cent, which clearly highlights that the industry is bleeding in terms of the number of claims being settled. The industry should look to change this perception and highlight the role it plays in stabilising society and economy.

INSURANCE AS RELIEF

Thanks to climate change, the frequency of catastrophes across the world has been on a rise. Insurance comes to the rescue during such times, helping people recover financially. An example is the Jammu and Kashmir floods in 2014, which had the insurance industry instantly settling claims worth more than Rs4,000 crore, and providing a combined relief of Rs1,500 crore. After the 2015 Chennai floods, the insurance industry settled claims worth Rs800 crore, and provided relief of Rs1,000 crore. After last year’s Kerala floods, the industry settled claims worth almost Rs1,500 crore.

These figures clearly indicate the contribution of the insurance industry in bringing instant and effective financial relief, helping people with a faster recovery from the aftermath of a calamity. The unfortunate reality, though, is that economic losses have always been much greater than the insured losses.

INSURANCE IN INVESTMENT

Not only has the insurance sector played the role of a stabiliser, but has always played a critical role in the uplift and development of our country, both in terms of infrastructure and economy. General and life insurance companies in India invested more than Rs19 lakh crore in Central government securities in the first half of the fiscal year 2018-19. Including the investments in other industries, this figure comes to Rs53 lakh crore.

With these investments, the insurance industry is indirectly helping the government bridge the fiscal gap, and helping it spend on subsidies, pension, welfare schemes, infrastructure and defence. India’s equity market has been doing well, and has seen a significant rise in investment over the past few years. The insurance industry has invested Rs8.2 lakh crore in the equity market, making it a significant contributor with almost 7 per cent of the market share.

HELPING THE FARMER

Insurance has not just helped in the making of a modern India, but has also contributed towards securing our roots, which are still very much agrarian. Agriculture remains the primary occupation of most people in the country. Insurance provides the much-needed financial support to farmers in case their crops are damaged, thus protecting their hard work and money against the vagaries of nature. The industry today covers more than five crore farmers under the Pradhan Mantri Fasal Bima Yojana and the Restructured Weather-based Crop Insurance Scheme. The industry has settled claims worth more than Rs30,000 crore till the 2017 kharif season.

MAKING HEALTH CARE AFFORDABLE

The industry prides itself on contributing to the welfare of India’s most valuable resource—its citizens. Health insurance enables citizens to utilise the best treatment options available. Countries with higher health insurance penetration have people with higher life expectancy. Health insurance allows people to be self-sufficient. They can pay for the expenses on their own, without being dependent on anyone or digging into their savings. It helps them lead a respectable and dignified life.

Health insurance penetration in India has been increasing, thanks to the launch of Ayushman Bharat Yojana and other mass health insurance schemes. As of fiscal year 2016-17, insurers have covered more than 43 crore citizens under various government and nongovernment schemes. With the increasing awareness about health insurance, and the efforts of insurers to introduce products and services that cater to the needs of customers, health insurance penetration is on an upswing.

A SUSTAINABLE EMPLOYER

Providing sustainable employment is the duty of every responsible industry. As of June 30 last year, the insurance industry—both life and general—employ more than 30 lakh people directly or indirectly. Wherever insurance penetration is low, these figures will go up with the increase in awareness, making it one of the biggest industries in terms of the number of employees.

I truly believe insurance is a good social cause. As a customer, even if you do not submit a claim, your small contribution in terms of premium is helping people pick up broken pieces and reestablish something that they have lost. By opting for insurance, you secure not only yourself, but others as well.

Singhel is managing director and CEO of Bajaj Allianz General Insurance.

life-insurance-reloaded

Sat Feb 09 11:41:46 IST 2019

HENRY MINTZBERG once said, “When the world is predictable you need smart people, when the world is unpredictable you need adaptable people.” None of us will remain immune to the unpredictable and dramatic changes in every sphere of human existence driven by technology and its side effects. The implications of these changes on our food chain, health, transportation, communication, environment, jobs and economies in general are unknown today. Despite challenges of predicting the future, there is solace in the fact that over the ages, human ingenuity has made life better for society at large and adaptation to these changes will remain the only constant.

Technology evolution is one of the largest mega trends disrupting the world at large and insurance business is no exception. Today's consumers are more informed, more empowered and more social with higher-than-ever expectations of their service providers. They demand immediate gratification and tend to be impatient when they do not get what they want. They live and operate in a hyperconnected world of disparate service providers leaving behind a complex trail of digital footprint.

Traditional insurance models were largely product-centric and channel-marketing driven. With advancement of technology that we saw in the last decade, terms such as paperless, cashless, branchless are passé. The new-age insurers will turn the traditional model on its head with the customer at the centre and a suite of digital technologies, services and ecosystems will be used to tap the customer. If incumbents are unable or unwilling to change to this business model, they will cede space to new participants. With rapid changes in the operating landscape, new-age insurers will need to invest in robust mid-term and long-term digital strategies. Such digital strategies will help insurers notch up their digital quotient across the insurance value chain and exploit complete value of customer potential while being available for the consumer, 24X7, for instant servicing and query resolution. Such strategies will also aid to improve business quality, drive efficiency, reduce human dependence, make processes real-time and accurate while mitigating risks of fraud.

As per Global Findex Report released by the World Bank, the number of bank account holders in India rose from 35 per cent of the adults in 2011 to 80 per cent in 2017. Given the rising trends of financial inclusion in the country, the insurance distribution landscape is also broadening laterally. Besides proprietary brick and mortar channels like agency and direct sales, insurers have partnered with players like traditional banks, NBFCs, MFIs, payments banks and small finance banks to foray into insurance selling. With such a diverse set of distribution partners, it is important for insurers to have agile multi-distribution plug and play platforms. Such platforms can connect to hundreds of distribution partners at short notice with minimal effort, so that insurers can deliver their solutions across the length and breadth of the country on the back of the distribution partner's presence. Consumers will largely benefit through such platforms since access to insurance products will be far easier, servicing avenues will widen and transparency on the products being offered will enable them to make the right choice at the right price and convenient location.

With every passing day, consumers are shifting to online market places driven by aggregators. Until a few years ago, who would have thought the largest cab hiring company would not be owning a single car or the largest global retailer would actually be a technology company powered by Artificial Intelligence and analytics. These new-age consumers exist, live and breathe within these so called 'ecosystems' which span across diverse platforms in e-commerce, transport, telecom, health care, media, food delivery and social network, to name a few. Progressive insurers have already started work on building their own ecosystems or partnering with players owning these ecosystems. They see this as an avenue to exponentially increase their distribution penetration, keeping the operating expenses well within control. Consumers in these ecosystems can be 'nudged' at an appropriate time for an insurance product or an insurance service based on the activity or transaction the consumer is doing within the ecosystem. For example, a consumer buying baby products online can be nudged for buying a children's insurance plan or a consumer crossing a certain age threshold can be suitably nudged to buy an additional term cover on his insurance policy. Such ecosystems and platforms will enable non-intrusive insurance selling and right products can be made available at the right time to such consumers. In addition, given that the partner understands the consumer well, this information can be leveraged by the insurer to expedite and ease the issuance, underwriting and servicing of policies.

Automation and robotics technologies allow for intelligent and predictive capabilities offering virtual advice, automated decisions which are real-time and accurate with no human dependence or need for branch infrastructure. Banking, financial services and insurance sector, including some leading insurers, have invested in AI and robotics-based solutions in their technology stacks, which include chat-bots, emails and Twitter bots for answering sales and servicing queries. These bots automatically read, understand, categorise, prioritise and respond to customer queries within milliseconds, giving instant response to the consumer. Similarly, mobile servicing platforms have literally taken the 'branch office' to the customer's doorstep where servicing transactions can be performed on a mobile app at a place and time of customer’s choice and convenience. Besides, automation bots which leverage capabilities like optical character recognition, neuro-linguistic programming, voice and image recognition have streamlined backend and mid office processes to make them real time, error free and human independent. In perspective, these advancements have simplified the customer journeys both at new business and service stages, making them simple and hassle-free.

With huge volumes and variety of data being collected near realtime through application programme interface and availability of sophisticated methods for analysing and harnessing these data insights, big data, AI, machine learning and analytics are getting increasingly institutionalised across data intensive industries like insurance. Perhaps, data may become a new revenue stream for players and we may see the breakout of data-as-a-service (DaaS) strategies across players. In addition, cloud infrastructure allows firms to use and process this humungous enterprise data to enable fast and accurate decisions at the click of a button with abilities to scale on demand with no infrastructure limitations. These advancements have helped insurers in predictive analysis across areas of the value chain like reduction in claim settlement time from weeks to days, fraud analytics at the time of new business and payouts, product propensity model, persistency and employee attrition to name a few, ultimately ensuring the end consumers are benefitted.

Another key area the insurance sector management teams need to stay sharply focused on is attracting and retaining talent. Insurers which offer superior employee value propositions will enjoy greater loyalty in an era where the workforce is younger, geographically mobile, technologically skilled, demands more flexibility, strives for work-life balance and expects greater learning opportunities. Self-paced online learning, geo-location based field force and partner tracking, hyper-personalised incentive programmes, flexible work spaces and location or office agnostic work tools enabled through iOT and mobility devices will be the key drivers to attract and retain talent while making them successful.

Given the pace of technology that is sweeping the world on one side and the large under-penetrated consumer base which is far behind the digital influence, what remains to be seen is will the insurance sector take the plunge and adopt a technology embracing position or will it stand along the sidelines and play catch-up, learning from the best practices of other industries over time. How quickly incumbents adapt to these inexorable changes will determine the size of their share in the next generation of the insurance industry.

Mulla is chief operating officer, HDFC Life Insurance Company Limited.

system-upgrade

Sat Feb 09 11:41:00 IST 2019

In this age of instant gratification, customers want to be in the driving seat of their retail loan journey as the expectations and demands have changed with the emergence of digital and mobile-based applications. Today, a customer does not wait for the bank branch to do a funds transfer, as it can be done through the 24X7 funds transfer facility available through mobile banking applications. Also, when we buy a product online, we expect same standards and quality at a better pricing than the retail store next door, else we just return the product with no questions asked.

Similar is the case when a customer approaches banks for a retail loan. He expects the bank to deliver the loan with minimum documentation and without any delay. Gone are the days when one would visit the branch multiple times to get a loan. Today, the customer, especially an existing one, expects the bank to know more about her and her needs, and hence approach her in a refined manner, maybe with a pre-approved loan offer and minimum documentation.

So, the trend we see is a migration towards a complete digital process that is smooth and hassle-free. Bank of Baroda has created a centre of excellence where it is building a complete digital process for sanction of loans. It also plans to partner with a few fintech companies that have built many solutions, and crunch the timeline to process a loan without compromising on the framework the regulators want us to follow. For example, to verify income statements submitted by the customer, there is a manual process that takes 2-3 days to get the result. The same can be done digitally in a matter of seconds, and such solutions will now help deliver superior customer experience.

Another major trend we see is the use of analytics to know the customer better and address her needs and to build a quality lending model. We know the importance of data and what it can mean for different departments. For marketing, it can bring in customer insights and conversation data across multiple channels. From a business intelligence perspective, it can be used for portfolio analytics, risk modelling and prediction of risk in a portfolio. Bank of Baroda has another centre of excellence for data analytics, which is putting in various models to work on all the aspects to bring in efficiency, more profitability and a focused approach in sale of products to customers with greater insight through data analytics.

One more major trend we see is the use of artificial intelligence (AI) and machine learning (ML) to deliver smooth processes. In this space, Bank of Baroda is discussing with fintech players to move some of the monotonous processes to AI driven by ML. Allocation of a valuation can be initiated through the AI engine, based on some data analytics parameters set in the engine. For example, data of the last two years show that some valuers have better timelines for submission of reports or have submitted quality reports. This helps us in having a system where no individual can decide who will do a particular valuation, thus reducing risks.

Another trend that we are witnessing is technological upgrade of the legacy systems that cannot integrate into the new generation systems architecture. Bank of Baroda has replaced the legacy systems that did not have technological capabilities of integrating with various fintech solutions.

Omni-channel presence is another important trend. Traditionally, the retail loan products were sold only through bank branches. Today, a retail loan player needs to be present across all important channels that can be a potential touchpoint for the customer. Hence, a digital or a branch driven strategy alone will not work. Bank of Baroda has built teams to engage with corporates, government bodies, public sector undertakings, builders, car dealers, education institutes, overseas career consultants, direct selling agents and digital channels to market products. As the customer looks at the convenience of the service delivery, the digital channels have an edge. The face-to-face interaction and physical delivery will remain high in products like home loans, but will be very low in products like personal loans.

Banking and financial institutions are gradually moving from being product-based delivery channels to a seamless mobile platform where all products can be purchased or serviced. The fintech disruption in banking and financial services seems to be the next big change after 'Uberisation' and 'Amazonisation'. Blockchain technology might be the next big thing to deliver superior process through non-traditional channels. But with banking being a highly regulated business, all this systematic changes will start with the regulator adapting and indicating the need for adoption.

Sethi is head, mortgages and other retail assets, Bank of Baroda.