 "Millennials buy insurance for family covers")
Insurance companies should have a long-term digitisation roadmap, said ‘the Changing Face of Indian Insurance: In Pursuit of Profitable’ report jointly published by Boston Consulting Group (BCG) and Federation of Indian Chambers of Commerce and Industry (FICCI).
The report said that insurers around the world are increasingly digitising front end sales processes as well as back end processes in an effort to achieve higher productivity, operational efficiency and cost benefits.
“As most Indian insurers are just embarking on the digitisation journey, it is important to prioritise processes, build supporting capabilities and define strategies for implementing and driving adoption,” it added.
The report showed that digitisation benefits all key stakeholders: on the ground sales force, managers, back end teams as well as customers. According to it, with the progress of technology, almost every insurance process can be digitised, but Indian insurers need to individually evaluate their starting position and prioritise processes and initiatives that can deliver maximum value.
“At BCG, we have identified major trends such as digitisation, changing consumer needs and ageing changes that are expected to impact the sector in its next phase. However, the challenge lies in sustaining profitable growth” said Alpesh Shah, Senior Partner & Director at BCG, India and Head – Insurance Practice in Asia.
The report also said that insurers need to look beyond just the actuarial valuations and focus on how to create a truly valuable company that can provide sustainable returns to shareholders and also continue to create value. Also with respect to listing, it said that while regulator has allowed insurers to get publically listed, it said that an IPO only makes sense as an integrated part of a strategic plan.
“Insurers should first set a valuation target, define an appropriate strategy and make decisions accordingly,” it explained.
It has been 15 years since the privatisation of the Indian insurance industry. The objective of privatisation was to create awareness and increase insurance penetration in the country.
The report said that the industry has, during this period witnessed several dramatic shifts, including emergence of bancassurance, de-tariffing, regulatory activism, explosion of health insurance as well as the emergence of large government insurance schemes.
The report said that the industry has, during this period witnessed several dramatic shifts, including emergence of bancassurance, de-tariffing, regulatory activism, explosion of health insurance as well as the emergence of large government insurance schemes.
Some of the key trends that are expected to impact the sector in its next phase as per the report include the digital imperative, changing consumer needs and behaviour, apart from factors like regulatory activism.
It also added that digital is likely the most important trend amongst all of the above. As industries are disrupted by bold digital business models from non-traditional attackers, the report pointed that more and more traditional companies are at risk of extinction.
