BS BFSI Summit 2023: 'Technology creating watershed moment in insurance'

IRDAI's chairperson Debasish Panda said there is a need for regulators to embrace innovation and make consumer-centric policies

Technology is bringing about a big change in the insurance sector of India, and in these times, there is a need for the regulatory process to be agile and adaptive, Debasish Panda, chairperson of the Insurance Regulatory and Development Authority (Irdai), said at the Business Standard BFSI Insight Summit 2023 in Mumbai on Tuesday.

"Insurance companies must invest in streamlining policy process, access, and claim processing through digital platforms by embracing tools like mobile apps and chatbots to enhance customer engagement and simplify insurance procedures," he said. 

"To harness the full potential of the sector and ensure its continued relevance, development and technological advancement is necessary. The insurance sector must embrace innovation," he said.

 

While talking about innovations, Panda said that new technology allows easy processing of voluminous data, enabling insurers to go ahead with predictive analysis, assess the risk more accurately and enhance the overall precision of underwriting processes.

"This not only benefits insurers by minimising risk but also empowers policyholders by offering premiums respective of their unique risk profile," he said.

Stating that there will soon be a time when there will be no need to file claims, Panda said that quantum computing will become a reality soon. "We got to be future-ready," he said. He added that artificial intelligence (AI) is leading to enhanced customer service efficiency.

Also Read: Technology can help reach more customers in life insurance sector: LIC MD

Moreover, according to the Irdai chairperson, climate change has set its sights on the insurance sector, and the regulators must take note of that.

"The increasing frequency of natural disasters necessitates a proactive approach. There is a need to adopt by leveraging advanced climate modelling to anticipate and mitigate climate-related risks," he said.

While emphasising that the main responsibility of a regulator is to empower the customer, Panda said that financial sector regulators in India must take cognisance of tech innovations and build these scenarios into the regulatory framework. Also, the consumer should be educated so that they can make an informed decision. 

Panda said that the focus should be on consumer advocacy groups and organisations dedicated to safeguarding the rights of financial services users, ensuring that their voices are not only heard but heeded.

On regulations, he said that there is a challenge to draft such rules that can foresee, predict and provide guidance for the events of the future.

"We need to allow an agile framework which would allow for revisions and adaptations to accommodate emerging trends and risk," he said. "Regulatory framework must display flexibility and adaptability."

Panda further said, "It may involve revising capital requirements, introducing new reporting standards or implementing specific regulations tailored to emerging issues. Therefore, regulation is a continuous job. You have to be on your toes all the time."

Also Read: BS BFSI Summit 2023: No funding winter in PE investments, say experts

Panda also cautioned that if the sector fails to do this, the regulations may become "more of a hindrance than a guardian".

Addressing the event, Panda added that in these rapid tech advancements, there is also a need to push more insure-tech players. He highlighted that the regulator is already working in that direction.

"We are regularly conducting regulatory sandbox experimentations, hackathons, and the insure-tech mission mode team is working day in and day out towards these objectives," he said. 

Panda also cautioned that in a digitised world, cybersecurity assumes a position of "paramount importance". "I believe the insurance industry is up to the challenge," he, however, added.