Mumbai: Arvind Sundaresan, GTM (go to market) head of financial services for Asia-Pacific and Japan at SAP Asia Pvt. Ltd, talks about how technology is changing the insurance industry. Edited excerpts:
In the insurance industry, what we do today to monitor and manage risks pretty much remains the same as we did many years ago. Once a product is sold, most insurance companies do not feel the need to touch base with the customer as long as the premium is coming. In most markets, this still seems to be the practice. Most markets remain agency channel-driven and insurance companies still struggle to find out who their customers are.
Earlier, there were challenges of high interest rates. Today, there are challenges on low margins because there are too many firms out there, and customers are unable to differentiate the product offering, which puts pressure on margins.
Things have, however, started changing with the emergence of technology, such as the Internet of Things, which gives us better access to monitor the insured.
This enables the company to know the basic lifestyle of the customer, how healthy the person is, how he is taking care of himself, how he is managing his car so that the company is able to know how the cost and the premium is being managed.
But, what do we exactly mean by digital? It may mean data, it could be the process, or it could be the innovation. How do you improve product agility and time to the market? These will be key considerations, going forward.
With the emergence of Big Data, companies have technological capabilities to slice and dice data on a real-time basis. Now companies have better capability to control pricing and renew businesses by engaging more with customers.
BMW, for instance, has come up with a concept of on-demand-car, wherein one can rent a car and buy insurance only for the duration he or she is driving it. This is creating disruption in the whole concept of leasing and car rentals in the world, and will disrupt the models followed by Ola and Uber as well. These models will eventually come to India.
Companies in the health insurance space are creating new models to assess the health condition of their customers and advising them on lifestyle needs on a real-time basis so that the insurer is able to manage pricing of its products.
Every component of insurance business is changing. Today, if one dies or gets disabled, companies pay. But tomorrow, companies may ensure that such things do not happen at all. There will also be a lot of consolidation between start-ups and traditional insurance providers, because there will be people who do not change.