Hot and Happening!

The last decade saw Indian insurance industry growing at a fiery pace with domestic and multinational companies entering to Indian market with various and competitive product offerings. The huge potential in this market is one of the reasons of its growth but the success of the business and its delivery can greatly be attributed to the massive implementation of ICT. In the times to come, it is also expected that the ICT adoption in the insurance industry would not cease, rather proliferate to newer heights.

Over the years, the service providers and the consumers alike, have adopted usage of IT in a big way, and insurers in India are gradually shifting their focus to the adoption of ICT oriented tools, services, and platforms. Until now, the ICT adoption in the insurance industry has occurred in a phased manner, wherein it has exhibited a steady but impressive growth rate over the years.

Embracing Technologies

Almost all insurers have set aside a significant part of their investments for IT to upgrade and maintain the IT requirements as and when the need arises. With a commitment to embrace all possible technologies, be it in IT, telecom, or networking, to lower the transaction costs and provide seamless service to customers. They are periodically reviewing the IT investments and the progress of business goals. Any new IT investment is initiated and driven by business goals. Hence the RoI is calculated before the start of the implementation.

According to a research reports by Netscribes, ICT spending by insurers in India is anticipated to grow from last year's Rs76.17 bn with a CAGR of around 14% through 2015.

Growth Drivers

One of the biggest limitations faced by the network today is bandwidth. New technologies such as 3G will break that barrier making data available in more ways than we can think of today. Some of the advantages we see of implementing 3G are increased usage of multimedia and reaching out to offices in remote locations. 3G is making IT accessible to even remote locations, which is helping insurers to reach out to a larger population and penetrate into currently untapped markets.

Currently, many locations face an issue of bandwidth, causing delays in policy issuance and other operations. 3G would enable them to handle large volumes more efficiently. Communication through video would help insurers provide more personalized service to the customer, in comparison to a telephonic conversation.

With 3G applications used for commercial purposes can be made easily accessible at home through basic telecom and IT infrastructure. This would also enable insurers to reach out to housewives who can work as insurance agents from the comfort of their homes.

Hotspots

Technology that empowers database management and provides stronger data security has also been a hotspot area of the industry. Database is a key area for the insurance companies, as they keep growing with the growth of the company. Archiving the databases is a matter of concern. It becomes very important to take the data from the production environment and archive it in a low-cost storage environment, so that it can be accessed from time to time. Keeping data in the production environment turns out to be expensive. Having a solution to have a secondary storage medium to store the unwanted data can indeed be useful.

Database encryption is another focus area in the context of complying with security standards. Security is a big threat to the insurance industry as the data, concerning customers, organizations, and payments is very sensitive. Companies are also looking at database encryption not only for the static data but also for the data in transition.

Need for better customer service and survival of the fittest has also been one of the key drivers of the market dynamics. At present, there are 49 insurers operating in the nation, thus making the sector very competitive with so many players vying for a greater share in the market. Insurers are now forced to revamp their services and product quality on a regular basis, so as to survive the prevailing competition.

A better and efficient customer service happens to be the top priority of major insurers, thus they have shifted their focus onto IT implementation customer service oriented tools and solutions currently, experiencing a dynamic demand and hence is boosting the overall ICT usage by manifold.

Trends

There are diverse trends in the insurance sector such as moving from decentralized to centralized, and vice versa. However there is surely one drive to optimize on the investment and leverage technology portals, mobile, remote availability, off-line, etc. It is also time to look internally, ie, optimize the processes and delivery management, which would ensure that in the long run, we are bound to be cost and performance oriented.

Outsourcing is another trend which needs to be constantly kept under observation, wherein non-core activities may get outsourced.

Technology trends that are getting the limelight are those that enable maximum amount of reach. For insurance, there should be a strong distribution platform to connect to data analytics and to empower collaboration with partners and vendors.

Service enabling the architecture is an important perspective. Also, a noticeable trend is the ability to rapidly develop applications using RAD tools to improve time-to-market.

Wireless technology, PoS services for policy issuance, and claim settlement would definitely be the key drivers of success in the market. In fact, any technology and its adaptation that will offer a hassle-free experience to our customers will be used. This approach would be the key differentiator in the insurance industry.

The emerging wireless technologies are definitely a boon for every business and they are the future. Wide use wireless applications such as providing information on mobile and acknowledged to the user at PoS has also been a hot trend.

In order to provide faster claims services and settlements, the firms are using wireless technology. The industry is all committed to embrace all technologies and the emerging convergence benefits to streamline our systems and simplify them to benefit the ultimate customer.

Concerns

IT in insurance, unlike the banking sector, is still evolving and there is a lot of opportunity waiting to be tapped. While in the current context there will be a temporary cut in the IT spend, but investment in IT will continue. As such there is no major barrier, but the insurers should adopt technology to enable business, and that should be the key driver.

IT risks like data security is a growing concern and we do ensure adequate security to review and mitigate the risks . A stringent security standards is needed for the growth of the sector. Accessibility issue in remote locations is a major concern.

Maintaining an optimum uptime for the business is a challenge, due to the dependence on fiber optics. To address this challenge, the insurance companies are looking at using 3G and VSAT technologies extensively as backups. Value added services such as managed services or security consulting remain a challenge. Billing plans offered by service providers today usually offer fixed plans for telecom usage.

There is a need for these billing plans to be made flexible depending on variable usage during different times of the day and month. Availability of telecom infrastructure in rural areas is limited and restricted. As a result, reaching a rural population is difficult.

Moreover, the demand from vendors is to have a proper service-oriented agreement in place. Vendors should be our true partners or strategic partners of growth, rather than be just 'vendors'. Vendors should realize that they will grow, only if the insurers grow. Channeling out of vendor's resource and support strategy to insurers business also happens to be a concern. The vendors should be willing to play an important strategic partner role in optimizing, reducing and better usage of resources, which would result in better/enhanced y-o-y payouts.