Prospect of E-Insurance in India

In the non-life sector, automobile policies are popular over the Internet. Premium
income, points out the paper, is expected to rise to $18 billion from about $1
billion currently. The growth of global online insurance business augurs well for
the Indian IT sector. The exponential growth in the online insurance business will
unfold significant business opportunities for software companies/consultants. The
opportunities that rise out of this will be both global and local, because new
entrants will have to either fine tune or prepare customized packages for the Indian
market. Online insurance will also help companies reduce costs and keep
premiums low, a prerequisite in a price sensitive market like India. The
government, however, will have to address problems relating to bandwidth on an
urgent basis to make online insurance a reality in India. Other major challenges to
face Indian insurers will be to design and develop strategies for delivering services
to well segmented customers. The third challenge lies in developing the right
combination of customer segments and applicable distribution channel strategies.
Most Web sites offer contact numbers of their branch officers where we can get
further details of the products on offer. The Agent locator feature, available on
maxnewyorklife.com, iciciprulife.com and on bimaonline.com help one locate an
insurance agent most accessible to you based on a search facility. One would
expect downloadable proposal forms on insurance web sites, but these are missing
in most cases. Only Iicindia.com seems to offer downloadable proposal and claim
forms for a few of the schemes. In the non-life sector, automobile policies are
popular over the Internet. Premium income, points out the paper, is expected to rise
to $18 billion from about $1 billion currently. The growth of global online
insurance business augurs well for the Indian IT sector. The exponential growth in
the online insurance business will unfold significant business opportunities for
software companies/consultants. The opportunities that rise out of this will be both
global and local, because new entrants will have to either fine tune or prepare
customized packages for the Indian market. Online insurance will also help
companies reduce costs and keep premiums low, a prerequisite in a price sensitive
market like India. The government, however, will have to address problems
relating to bandwidth on an urgent basis to make online insurance a reality in India.
Other major challenges to face Indian insurers will be to design and develop
strategies for delivering services to well segmented customers. The third challenge
lies in developing the right combination of customer segments and applicable
distribution channel strategies. Most Web sites offer contact numbers of their
branch officers where we can get further details of the products on offer. The Agent
locator feature, available on maxnewyorklife.com, iciciprulife.com and on
bimaonline.com help one locate an insurance agent most accessible to you based
on a search facility. One would expect downloadable proposal forms on insurance
web sites, but these are missing in most cases. Only Iicindia.com seems to offer
downloadable proposal and claim forms for a few of the schemes.

Reinsurance management capabilities provided by mySAP Insurance will enable

Munich Re to comply with ever-changing legal requirements and carefully
analyze the policies in which they participate to more effectively manage risk and
protect themselves from potentially devastating financial effects. To derive the
most advantage from limited budgets for IT spending, European carriers take an
industrialized approach, they eventually will integrate successful IT projects into
all their different lines of business. An IT system is developed for one product, he
explains, and then adopted for another product. For example, if a claim
management system for automotive insurance is used as a base for other products
the costs are spread across different lines of business. Several European insurers
have implemented programs to improve company efficiencies. Some have a
centralized approach; others have a decentralized approach, but decisions for
spending are coordinated centrally. Allianz Group is an international financial
services provider with 700-plus subsidiaries in more than 70 countries. "Most of
the business is local, and the structure of Allianz Group is decentralized," says
Oliver Bussmann, head of group information management. "But in terms of IT all
Allianz companies can profit from joint IT solutions within the group. Indeed, he
adds, group center provides group-wide coordination of global IT initiatives. "Our
goal is to realize as many synergies and Knowledge transfers as possible," he
explains. "For international businesses like Allianz Dresdner Asset Management
and Allianz Global Risks, centralized IT support is aimed to integrate worldwide
companies/divisions closely." Furthermore, Bussmann indicates Allianz pursues
two major IT goals. First, Allianz capitalize on all IT synergies a group of their size
can exploit, and second, it supports their increasingly international business with
powerful and efficient IT solutions that can be used by all companies. At the same
time, "a lot of the business is local and can best be supported by the systems of the
local company". Within the German market, "the different Allianz companies are
centralizing systems and applications in areas where they achieve synergies
he points out. For example, they use one platform for all, Internet applications such
as online insurance and premium calculators for clients, he continues. "Also
Allianz h built a private virtual network that supports the sales process for all
14,000 agents in Germany. According to the Celent study, "outsourcing has
become a major strategy at European insurance firms to reduce costs." Regarding
the question of outsourcing at Allianz, Bussmann responds there isn't one answer
for the entire group. "In Germany, for example, they decided to outsource the IT
services provider into a subsidiary, AGIS, Allianz Dresdner Gesellschaft fr
Informationsysteme. AGIS provides the German Allianz companies and other
renowned companies with a complete range of IT services, including an EDP
center and network services." However, around the world, selected IT tasks are
outsourced on a project basis. "For example, Allianz has been working with an
application service provider to launch an e-recruiting solution that will be
introduced in different countries successively. AXA Group in Paris has taken a
centralized approach that promotes IT process improvements by benchmarking and
adopting best practices as well as identifying, quantifying, and proposing IT
opportunities that cannot be dealt with at one company level, says AXA
representative Clara Rodrigo. As a result, AKA has created three units-AXA Tech,
AXA Consulting, and AXA e-services to coordinate its IT operations. AXA Tech
was created in January 2002 after the firm recognized "significant savings could be
realized by consolidating IT service delivery infrastructure operations across the
group. In February 2003, AXA Tech and IBM signed an on-demand services
contract. The deal aims to enhance the performance and efficiency of AXA's global
computing infrastructure," she affirms, noting the company expects to make
considerable savings over the six-year term of the agreement. AXA Consulting was
set up to implement, integrate, and reengineer software or new technologies
available as packaged solutions, Rodrigo says, adding it provides operational
assistance for the strategic needs of AXA companies throughout the world. Further.
AXA e-services offers e-solutions for all of AXA's global subsidiaries and
identifies the best available market packages that meet specific business
requirements. This unit also builds mutualized services and/or applicative layers on
top of packages bought from outside vendors. These three units "are conceived as
genuine service providers and invoice all services rendered," Rodrigo says. To
maintain the trust of their customers, they will have to be able to show the services
paid for actually are delivered and they live up to agree upon standards of quality.
Kiosks: Kiosks are unmanned information centers, placed strategically at public
places. They are called Interactive Touch screen kiosks. A kiosk is a self-contained
hardware & software to blend all current media including graphics, video, text &
quality sound. It consists of a touch sensor& a monitor on which the sensor can be
fitted. The user is expected to touch the relevant sensors, according to the choices
offered by the kiosks visually on the monitor. The kiosks then takes him the
required information or to transact the required business. The LIC has installed
kiosks in more than 100 locations covering its divisional headquarters. The kiosks
provide information on policy status, product information about all products
including group insurance products. These can he used by persons, who do not
have their own computers and cannot access the internet. They can be operated 24
hours a day and do not require any supervision like the ATMs of banks. The touch-
screen kiosks were installed in some of the branch, divisional and zonal offices of
LIC. By this facility the customers can obtain information about LIC, its
performance, schemes and statuses of policies by the touch of the screen. The
kiosks are interactive and user-friendly. Such kiosks are also to be installed in bus
and railway stations and in busy thoroughfares of major towns and cities. In due
course, payment of premium will also be made by dropping cheques and DDs in
drop-in boxes.

ROLE OF E-COMMERCE IN DISTRIBUTION OF INSURANCE PRODUCTS

IN INDIA
Indian insurance industry is now entering into this area. Indian firms are planning
to use the Web to sell their products. The traditional method of selling insurance
policies through agents may soon be rendered obsolete. Private insurance
companies would then be reaching out to their customers through internet. With
ecommerce likely to be allowed soon, customer can choose and buy a policy over
the net. Private companies believe that setting up a website is much cheaper than
developing an entire marketing network. These website, can be used in the future
for setting claims. Indian companies have already begun negotiations with IT
companies like Computer Science Corporation, Apex System Pvt Ltd. and IBM for
system integration.

INSURANCE MALLS

Insurance malls are growing resource for online insurance shoppers. They offer
one stop shopping facilities. These are certain sites which are provided to compare
quotes and products and facilitate a buying process with participating insurance
companies. The malls provide valuable information regarding various participants,
and provide the customer with research tools and explanations about the various
products. The insurer who like to participate, enter into partnership with these
malls. A fee is charged according to the number of products sold by insurer through
these malls. While there are numerous insurance malls on the internet, the leaders
presently in the field are insure market and INS web. If the customer decides to
purchase the product online then the insure market charges the insurance company
fees whose product is being purchased at percentages on the premium amount.
Currently, the sale from insurance malls is restricted to only a few states.

HELPLINE SERVICE
The development of Helpline is well established and advanced abroad especially in
the UK. A Helpline is defined as the provision of an advisory and/or assistance
service via the telephone. The modus operandi is that the person who provide
achieve have an online access to information relating to the problem in hand, such
as a list of trade people, for household claims. The respondents are normally well
trained and able to make immediate decision so that appropriate action can be
taken swiftly. Helpline are seen as a product of the Information Technology
revaluation. The emphasis in the Helpline is an immediacy, which is the Hallmark
of Help line.

The requirements for the success of helpline are:

Modem telecommunications.

Immediate Access to the source of information.

Affordable computer processing power

Enhance computer processing speed enabling data to be captured, processed and

distributed at unrivalled speed.

Continuous efforts to develop innovative products and services Benefits of

Helplines

Every policyholder will have immediate access to the service at all times anc.
whenever he or she is physically located.

The Helpline staffs are trained to soothe customer and provides quality advice.
The assistance level provided is much more timely than traditional system

Expeditious settlement of claims.

 The insurers are benefited, as customers loyalty increase as a result of efficiency
and quality in claims service.

The firms providing Helpline service have marketing advantages.

CUSTOMER INFORMATION

The Helpline provide improve management of calls from customer for access to
information. They also help to improve the customer knowledge, exponentially
increase the choice of providers, and allow for individualized product offerings.
Clients have different needs, so it is important to identify the information they
require, because this is what they will expect when contacting a Helpline. It is
necessary to continually monitor clients changing information requirements, to
ensure that their needs continue to be met satisfactorily. The necessary information
must be collected and maintained on a regular basis to ensure that it is a latest as
possible. A system must be developed so that the information can be stored in such
way that it can be retrieved easily and quickly whenever required. Modem
telephone switching system can provide sophisticated options which may enhance
Helpline operation such as Auto Attendant and Automatic call distribution, voice
mail and touch tone routing, Telephone options, trunk to trunk calling and other
telephone services. Helpline also play a vital role in claims management. The
insured who incurs a loss due to the happening of the event is in dire need for the
rights advice. Helpline undertake to give them immediate relief, in some cases they
give the right information and advice which can be followed by the insured.
Sometimes arrangement to medical facilities, etc. is also undertaken.

ELECTRONIC PAYMENT SYSTEM:

Electronic Payment Systems have been designed to help the increased cash flow,
reduced costs and improved customer service objectives which are important to the
insurers. Such system provides for improved cash flow through automated
payment and reconciliation processing. It results in decreased expenses due to a
reduction in paper work, file retention and retrieval. Thus Helpline service
provides the customers with an option to make payments using Helplines. Some of
the methods used to allow the customers to make payment of premium regularly
and for the insurers to settle the claim of the insured are:

Debit card: A card that resembles a credit card but which debits a transaction
account (checking account) with the transfers occurring contemporaneously with
the customer purchases. A debit card is a machine readable, allowing for the
activation of an Automated Teller Machine or other Automated Payment
Equipment.

Electronic Fund Transfer Systems: A variety of system and technology for

transferring funds (money) electronically rather than by cheque. Includes Fed wire,
Bank wire, Automated Clearing House (ACHs) and other automated systems. The
electronic payment system shall include requirements for storage of data by and
communications between the parties. This includes not only the data flows for
payments themselves but also for refunds, account enquiries and settlements. It is
also to be noted that it requires a mechanism by which the necessary security
requirements for messages and stored data are achieved.

CALL CENTERS: A typical call center is a service center that has adequate
telecom facilities, trained consultants, and access to wide database, Internet and
other online information support infrastructure to provide round the clock and year
round service. Call centers are normally operated by large airlines, banks to
provide service to the customers/callers, investment banks, mutual funds, telecom
services, companies providing customized and high value services, IT products
companies, among others. In the field of insurance, call centers are helpful in
answering complex questions from policyholders and independent insurance
agents, and often use a personal computer to access insurance information. They
are used to handle calls from customers, claimants, and other parties who have a
claim report. They handle correspondence from policyholders and independent
agents to rate Insurance policies correctly. The call center secures basic
information from customer, including where, when and how the loss occurred, who
was involved and if any one was injured. They enter this information into their
computer system and then forward the information and caller to a claim
representative in an office near to the caller. They solve problem and help people,
and treat customer with respect, courtesy and positive attitude.

WEBSITES AND PLACING GUIDELINES: Helpline are being established to

place new guidelines useful to the customers, the agents, the intermediaries with
regard to changes in law, practice of insurance, other related laws and practices
which have a bearing on the insurance activities and impact on the customers. Data
warehousing is a prime example of the industries move towards strategic thinking.
The concept relates to the electronic storage and dissemination of data. The
conjunction of data warehousing applications with Web technology is a key trend,
providing insurers with wide data distribution capabilities at relatively low cost and
using this infrastructure to provide database incorporating image, text, picture
presentation, etc. to a defined user group. Such sites are also designed to provide
guidelines to the agents and other intermediaries.

AVAILABILITY OF RECORDS AND FORMS: Help lines provides access to

application forms and other material on the request of the customer. The
application are made available mostly free of cost or for a small amount. Help lines
are attempting to use computer contact centers integrated with existing ERP and
document management systems, to achieve a higher level of customer loyalty.

INTERNET & INTRANET

The Internet is a worldwide system, accessible through computers. Information

travels through the internet at incredible speeds. It cuts across national &
international boundaries. While the internet allows access for anybody from
anywhere, the internet is an in-house network, working on the same principle. The
difference is similar to the difference between a national newspaper & in-house
newsmagazine, which is for private circulation. If an insurer has an intranet
system, the information in the intranet will be available only to its offices &
personal. The policyholders will not be able to access the data in the intranet.
Circulars meant for internal circulation can be posted on the intranet & everybody
will have immediate access to it, however far away he may be located. In the
intranet also, it is possible to restrict some information to certain categories of
persons, who will be identified through passwords. Both internet & intranet
enables users to do the following at any time (24 hours, 365 days)

Send & receive letters, which are called e-mail. Every person will have an e-
mail id, which is his address in the net.

Search, read & retrieve data, files, and pictures.

Buy & sell of policy Benefits to Agents If the insurer has an intranet, the agent
can, sitting at his place of work, be attending the insurers office, making enquiries
about status of proposals or claims or discussing with any other agent, for
clarification or advice, whenever he wants to do it. The physical distance between
the agent & the office will not be of any consequences at all. The benefits to agents
will be:

He can receive all circulars & instructions issued by any office. All delays on
account of postal transmission, being forwarded from one level to another, dispatch
department absence of peons, wrong addresses, misplaced through oversight, lost
in transit etc., are avoided.

Any doubts with regard to proposal, benefit, premium, taxation, medical

examination, insurability etc., can be discussed & got clarified directly from the
person concerned. Communications to & from the office will be immediate
through e-mail & at a low cost.

Benefits to Policyholders Prospects: Prospects can get benefit through the internet
in the following ways- They can get details of the various policies, the benefits
there under, the premiums payable etc.,

Prospects can get advice on the suitable insurance plan for themselves.

Policyholders can get information with regard to the status of the policy, the
premiums due, the bonuses attached, the surrender values or loans available,
revival possibilities, nearest office for any further transactions.

Premium can be paid without having to go to the office of the insurer, by direct
debit to the policyholder credit card or bank account The LIC has included in its
websites, for the benefit of the prospectus and the policyholder, information to
health issues.

Impact of Technology on Insurers

Any new adoption needs time to get acquainted with the users until they gain
enough confidence & knowledge in that system. Recent studies reveal that
consumers lack passion for insurance because of its complexity, but despite these
push backs, a growing number of insurers are intrigued by the significant cost
saving & customer-retention benefits to be gained through online self-service.
Although carriers think that by encouraging insurers to do transactions by online
services, which would reduce operational costs vastly, they are very cynical of
investing in web technology with dot-corn collapse. The trick lies in educating
insurers about the concept and benefits of eservices in this sector. Driving client to
initial online self-service experience into something more interactive by call
services that would involve human interactions will certainly have a greater
impact. This balanced approach is how most insurers are enabling online self-
service that not only make sense for policyholders, but also provides support for
intermediaries and agents. The main challenge for any health companys website
would be bringing all sections of people to view their site. They should show some
positive incentives to bring customers to their websites. Online services have own
advantages like accessibility of information 24/7, visualization of information,
providing interactive plan finder tools, adding useful links to the websites, live chat
technologies etc. An online activity helps to give necessary knowledge to
consumers, which is very positive, because it implies that when people learn more
they establish a deeper relationship and a broader dialogue with the carrier. Agents
and brokers also enjoy the efficiencies that come with writing new businesses and
servicing their customers on websites. About 55% to 60% of customers take
booklets electronically. In order to enable efficient online self-service functions,
companies typically have to update their legacy systems. Despite the current limits
to online self-service, as the Internet continues to gain acceptance, customers
probably will become more open for using it as a conduit for insurance services. In
the past year, the portion of insurers offering customers service websites has been
growing dramatically.
IMPORTANCE OF TECHNOLOGIES IN INSURANCE

Introduction of technology in the insurance sector has improved every aspect of the
industry. Technologies play a major role in data management process of an
insurance agency by providing flawless services from underwriting policies,
producing documents to collating various ratings and data. The state-of the-art
implementations offers instantaneous accurate information about different
insurances to the clients. Insurance firms regularly spend a part of their yearly
premiums on modern technology that aids in enhancing the overall performance of
the organization. Insurance technologies help the insurance agents to immediately
respond to the requirements of the customers and technology has managed to cut
back the annual expenditure of the organizations. The basic purpose of insurance
technologies is to reduce the paperwork of proposals and policies and address the
customer services effectively in a shorter time than any other traditional methods.
Information technology in insurance has made it easier for the customers too.
Online availability of the insurance agencies allow the clients in dealing with
application procedures, signing proposals and policies as well as in receiving
quotes without even visiting the insurance office in person. The best part of
technology in insurance is that it helps the firms in reducing the costs by
eliminating the mail rooms, paper files as well as the data entry clerks. The
elaborate underwriting, data processing and the rating take place online and the
customers or brokers receive the emailed policy documents within no time. This
online advantage, however, comes with a price. The system requires a substantial
initial investment in its primary stages but the owner certainly gets his returns on
investment over the years that come equipped with superior services and response
timings.
ROLE OF INTERNET IN INSURANCE DISTRIBUTION

The internet is an emerging channel for insurance distribution. The developments

in Information Technology (IT) are working wonders in all fields of activity. It has
become possible to send and receive information almost instantaneously. If
circulars do not reach the agents on time or doubts are not cleared quickly, or the
agent does not have details of new plans announced in the press, the agent may
have faced awkward situations with the prospects. These problems can be totally
avoided with the use of IT. Insurers traditionally, have been quick to adapt latest
advances in technology. This is happening in the areas of IT as well. The extent of
IT application will vary from insurer to insurer. The Internet is a global system of
interconnected computer networks that use the standardized Internet Protocol Suite
(TCP/IP). It is a network of networks that consists of millions of private and public
academic, business, and government networks of local to global scope that are
linked by copper wires, fiber-optic cables, wireless connections, and other
technologies. The Internet carries a vast array of information resources and
services, most notably, the inter-linked hypertext documents of the World Wide
Web (WWW) and the infrastructure to support electronic mail, in addition to
popular services such as online chat, file transfer and file sharing, online gaming,
and Voice over Internet Protocol (VoIP) person-to-person communication via voice
and video. The internet is thus a worldwide system, accessible through computers.
Information travels through the internet at incredible speeds. It cuts across national
and international boundaries. Information posted on a `website' is available to
anybody from anywhere in the globe, free of cost, unless the access is protected.
While the internet allows access to anybody from anywhere, the Intranet is an in-
house network, working on the same principle. The difference is similar to that
between a national newspaper and in-house news-magazine, which is for private
circulation. If an insurer has an intranet system, the information in the Intranet will
be available only to its offices and personnel. All the information is channeled to a
central server usually located at the head office and they are transferred to
respective computer terminals all inter- connected through wide area network
(WAN). The internal information is available to the employees through the
computers connected through local area network (LAN).The policyholders will not
be able to access the data in the Intranet. Circulars meant for internal circulation
can be posted on the Intranet, and everyone will have immediate access to it,
whatever be the distance where the person is located. In the Intranet also, it is
possible to restrict some information to certain categories of persons, who will be
identified through passwords. The interne is the medium that is the most
democratic, since it is available to all, and displays no discrimination. One can
send and receive mails, called as e-mails, through unique "user id" which is his
address in the worldwide net and a unique password too that needs to remain
confidential. One can search through search engines such as Google, yahoo, and
Microsoft, and retrieve and download data, files, images; play games, join social
networking sites, find professional jobs, post messages through blogs, have a
corporate identity through websites, send mass business mailers, join chat rooms
and discuss ideas; make friends, get married through online marriage websites;
communicate with friends through social networking sites such as Orkut,
Facebook, Myspace, Tweeter and many others; read online newspapers from any
part of the globe, watch videos, connect with family and friends through a web
camera connected to a computer while sitting across the continent, buy and sell
online (ecommerce)etc. Thus, in terms of benefits to the insurance field; the agent
can sit in his office and sent relevant information, product brochures, and sales
illustration to the prospective client; and clarify queries on the phone. Even policy
application forms are available to the client through free downloads from the
company's official website. It means savings of time and money for the agent or
other distributors.