Insurance Regulatory and Development Authority of India (IRDAI) played a pivotal role in governing & regulating Insurance sector effectively, creating awareness amongst the customers, agents & brokers about the importance of insurance throughout the year and especially during pandemic period which gripped the entire globe. This situation has resulted awareness amongst the customers about the importance of Insurance which will lead to leaps & bound growth in Insurance sector in coming years. In the last union budget 2021, Government of India also supported Insurance sector to fuel growth by announcing an increase in the FDI limit from 49% to 74%.
Life and Non-life insurance (except General insurance like Fire, burglary, Commercial General Liability, Directors’ & Officers Liability etc.) processes and policies more or less have been stabilized except continuous improvement & as per the business demand.
IRDAI has initiated one amongst many steps that all brokers / agencies are advised to use any Insurance management software is a positive move however for General Insurance as stated above there is a pressing need to standardise the forms of certain line of business / coverages which will be easy to understand and to enhance the efficiency in the larger interest of the customers. Adopting standardization and automation would ensure faster and precise quote comparison, policy checking and sharper risk analysis by machines, processing a convoluted and cumbersome policy & other document within minutes for brokers which otherwise takes hours of manual reading and is prone to errors i.e. ease of business. This also paves the path for competitive pricing with a higher level of transparency for brokers and for end clients.
By automation and standardizing the quote formats of general insurance line of coverages, there will be seamless data exchange between insurance companies & brokers. This will save an enormous amount of human efforts & time of repetitive task of data entry for both insurance company & brokers. Also, from the end client perspective the ultimate comparison of two quotes would be easier once the formats are standardized.
The standard forms can be revised to reflect the changes in business practices or due to legislative and regulatory requirements and will be made available in printable PDF, electronic fillable, e-forms as well as link can be provided so that the Insurance Company / brokers / agents can use the same & fill it up on the same link and send it to the respective brokers / agents or vice versa.
Across the globe the regulator of several countries have standardised the forms like in USA ACORD is facilitating by providing standard variety of forms which allows Insurance Companies / brokers / agents to increase in efficiency, accuracy, transparency and speed of information processing to serve customers effectively to acquire more customers.
It is essential to encourage start ups with newer technologies like artificial intelligence and machine learning to understand structured contextual text in policy and other documents to compete with the globe. Lately, data management tools using artificial intelligence have been gaining accelerated adoption to build business intelligence, especially in the US and Europe markets. Artificial intelligence in insurance has gained popularity in claims processing and efficient underwriting, as well as risk evaluation and fraud detection for brokers. McKinsey estimates a potential annual value of up to $1.1 trillion if AI tech is fully applied to the Insurance industry. The idea of a context-based insurance policy that adjusts its price depending on the circumstances has already surfaced. Therefore, standardization and automation in commercial insurance industry will pave the way for more consumer-friendly market in the coming years which will enhance the insurance penetration in India.
With the increased expectations of the Customers and to enhance the customer base, it is essential to implement automation, i.e. state of art technology like AI and machine learning coupled with standardization of forms & processes to enhance the efficiency and paves the path for competitive pricing with a higher level of transparency.
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