Thrive in Uncertainty

Executive summary

This has been an unprecedented year for all – the insurance sector in India is no exception. Across the nation, COVID-19 has underscored the importance of protection to many customers, leading to increased demand for insurance products and policy servicing volume. However, the enforced social distancing has meant that severe competition is expected to be played out in the digital arena.

Insurers are therefore under pressure to accelerate the digitization of end-to-end customer journeys and internal processes, while adopting tools that they might once have considered risky just to stay ahead. At the same time, industry-wide digitization is also opening the sector to a host of new players, including Big Tech companies such as Amazon and Google, which are both making inroads within the global insurance industry.

This report charts out the 6 key trends that will impact Indian insurers in the near to medium term. These trends include disruption to traditional sales channels, adverse economic headwinds, the emergence of large ecosystems, regulatory tightening, stiff digital competition, and the rise of insurtechs.

To survive and then thrive, Indian insurers will need to be adaptive. We provide 8 strategies for Adaptive Insurer to succeed, based on our learnings from working with the world’s leading financial services and insurance firms.

These strategies range from taking full advantage of data, enabling a more technology-driven workforce, using AL/ML-based advanced analytics throughout the insurance value chain, harnessing the power and agility of the cloud, modernizing financial management, streamlining regulatory compliance, elevating digital customer engagement, and enabling an ecosystem approach to bring the best insurance solutions to market.

In this new reality, the role of data will be even more pronounced than ever before. At Oracle, our mission is to help people see data in new ways, discover insights, and unlock endless possibilities.

6 trends impacting Indian insurers

Powerful forces are reshaping the Indian insurance industry. Economic headwinds have forced changes in business models and created shifts in consumption patterns that have yet to settle. At the same time, Indian insurers have themselves been impacted by operational disruptions such as travel restrictions, social distancing, and mandatory remote working requirements.

In an industry based heavily on trust, especially for life and healthcare insurance, the inability to meet customers in person has made business continuity all the more challenging.

But there is an upside for the protection business. In the midst of uncertainty and sweeping changes, digital transformation is finally underway. To cope with disruption in the traditional customer journeys, foresighted insurers have deepened their digital presence, embarked on better digital customer experiences, and are optimizing their digital sales channels.

Interest in financial and family protection has also surged. More people are now purchasing health insurance policies, particularly new insurance products that were introduced in the wake of the pandemic.¹

According to regulatory data, health insurance premiums grew by 10.44% between July 2019 and July 2020.² Policy claims for COVID-19 treatment have also surged to over Rs 3,300 crore (US$450 million) as of September 2020.³

Rs 3,300 crore: Total policy claims for COVID-19 treatment as of September 2020.

Source:
¹The Indian Express, 03 Sept 2020.
²Asia Insurance Review, 02 Sept 2020.
³Financial Express, 15 Sept 2020.

Indian insurers are now at an inflexion point. It is possible to thrive in this uncertainty. However, it means taking risks – calculated risks – and charting a roadmap towards a digital future. Here are 6 trends that we’ve identified to help guide your journey ahead.

Trend 1

Channel disruption

The breakdown of traditional sales channels such as bancassurance and agency will lead to even greater emphasis on digital sales.

Before

The offline
customer journey

After

The one click
customer journey

Trend 2

Economic headwinds

The low interest rate environment coupled with stress in the employment sector will put pressure on both the top and bottom line.

Pressure on earnings increasing risk of default

of Indian consumers are worried about repaying their loans after the moratorium

of Indian consumers looking to defer their loans further

Source: BCG Consumer Sentiment Survey

Low interest rates expected in the short term

Units: RBI interest rate

Source: RBI data

Trend 3

Platform insurance

Globally, industries are moving towards more democratic, large ecosystem models, and away from the traditional model where a few dominant players dictated the industries’ norms.

As the ecosystem movement makes headway in India, incumbent insurers must begin transitioning from selling standalone products to becoming part of consumers’ ecosystem through strategic partnerships.

Just-in-time insurance

Insurer provide in-trip insurance
Telco provide network coverage
Bank takes care of payment
Ecommerce platform deployed as an interface

Trend 4

Regulations and security

Insurers will face tighter regulations in light of greater use of digital services in India. These regulations range from cybersecurity measures, to business continuity processes to protect customers, and international financial guidelines such as IFRS17.

Irdai lists LIC, GIC Re, New India as ‘too big to fail’, need enhanced supervision. The Indian Express, 1 Oct 2020

Irdai to standardize insurance covers. The Times of India, 18 Sept 2020

Health Insurance: Telemedicine, online consultation to be covered amid COVID-19. How it works, livemint, 10 Oct 2020

COVID-19 related
guidelines issued
by Irdai COVID-19 related guidelines issued by Irdai

Business continuity:

“Insurers shall put in place a Business Continuity Plan (BCP) which inter alia deals with processes, transactions, reporting and customer services to be handled in a seamless manner.”

Cybersecurity:

“… insurers need to take precautionary measures to address such cyber risks… also educate their staff regarding such risks.”

Source: Irdai Circular 30 March 2020

Trend 5

Data-led digital transformation

According to IDC, 40% of insurers worldwide will automate claims with AI and conversational interfaces by 2022.⁴ This will not only improve the customer experience by speeding up response times, but also create operational efficiencies and more scope for hyper-personalization.

3 models of collaboration

Collaboration

Insurtechs partner with incumbents.

Segmentation

Insurtechs focus on small, specialized segment of the value chain.

Acquisition

Incumbents acquire insurtech startups with complementary or supplementary skill sets.

⁴IDC FutureScape: Worldwide Financial Services 2020 Predictions, 2019.

Trend 6

Insurtech revolution

Innovative insurtech businesses, along with price-comparison websites such as PolicyBazaar, are putting pressure on incumbents to adjust their business models, rethink their strategy, and accelerate the implementation of emerging technologies.

To stay competitive, incumbent insurers are already pivoting to include Prevention and Wellness as part of their offerings, rather than focusing only on loss coverage.

Insurtech funding in
India increased

Source: Asia Insurance Review

Acko General Insurance

Raised $60m in Series D funding in September

600% growth between September 2018 and 2019

45 million unique customers as of September 2019

Go Digit Insurance

260% growth between September 2018 and 2019

Sales of more than 3 lakh policies per month

Paytm

Acquired Raheja QBE in July for $76m to enter general insurance sector

Source: Irdai, Acko, Raheja QBE

Why act now

For years, you’ve been hearing about these forces of change. With rapid digitization now accelerating these pre-existing changes, it opens the field to a host of non-traditional players. Big Tech companies such as Google and Amazon are some of them.

Furthermore, as younger, more tech-savvy consumers continue to populate the market, the cost of rigidity will become apparent.

The key to thriving in uncertainty is being adaptable – having the ability to evolve and comfortably seize tomorrow’s opportunities with alacrity. Adaptive Insurers are those that are intelligent, agile, and integral to their customers’ lives.

At Oracle, we believe that we have the best enterprise grade, secure portfolio of offerings to help Adaptive Insurers prepare and thrive in the new normal.

Traits of the Adaptive Insurer

Intelligent

Transform data from stored treasure to shared wealth. When you embrace intelligent technologies, you create a competitive edge that’s extremely difficult to replicate. As an Adaptive Insurer you know how to optimize your data investment by embedding data and intelligence across every area of your business and IT stack – from your infrastructure through to your platforms and even SaaS applications.

With AI/ML embedded throughout processes and the software that runs them, you can engineer your business to leverage your information advantage, securely, and win in the moments that matter.

Impact scale: Improve your ability to respond to the trends with intelligent solutions

Trends	Low	Medium	High
Channel disruption
Economic headwinds
Platform insurance
Regulation and security
Data-led digital transformation
Insurtech revolution

Agile

Becoming agile is about taking a holistic approach to business modernization. It’s about becoming more responsive, competitive, efficient, and refocusing your teams to innovate for the future.

To stay ahead, you must look beyond simple automation to intelligent, responsive automation, and cloud-based resource provisioning. At the same time, agility also ensures that you remain compliant with regulations while tailoring your offerings to customers in a dynamic external environment.

Impact scale: Improve your ability to respond to the trends with agile solutions

Trends	Low	Medium	High
Channel disruption
Economic headwinds
Platform insurance
Regulation and security
Data-led digital transformation
Insurtech revolution

Integral

Transform your customer experience and exceed expectations at every touchpoint. Whether you’re serving individuals, SMEs, or large corporations, the path to efficient and enduring customer-centricity lies in being able to address their needs quickly and seamlessly.

To be a critical part of the growing insurance ecosystem, the Adaptive Insurer must enable simple yet powerful API-based connections with a variety of other stakeholders. The collective network will then enable customers to reach the insurers at all key trigger points.

Impact scale: Improve your ability to respond to the trends with integral solutions

Trends	Low	Medium	High
Channel disruption
Economic headwinds
Platform insurance
Regulation and security
Data-led digital transformation
Insurtech revolution

8 strategies for the
Adaptive Insurer

# 1

Transform mission critical data to drive deeper self-discovery, sophisticated ingesting and curating of structured and unstructured data, and powerful advanced analytics.

Solutions:
Oracle Autonomous Database with Analytic Views, Oracle Business Intelligence, Oracle Data Integrator, Oracle Unity Customer Data Platform

# 2

Enable your intelligent workforce to collaborate and better manage talent across employees and intermediaries.

Solutions:
Oracle HCM Cloud, Oracle Content and Process, Java Cloud, Database Cloud

# 3

Use AI/ML-based advanced analytics to make rapid, data-driven decisions on underwriting, claims, fraud, and build a comprehensive 360-degree view of the customer.

Solutions:
Oracle Exadata, Oracle Machine Learning, Oracle Database (Graph and Spatial Analytics), Oracle Exalytics In-Memory Machine, Oracle Analytics Cloud, Oracle BIEE, Oracle Data Science Platform, Oracle CX Unity (with AI models and Intelligent Attributes including forensic analytics)

# 4

Accelerate your transition to the cloud by moving to low-code, cloud-native applications that run at lower cost, with more automation and resilience. This will drive innovation, and support DevOps and partner integration.

Solutions:
Oracle Public Cloud, Oracle Cloud@Customer, Oracle Insurance Data Foundation (OIDF), Verrazzano, Oracle JET, Helidon, WebLogic, SOA Suite

# 5

Modernize financial management to plan more intelligently and manage risk better by modelling multiple scenarios.

Solutions:
Oracle Enterprise Performance Management (EPM), Oracle Enterprise Resource Planning Cloud (ERPM)

# 6

Streamline regulatory compliance and respond at speed with technology that automates international compliance processes.

Solutions:
Oracle Financial Services Analytical Application (OFSAA) suite

# 7

Elevate digital customer engagement by enabling ecosystems and co-creation with external developers.

Solutions:
Oracle CX Cloud, CX Unity, Oracle Advanced Customer Support, Oracle Partner Management, Oracle Commerce Cloud, Oracle Service Cloud, Oracle Intelligent Advisor (formerly Oracle Policy Automation)

# 8

Full configurability to bring the best insurance solutions to market.

Solutions:
Open Insurance Policy Administration (OIPA), Oracle Integration Suite, Oracle Fintech Ecosystems, Oracle API Management Cloud Services, Oracle Intelligent Advisor, CX Unity

Partnership with Oracle

Data is at the heart of every business. Whether you operate in the old world of on-premise technologies, or in the new cloud-based world, your ability to harness the value of your data is key to obtaining competitive advantages.

Helping financial institutions succeed on our platforms

26 billion transactions
400 million retail loans
37 million policies
9000+ global customers
180+ partners dedicated to financial institutions

Oracle Fintech Innovation Program provides

Mutually monetizable relationships with fintech and digital banking innovators.

Accelerated ecosystem maturation with accelerated productization and monetization of fintech innovation.

Faster time to innovation which in turn, provides more value to banks and insurers.

Global startup ecosystems

Engagement opportunities with 430k+ customers
Access to Oracle's product and development teams
Dedicated program lead and cloud architect
World-class mentoring programs
POC development