Page 19 - Insurance Times April 2022

stabilizing factor for the insurer in his investment activities, additional control over the process. In developing countries,
particularly if other premium resources are insufficient. Also consumers and the company face several barriers due to less
motor insurance, unlike other classes of business, does not reliable telecommunications infrastructures, power supplies,
require for its underwriting a highly specialised know-how. and less access to online payment mechanisms which hinder
Only on the claim side (which is further being disrupted by successful e-commerce adoption. The insurance industry in
technology), extensive experience, and resort to specialists India was a bit slow initially in capitalising on e-commerce
is needed so as to process claims in an adequate manner. due to lack of appropriate software/connectivity
infrastructure, non-awareness among customers and security
Motor Insurance Business Operation concerns but things have changed drastically in last 4/5 years.
The conversion of individuals visiting web platforms into buyers
Because of the concurrence of these features, motor
depends on the complexity of the product.
insurance by its volume, rate of growth and nature of the
operation will remain for a considerable time to come to the
For car insurance, the conversion is within the range of 60-
main line of insurance business in developing countries, Thus,
adequate profits in motor business are vitally necessary if the 70%. This is due to a better quotation that a customer gets
online, the convenience of buying online and having an
emerging insurance industry in these countries is to develop
and grow and if the general public is to still be provided with understanding of the processes involved in case they have to
make a claim, which is far greater than the 1% conversion
an essential insurance cover.
rate in case of health policies. Typical consumer behaviour is
to just compare prices and get quotations from different
Like any other line of business in insurance distribution, risk
insurers through the web aggregators.
assessment (UW / pricing) and claim settlement are the
crucial link in the value delivery. The recent technological
Subsequently, this information is used by them to negotiate
advancement and its use in this line of business is showing
with other channels like bank representatives or distribution
promise and hope to add a lot of value in coming years to all
the stakeholders. agents. This online/offline mode of buying is happening very
well in India these days.

Digital Distribution
Power of connectivity
The agency channel had been the most important distribution
As per the telecom regulator TRAI statistics, India had over
channel for ages in the Indian market. The direct business
i.e. the business done in the office of the walk-in customer 102.5 crores of active mobile in India at the end of 2018. Out
of this approximately 52 crores users were in the rural belt.
was the other stream. Since the opening up of the sector in
Mobile service teledensity was 155.48 in urban areas and
the year 2000, we saw the emergence of the different
channels of distribution such as brokers and corporate agency 59.15 in rural areas. The number of broadband subscribers
reached 518.55 million. India has 18.17 million wired
including bancassurance. The arrival of banks /lending
institutions did change a bit the way new vehicle insurance broadband connections and 499.95 million wireless
broadband connections in 2018. The cost of smartphone has
was being done. The financing organization, if having agency
come down drastically in recent past and the number of
started influencing the sale of insurance cover.
smartphone users is expected to touch a figure of around 36
crores by 2022 as Statista Research. This digital reach is of
However, the real transformation has come with the arrival
immense benefit to the business providers in terms of not
of digital platforms and the channels like web aggregator /
online / PoS / MISP. Now the customers are not dependent only reaching to the targeted audience with business
promotion but also to transact business over it.
on an agency/any specified person to guide them about the
features/pricing of the policies but they themselves are
The mobile telephony and the ever-increasing connectivity
empowered to have the information on their fingertips and
through networks have given rise to a new set of tech-based
compare the offerings and make a call.
distribution channels. Dept of IT-driven rural facility Common
service centres (CSC) and Point of Sales (PoS) are doing great
In the last few years, e-commerce has made an entry into all
households. This self-service option not only reduces the service in reaching the rural population. In a very short time,
the number of trained PoS agents have crossed 2,00,000 while
workload of service providers but also gives customers
we have more than 12000 CSC centers authorised to sell

The Insurance Times, April 2022 19