Insurance in the 21st century
K Mehrotra, MD, LIC talks to Kumar Dawada about how insurance companies
can retain business despite global competition. The strategy is to invest in
customer-centric IT initiatives and to focus on customers by providing better
products, services and returns.
We live in the information age. People are becoming more aware of the importance
of insurance in their life. However, there is a paradox in the form of a growing
need to educate people to buy insurance.
Today, natural disasters on a large scale occur regularly and even terrorism
is increasing day by day. Specialised software is used in actuarial science
to accurately predict life expectancy and mortality. But natural disasters are
difficult to predict.
This has highlighted to the world that insurance is a basic and fundamental
need for the safety and security of the family. Only a larger insurance cover
can guarantee a better future.
However insurance claims for natural disasters are very low. This is because
insurance coverage was too low, and those who really needed insurance had not
taken it. There is the need to push insurance as a social responsibility for
those who really need it.
Business And Social Objectives
When LIC was formed in 1956 through the amalgamation of 225 private companies,
its business objectives complemented its social objectives. The main objective
is to spread life insurance to every nook and corner of the country especially
rural areas, to socially and economically backward classes and provide them
reasonably-priced financial cover against death.
Other objectives include encouraging people to save for the future by making
insurance-linked savings more attractive and secure. The funds created are then
utilised and invested for nation building. The insurance business is conducted
with the full realisation that LIC is only a trustee of the insured public and
priority is given to meet the needs that arise due to change in the social and
Even today after 50 years, the core value of social commitment has not changed.
What have changed in recent times are customers expectations and the environment
in which the life insurance sector operates. This is due to globalisation which
has opened up the insurance sector to private players.
IT For Insurance
IT policy flows from the business and social objectives. IT usage covers all
business activities of the organisation. This includes finance, investment,
product development, actuarial, underwriting, customer relationship management,
marketing, policy servicing, human resource development, office servicing, and
ITs role is not to automate processes. Rather, it is
a strategic tool to simplify procedures and revamp processes. This helps create
a very efficient customer service management system. It not only provides anywhere,
any time service, it also provides greater accountability, transparency and
responsiveness in all business processes.
In todays world, IT is a must for any industry to keep pace with the customers
changing expectations. This is especially relevant in the service industry.
The insurance sector has to ensure that the technology it chooses does not lag
behind where customer expectations are concerned.
In our case, LIC has more than 16 crore policy holders. So it has to induct
the best IT products available and use them to cater to the needs of the customers
and deliver anywhere any time service on demand and to add value to its new
products. The trust and the goodwill of the customer gained in the last 50 years
have to be consolidated by making all activities more customer-focused.
For instance, LIC has a corporate Web site to provide information on products,
services, policy status, grievances and premium calculator. Other facilities
include touch-screen information kiosks at central locations to provide 24 x
7 inquiry services to customers.
Info centres are set up at major cities to provide call centre type services.
Alternate premium payment channels like ECS, Internet payment gateways as well
as ATMs of major banks are also available. Push services like premium alerts
and product information have been also been started through SMS.
A Customer-Centric Focus
As all the activities of insurance sector are customer-centric, any new technology
implemented or process developed needs to be customer-focused. It is necessary
to look at any IT implementation from the customers perspective.
This approach ensures that the technologys benefits and convenience are
passed on to the customers. The implementations should help customers minimise
their effort in dealing with LIC and allow interactions and transactions from
the comfort of their home or office any where and any time.
Facilities exist to pay premiums and get information
on policies online; however, there is a need to enhance the online service
to include settlement of claims, policy surrender, distribution channel
management and policy dockets.
Facilities exist to pay premiums and get information on policies
online; however, there is a need to enhance the online service to include settlement
of claims, policy surrender, distribution channel management and policy dockets.
There is a need to acquire CRM tools for better understanding of customers and
their buying patterns. There is also a need to redesign business processes and
centralise non-core functions, provide real-time processing, to have sound security
policies and conform to international standards.
Initiatives to be implemented in the near future include Web
portals dedicated to customers, sales intermediaries
and employees. The process is afoot to set up a premium
payment gateway for collecting insurance premia over
the Internet as well as an online data store at a central
level to make data available to requesting applications
for online real-time transactions.This will provide
MIS reports and help us deploy analytical and operational
Putting a document management system in place will eliminate the need to reference
physical records and create the capability of extending anywhere, any time service
to settle claims and other similar activities by using a repository of document
images. Another aim is to conduct network audit, information security audits
and achieve BS 7799 standards.
The feasibility of a BI solution from business objective and customer perspective
is also being considered. Already the proper providers, technology and models
are being considered as a precursor to a BI initiative. Work is also going on
for a payment gateway which works both wayspayments and receipts, so that
the customers can get their payments wherever they require.
For The CIOs
The insurance sector has to work with huge amounts of data on a daily basis
through nationwide networks. There is a growing need to provide real-time services
and transactions to customers. Hence the dependence of the business on IT will
IT implementations will also have to be upgraded to align them with growing
customer expectations and market needs which will, in turn, drive business objectives.
Only those IT implementations that suit business needs and add value for customers
will be adapted.
The customer should be the principal beneficiary of any technological or business
process initiative. It is necessary to see things from a customers perspective
and only those technologies will be adapted which bring the organisation closer
to the customer, which make the customer trust the organisation, which are user-friendly
and convenient for the customer.