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Transcript of Intoduction to Insurance111
INFORMATION TECHNOLOGY IN INSURANCE
CHAPTER – 01INTRODUCTION
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INFORMATION TECHNOLOGY IN INSURANCE
INTODUCTION TO
INSURANCE
What is Insurance? The business of insurance
is related to the protection of the
economic value of assets. Every
asset has a value. The asset would
have been created through the
efforts of the owner, in the
expectation that, either through
the income generated there or
from some other output, some of
his needs would be met.
For Example: 1. In the case of a factory or a cow, the production is sold and income
generated.
2. In the case of a Motorcar, it provides comfort and convenience in
transportation.
There is normally expected life time for the asset during which time it
is accepted to perform. The owner, aware of this, can so manage his
affairs that by the end of that life time, a substitute is made available to
ensure that the value or income is not lost. However, if the asset gets lost
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INFORMATION TECHNOLOGY IN INSURANCE
earlier, being destroyed or made non-functional, through an accident or
other unfortunate event, the owner and those deriving benefits therefore
suffer. Insurance is a mechanism that helps to reduce such adverse
consequences.
DEFINITION OF INSURANCE
“It is a form of a contract or agreement under which one party agrees to
pay in return of consideration an agreed amount of money to another
party to make good loss, damage or injury due to some uncertain event in
which the insured has interest”.
“Insurance is a contract by which one party, for compensation called the
premium assumes particular risk of the other party and promises to pay to
him or his nominee a certain or ascertainable sum of money on a
specified contingency.”
-E.W. Patterson
CONCEPT OF INSURANCE
Insured, are you? The Functions of Insurance will give you an idea
on how to go ahead with the approach of Insurance and what type of
insurance to choose. In a layman’s words, insurance means, “a guard
against pecuniary loss arising on the happening of an unforeseen event”.
In developing economies, the insurance sector still holds a lot of potential
which can be tapped. Majority of the people in the developing countries
remains unaware of the functions and benefits of the insurance and it is
for this reason that the insurance sector is still to grow.
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INFORMATION TECHNOLOGY IN INSURANCE
Introduction to IT
Overview
Now days Information Technology permeate virtually every aspect
of modern business to the extent that it’s effective use can easily mean
the difference between success and failure. The effective use of
Information Technology is one of the biggest challenges facing most of
the organization today. Understanding the role of information technology
plays and how to make the best use of Information Technology systems is
an essential requirement for any organization seeking competitive
advantage.
What is IT?
IT stand for Information Technology and in its widest sense,
refers to any technology controlled by a microprocessor (or a computer
chip). For example: Microprocessor is used to control the delivery of
essential services such as water, electricity and telecommunication.
There is no organization that can afford to
ignore the empowering technology of the modern
world. Today’s IT systems can help a business to
be more responsive, efficient and flexible in the
face of continuous and rapid change. Properly
used Information Technology will allow every
company to stream line its
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INFORMATION TECHNOLOGY IN INSURANCE
processes and focus on its core skills and abilities that differentiate if form its
competitors in the market place failure to embrace the opportunities that are ace
offered by Information Technology today is likely to result in business failure.
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 does not have details of new plans
announced in the press, the agent may face 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 between insurers.
Using the power of modern Information Technology systems to the
best advantage is a strategic skill that has become an essential
requirement if an organization already of its competitors Information
Technology fulfills many functions in an organization including
automated process and systems management; but for manager the key
role is as an enabling technology. Manager must select and use
Information Technology systems to simplify business process and to
acquire analyze and manage data on which their business depends.
CHAPTER – 025
INFORMATION TECHNOLOGY IN INSURANCE
LITERATURE REVIEW
"This is a point of great change. I recommend you think both
tactically and satirically about you can use technology," Harris said.
"Make sure your technology is aligned with your business our come it
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INFORMATION TECHNOLOGY IN INSURANCE
will allow you better longevity of the projects, as well as provide greater
business home Select vendor packages that meet business requirements
and match enterprise architecture. We are seeing a great shift in insurer's
thinking about vendor packages. It is not necessary to build alliance
solutions. Focus on enterprise agility and flexibility and understand the
risks associated with technological maturity. Many technologies are not
mature at this point, and there will be a risk in implementing these.
Understand first mover advantage with emerging technologies."
A.T. Kearney recently completed a study of emerging
technologies to isolate opportunities for capturing strategic advantage.
These trends in insurance are part of a broader landscape in which
innovative technologies are significantly driving change across a wide
range of functions and industries. Figure 1 highlights the main trends in
five areas: consumer and employee experience (leading to innovation
breakthroughs), applications and telecommunications (leading to growth
and profits), and information management (leading to improved
operations).
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INFORMATION TECHNOLOGY IN INSURANCE
The study included interviews with more than 150 leading
technology executives worldwide. The findings suggest that social
networking, telematics and SOA are essential to growth and competitive
advantage. The following discusses each in more detail, including how
each technology could play a role in transforming the insurance industry.
CHAPTER – 03FIELD STUDY
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INFORMATION TECHNOLOGY IN INSURANCE
Purpose & Need of Insurance
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INFORMATION TECHNOLOGY IN INSURANCE
Assets are insured because they are likely to be destroyed or made
non-functional, through an accidental occurrence. Such possible
occurrences are called perils. Fire, floods, breakdowns, lightening,
earthquakes, etc, are perils. The damage that the perils may cause the
asset, is the risk that the asset is exposed to. The risk only means that
there is a possibility of loss or damage. It may or may not happen.
The mechanism of insurance is very simple. People who are
exposed to the same risks come together and agree that, if any one of the
‘members’ suffers a loss, the others will share the loss and make good to
the person who lost.
A human life is also an
income generating asset. This
asset also can be lost through
unexpectedly early death or
made non-functional through
sickness and disabilities caused
by accidents. Accidents may or
may not happen. Death will
happen, but the timing is
uncertain. If it happens around
the income will normally cease, the person concerned could have made
some other arrangements to meet the continuing needs. But if it happens
much earlier when the alternate arrangements are not in place, insurance
is necessary to help those dependent on the income.
In the case of a human being, he may have made arrangement for
his needs after his retirement. These would have been made on the basis
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INFORMATION TECHNOLOGY IN INSURANCE
of some expectations like he may live for another 15 years, or that his
children will look after him. If any of these expectations do not become
true, the original arrangement would become inadequate and there could
be difficulties. Living too long can be as much a problem as dying too
young. These are risks which need to be safeguarded against. Insurance
takes care of it.
Insurance does not protect the asset. It does not prevent its loss due
to peril. The peril cannot be avoided through insurance. The peril can
sometime be avoided, through better safety and damage control
management. Insurance only tires to reduce the impact of the risk on the
owner of the asset and those who depend on that asset. It compensates,
may not be fully, the losses. Only economic or financial losses can be
compensated.
The concept of insurance has been extended beyond the coverage
of tangible assets. Exporters run the risk of the importers in the country
defaulting as well as losses due to sudden changes in currency exchange
rates, economic policies or political disturbances. These risks are now
insured. Doctors run the risk of being charged with negligence and
subsequent liability for damages. The amounts in question can be fairly
large, beyond the capacity of individuals to bear. These are insured. Thus,
insurance is extended to intangibles. In some countries, the voice of a
singer ort the legs of a dancer may be insured, even though the advantage
of spread may not be available in these cases.
There are certain basic principles which make it possible for
insurance to remain popular which make it arrangement. The first is the
fact that people are exposed to risks and that the consequences of such
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INFORMATION TECHNOLOGY IN INSURANCE
risks are difficult for any one individual to bear. It becomes bearable
when the community shares the burden. The second is that no one person
should be in a position to make the risk happen. In other words, none in
the group should set fire to his assets and ask others to share the costs of
damage. This would be taking unfair advantage of an arrangement put
into place to protect people from the risks they are exposed to. The
occurrence has to be random, accidental, and not the deliberate creation
of the insured person.
Functions of Insurance
The function of insurance is divided into two parts:A. Primary Function
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INFORMATION TECHNOLOGY IN INSURANCE
B. Secondary Function
A. Primary Functions
i. Insurance provides certainty: Insurance provides certainty of payment at the uncertainty
of loss. There is different type’s uncertainty of risk. The risk will
occur or not, when will occur how much loss will be there?
Insurance removes all these uncertainty and the assured is given
certainty of payment of loss. The insurer charge premium for
providing the said certainty.
ii. Insurance provides protection: The main function of the insurance is to provide protection
against the probable chances of loss. The insurance guarantees the
payment of loss and thus protects the assured from sufferings. The
insurance cannot check the happening of risk but can provide the
losses at the happening of the risk.
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PRIMARYFUNCTIONSECONDARYFUNCTION
INFORMATION TECHNOLOGY IN INSURANCE
iii. Risk sharing:Life and property of person are subject to a number of
uncertain risks. Thus the loss that a few may suffer is spread over
to a number of people who have insured against the same risk. The
premium paid by a large number of persons are used to compensate
the loss, that a few may suffer i.e. insurance company never takes
the risks; it covers the risk and immediately spreads the risk among
many insured’s.
Because the premiums
for insurance are paid by large
number of insured’s whereas
the loss is suffered by few
insured’s. Thus from the
premiums collected the
compensations are paid to the
sufferers.
B. Secondary Function
i. Prevention of Loss : The insurance join hands with those in situations which are
engaged in preventing the losses of the society because the
reduction in loss caused lesser payments to the assured and so
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INFORMATION TECHNOLOGY IN INSURANCE
more saving is possible which will assist in reducing the premium.
Lesser premium is reduced to, which will stimulate more business
and more protection to the masses.
ii. Provides capital : The insurance provides capital to the society. The
accumulated fund are invested in productive channel, the dearth
(Lack) of capital of the society is minimized to a greater extent
with the help of investment of insurance.
iii. Improves efficiency: The insurance eliminates worries and miseries of
losses at death and destruction of property. The carefree person can
devote his body and soul together for better achievement. It
improves its efficiency.
iv. Economic Progress: The insurance by protecting the society from huge losses of
damage, destruction and death, provides an initiative to work hard
for the betterment of the masses. The next factor of economic
progress, the capital, is also immensely provided by the masses.
Kinds of Insurance
The insurance can be classified into three categories from business
point of view:I. Life Insurance
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INFORMATION TECHNOLOGY IN INSURANCE
II. General Insurance
III. Social Insurance
I. Life Insurance
“Life Insurance is a contract or agreement by which
Insurance Company agrees to pay in return premiums or lump
sum premium, an agreed amount of money at the time of death or
maturity of policy whichever is earlier”.
Life Insurance is the latest type of insurance and popular
type of insurance. In India the business of Life Insurance is
conducted by Life Insurance Corporation of India, which is an
example of statutory Company. This life insurance is based on two
principles i.e. utmost good faith and insurable interest. Life
Insurance contract is not a contract of Indemnity. It is a contract for
the payment of a specific amount, as the value of human life
cannot be measured in terms of money.
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INFORMATION TECHNOLOGY IN INSURANCE
II. General Insurance:The General Insurance
includes property insurance,
liability insurance and other
forms of insurance. Fire and
Marine insurance are property
insurance. Motor, theft, fidelity
and machine insurances
include the extent of liability
insurance to a certain extent.
The strictest form of liability insurance is fidelity insurance,
whereby the insurer compensates the loss to the insured when he is
under the liability of payment to the third party.
III. Social Insurance: The social insurance is to provide protection to the weaker
section of the society who is unable to pay the premium adequate
insurance. Pension plans, disability benefit, unemployment benefit,
sickness insurance and industrial insurance are the various forms of
social insurance. With the increase of socialistic ideas, the social
insurance is the obligatory duty of the nation. The government of
the country must provide social insurance to its masses.
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INFORMATION TECHNOLOGY IN INSURANCE
EVOLUTION OF
INFORMATION TECHNOLOGY
Information technology (IT) is a term that encompasses all
forms of technology used to create, store, exchange, and use
information in its various forms (business data, voice
conversations, still images, motion pictures etc .) It is a
convenient term for including both telephony and computer
technology in the same word. The technology is driving what has
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INFORMATION TECHNOLOGY IN INSURANCE
often been called “the information revolution". Information is a
stimulus that has meaning in some context for its receiver. When
information is entered and stored in a computer, it is generally
referred to as data. After processing, i.e. compacting, editing,
deleting, merging, etc., the output data can again be perceived as
information. When information is packaged or utilized for
understanding, it is known as knowledge.
Information Technology is a business tool that can radically improve
the way business is managed. If systems are to deliver real benefits,
then they must be:
1. Transparent to the user: Users need not know how systems work; the requirement is simply
that the systems perform as and when needed.
2. Fast and Easy to use: Users should find the systems simple to use and must be able to
complete the tasks without having to wait any significance time for the
system to respond.
3. Flexible : Changing needs require systems that are capable of being adapted
quickly. Changes with the technology sector of the insurance industry are
occurring with unique speed, traveling beyond and impacting companies
more fully than ever expected. Business drivers are leading insurers to
look for technologies and business processes that are significantly
different from anything they have used before. Driving forces such as
market globalization, merger and acquisition activity, and the critical
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INFORMATION TECHNOLOGY IN INSURANCE
need to adopt market segmentation strategies are forcing companies to
move to the information age at a unique speed. Those unwilling to make
the move risk being left behind with unsatisfactory business levels,
declining profits and ultimately, the inability to survive.
On Account of various reasons, the insurance industry in India has
not kept pace with the rapid development in technology. It is only in
recent years that an attempt is being made to become technology-wise.
The revolution in communications and Information Technology is
promising to change the way business is done. These innovations are
promising to make things transparent, quicker and accessible. From their
controlling offices located thousands of miles away a company such as-
M/s Hindustan Lever Limited (HUL) which has become Hindustan
Unilever Limited (HLL) claims it knows the stock movement at remote
depots a minute-to-minute basis.
Other Examples:
A patient undergoing tests in the U.S in the evening finds his
reports processed and ready in the morning.
A lawyer dictates his notes in his recorder late in the night. The
next morning neatly typed out notes is available in his
computer. The processing work has been done in a distant
country like India.
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In Insurance also, Technology will play a vital role. Any player in
the market will have to be technology know-how, to be competitive and
to enable the organization to survive. It should be possible for a proposal
in Guwahati to be evaluated in Mumbai and acceptance confirmed
immediately. All these new technologies promise to reduce operational
costs significantly.
The Earlier Business Model
In the pre-computer days, agencies, handled almost all customer
service. Though manual, this system was efficient in the there was no
duplication of processes by agencies and insurers. The insurer’s main role
was to provide financial backing and keep statistical information.
The advent of computers in the 1960s allowed insurers to change
their business model. As mainframes became entrenched, more functions
flowed back to home office. Agencies did less, and big bureaucracies in
both home and branch offices became necessary to run the company’s
business.
Built around centralized control and a large bureaucracy at the
home office, the old business model customarily relies on a mainframe or
other large computer system. This technology foundation offers
centralized processing power and huge data storage capacity. However,
under this model, customer support for billing, claims, and policy
servicing are often split between the agent and the company, and the
often handled by different company departments. Customers with
multiple concerns are bounced from agents to company and from
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department to department, introducing many opportunities to commit
errors. That often results in a dissatisfied customer and high service costs
that are difficult to manage.
In this environment, a cadre of highly trained and expensive
programmers is needed to maintain the mainframe or large computer
system. Users, such as marketing staff and underwriters, must make a
written request to the information systems (IS) department, which then
puts the request in its queue. The order may take weeks, months, or years
to fulfill. The first attempt is often sent back for fine-tuning because of
communication gaps between the business unit and the IS department and
time lags need definition and programmed resolution.
Today, the mainframe or other large computer system is still an
industry workhorse. But insurers are recognizing that it is a millstone
because the environment is so inflexible. Changing business process is
time-consuming and requires expensive programming and even then the
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results may not be optimal. The enormous cost and anxiety spurred by
year 2000 compliance issues provides an extreme example. That’s why
many insurers are no longer putting new lines of business on their
mainframes, turning instead to client/server systems that offer a superior,
user-friendly development environment centered on fulfillment at the
point of sale.
Application of Information
Technology (IT) in Insurance (The
New Business Model)
There has a revolution in the way insurance companies do
business. The new emerging business model depends heavily on
information technology.
What is this new business model? Primarily, it is customer-
oriented. That is, all processes are designed to satisfy customer needs,
rather than the company’s needs. The new model is also decentralized;
with more responsibility and power given to the people who are on the
front lines with the customers-whether they are independent agents,
brokers, captive agents, or company employees.
Giving these people the automated tools they need to handle all
customer requests, often in a single session, lets insurers satisfy customer
needs faster and better. As result, the new business model is flexible,
responsive and cost-efficient.
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Many established companies, especially those with a keen eye on
the strategic advantages of leading- edged automation, having already
adopted the new technology-driven business model either
comprehensively or in specific niches, such as a specially line or a
residual market. And forward- thinking start-ups are now running their
entire company on the new business model and powering with a network
of personal computers.
Information Technology Applications
in Functional Areas
Even though the information technology has wide application in all the
spheres of the insurance, yet following are the most important ones in
respective functional areas:
Marketing:
The scope for use of information Technology in marketing function is
tremendous. It may start from the consumer accquitance to an insurance
product to claims settlement or further selling of new products or
developing consumers for the products.
Information technology can be integrated with almost all the P’s of
marketing. It may help in formulation and implementation of various
marketing strategies including pricing, promotion and customization
strategies. Some of these areas are discussed below.
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1) Customer Awareness: The use of information technology may be path breaking for
the insurance companies since conventionally the awareness of the
insurance products in India is low. With the use of internet the
information about the products and pricing policies can be made
available to the public in few seconds and much transparency in
operations can be established. There are numerous websites
available which can help the prospective customers to compare the
insurance products of various issuers and decide the product suited
to his needs. Also, the information about the new products changes
in the existing ones and of course, the information on various
discounts and incentives can be provided at a much faster rate and
lower cost.
2) Customer Services:
The insurance being a service needs high concerns in terms of
services. Customer service requires maximum attention and should
span the entir gamut of activities in the purchase of a product i.e. right
from the dissemination of information, documentation to policy
administration and claim settlement. The service quality standards of
the new private insurance players have posed a threat to the –then
giants viz. the LIC and GIC. The investments in the personnel and
knowledge systems have helped private player’s companies build
significant domain expertise. The emerging areas of IT applications
are:
a) Market Research
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INFORMATION TECHNOLOGY IN INSURANCE
b) Consumers Targeting and Segmentation
c) Customizations of Product
d) Easy Procedures like premium payments, claims settlements,
tracking of brokers and agents
e) Complaints management/ grievance handling
f) Intermediary analysis.
3) Finance: Information technology can be effectively used for internal
management viz. Accounting, treasury management, financial
performance reporting etc. and as well as in resource mobilization,
portfolio management, investment planning etc.
4) Human Resource Management: Application of IT in human resource management is obvious.
It can be effectively utilized in
a) Recruitment and selection,
b) Training,
c) Performance appraisal,
d) Promotions, transfers and dismissals,
e) Valuations etc…
5) Research and Development: R & D has been made an easy task with increasing use of
IT. Surveys and research on market potential, analysis of markets,
tracking with international norms and developments are the profound
areas of It applications.
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INFORMATION TECHNOLOGY IN INSURANCE
INFORMATION TECHNOLOGY
IN THE INSURANCE SECTOR
Information Technology plays a vital role in efficient operations of insurance carriers. Obtaining accurate information as quickly and efficiently as possible remains an integral component to the framework of the insurance sector. Unfortunately, the dynamically changing corporate landscape, situated alongside progressively expanding legislation, results in the need for consistently improving information technology.
1. Client DataInsurance carriers maintain accurate and updated client data
records. Information Technology must be both secure and comprehensive enough to store multiple names, addresses, telephone numbers, email addresses and other pertinent details.
2. Policy DetailsFor those insurance companies providing policies across multiple lines of insurance, information technology requirements become even more complex. Details of each insurance policy, ranging from life, home, auto, boat, liability and business products, need to be accurately recorded and merged with client data.
3. Claims ManagementInvestigating, paying and recording claims data is crucial to any insurance company’s financial stability. Information technology plays a vital role in allowing carriers to record claims details and share data with police, other carriers, attorneys and beneficiaries. Advanced computer software ensures important information remains accessible and updated.
4. BeneficiariesLife insurance companies utilize database technology to record policy owner’s beneficiary designations. Aside from the personal details of the insured individuals, beneficiary names, addresses, telephone numbers and death benefit portions are of monumental importance.
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5. Payment InformationPerhaps the most essential area requiring accurate and efficient information technology is an insurance company’s client payment details. Above all else, billing and invoicing systems generate the necessary revenue to keep the company in business. Cash flow remains vital to daily operations and without superior information and processing systems, the carrier’s financial stability is at risk.
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The Role of IT in Insurance
American insurance companies are rapidly becoming technology-driven organizations, replacing millions of paper files with databases of information. Where once the industry lagged behind other, more progressive sectors of the economy, insurers are now at the forefront of technological innovation, targeting several key areas.
Actuarial AnalysisInsurers base their rates on actuarial models that seek to determine what risks are more or less likely to experience a loss. Insurance companies are using technology to analyze years of claims and policyholder data searching for correlations between risk characteristics and claims. Technology has allowed actuaries to analyze risk at a much more precise level of granularity.
Policy AdministrationMost insurance policies are still printed and delivered to policyholders by mail each year. The process of creating these documents used to be accomplished by armies of clerks, technicians and typists. In most cases, this repetitive task has been completely re-imagined using technology. Customer data is maintained in massive databases, where it is accessed by computer systems that automate the renewal of each policy. Policies are assembled using complex software packages and printed using advanced high-speed printers.
Automated Underwriting and RatingEvery insurance policy undergoes an underwriting process that determines if the insurance company is willing to provide insurance. If the risk is acceptable, it is then rated, to determine the price the company will charge. Once the purview of highly trained underwriters and rating technicians, this process is now automated, with only the most unusual risks requiring personal attention.
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Speedy and correct issuance of documents.Expenditure disposal of claimsProper building of accounts and statistics
Quality Assurance & Efficiency
INFORMATION TECHNOLOGY IN INSURANCE
The Need for Information
Technology
The rapid innovation in the field of information and
communications technology has posed serious challenges for the
insurance industry in India. The use and applications of Information
Technology in wide variety of Insurer’s operations has now become
strategic in the sense that it has direct impact on the productivity of
resources, and a sweepening impact on reducing the cost of various
activities.
With the arrival of private insurance players, the competition has
become more intense and an important role is being played by the
insurance sector. Even though the use of information technology is not
new to the insurance sector, yet we may find tight compartmentalization
regarding the use of information technology in various departments of the
insurance companies including the major players since last years. The
most visible of these departments are accounting, policy issue and
servicing, claim processing sales management etc. The innovation in
information technology can be effectively utilized in the following areas
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INFORMATION TECHNOLOGY IN INSURANCE
Therefore the imperative for all the insurers, especially LIC and
GIC is to build up an efficient interface between the various departments
and segments. This would reduce the paper work, improve efficiency of
service delivery and provide competitive advantage to the insurance
companies.
INSURANCE AND ELECTRONIC
COMMERCE- E-INSURANCE
On a global basis, there is mad rush of companies willing to
enable their business. E- Insurance ispo-facto, not aloof, is one of the
growth areas in India. Enormous opportunities are being created by the
Internet’s new connectivity such as improving customer’s service,
reducing cycle time, becoming more cost effective, and selling goods,
services or information to an expanded global customer base. As entire
industries are being reshaped and rules for competition are changing,
enterprises need to rethink the strategic fundamentals of their business in
order to be successful. Globally, insurance on the net has lagged behind
other financial service products such as banking and brokerage. Of the
total online users only 5% used insurance service online.
This lag was due to lack of relevant and adequate content.
Traditional insurers, while leveraging on new information technologies,
have been slow to utilize the internet as an alternative distribution
channel. Generally the largest insurers have been focused on static
marketing presence online, encompassing product information, FAQ’s
and quotes. Only a few insurers have added the ability to submit
applications online. This lack of participation in the e-business revolution
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INFORMATION TECHNOLOGY IN INSURANCE
is seen across lines. The insurance companies attribute two factors for the
slow take off. First and foremost, insurance is a product that is sold and
not bought. The internet is perceived to be a buyer’s medium, with online
customers able to search quickly and for the most competitive prices and
variety of products. Insurance is one product, which involves
personalized selling. The process of insurance sales requires a series of
face-to –face interactions.
International Trends33
INFORMATION TECHNOLOGY IN INSURANCE
The convergence effect of IT is being felt by the insurance
industry as well in developed countries. In the US, personal savings are
almost evenly distributed between banking, insurance, mutual fund and
other financial institutions. The insurance industry is expected to lose
market share to banking and other financial institutions. Customers today
expect enhance levels of service due to increased competition. This
customer demand is likely to result in non-traditional access to specific
information. The global online insurance market is expected to achieve
and exponential growth in the near future. In the life insurance segment
alone, the total online business will grow to $21 billion by 2003.
Premium income from the non-life policies will go up to $18 billion in
the next three years. The Gartner Group in a study conducted by them
says that in a year 25% of all customer contacts and enquiries for
enterprises will come via the internet, e-mail and online forms.
Bancassurance customer service, which has been almost exclusively done
via the telephone (96% of all transactions), will become increasingly e-
mail based in the next four years; decreasing telephone related service by
28%.
In response to these trends in customer preference, insurers are
mobilizing their online sales and customer account management
capabilities. This move towards building Internet based business
solutions benefits the insured by providing greater flexibility, greater
customization of information and improved customer service for the
insurance company, this drastically reduces the costs involved.
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Life Insurers on the web
Insurance Companies: IRDA has so far granted registration to 12
private life insurance companies and 9 general insurance companies.
If the existing public sector insurance companies are included, there
are currently 13 insurance companies in the life side and 13
companies operating in general insurance business. General Insurance
corporations have been
approved as the “Indian
reinsurer” for
underwriting only
reinsurance business.
Insurers Website
LIC of India
Om Kotak Mahindra
Max New York Life
Birla Sun Life
ING Vysya Life
HDFC Standard Life
ICICI Prudential Life
www.licindia.com
www.omkotakmahindra.com
www.msxnewyorklife.com
www.birlasunlife.com
www.ingysyalife.com
www.hdfcinsurance.com
www.iciciprulife.com
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INFORMATION TECHNOLOGY IN INSURANCE
E-Insurance in India
The intriguing question before all associated with the insurance industry
is that will it be possible for private companies or even public sector
monoliths to sell the insurance online in India in the near future?
Insurance companies will probably have to wait for internet penetration
to increase and the still ambiguous E-commerce rules to take concrete
form. However, what is not debatable is that new private entrants will
change the rules of the game for the Indian insurance business, both in
the life and the non- life segment, unfolding opportunities for software
engineers and professional agents.
To peep into the possibilities and opportunities emerging out of the
integration of insurance and information technology, various
organizations have organized seminars and conferences in the recent past
to explore the possibilities of selling insurance on the Net and gauge the
opportunities for the growing Indian software industry.
According to T. Ramanan of Assocham, life insurers were among the
first to go online with informative content and features like actuarial
calculators. However, according to him, they have been relatively slow to
embrace online commerce, which currently makes up about 1% of the
total term life market. Only 12% of insurers companies globally sell
policies online. Experts expect the percentage of term life sold over the
internet to increase from 1% to 15% by 2003, which in monetary terms
works out to $21 billion. Although traditionally term life insurance has
been sold through independent agents, the big shift will become manifest
sooner than later. And more importantly Indians cannot watch from the
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INFORMATION TECHNOLOGY IN INSURANCE
sidelines as this paradigm shift in the insurance sector takes place. In the
non-life sector, automobile policies are popular aver the internet.
Premium income, points out the paper, is expected to rise to $ 18 billion
form 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 companies reduce costs and keep
premiums low, a pre-requisite 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 websites, but these are missing in most cases. Only
licindia.com seems to offer downloadable proposal and claim forms for a
few of the schemes.
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INFORMATION TECHNOLOGY IN INSURANCE
Benefits of Electronic Insurance: -
E- Insurance provides multiple benefits to the insurer and the existing and
prospective insured’s:
Information collected is better and cheaper.
Speed of response – Issuance of policy and settlement of claims is
faster
Provides new ways of doing business in competitive market.
Flexible pricing and customized services.
Global accessibility i.e. lapse of physical boundaries
Increased sales without additional sales force
Immediate premium collection and funds transfer
Reduced cost per transaction.
24*7 availability i.e. round the clock availability of information
Real time knowledge base building.
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INFORMATION TECHNOLOGY IN INSURANCE
Improved service
The features offered by most of the Indian insurers’
websites are:
1) Basic details of the various products classified by type-
endowment, whole life, money back policies etc...
2) A primer on insurance basics explaining the need for insurance,
glossary of insurance terms, FAQ’s etc...
3) Downloadable forms (not offered by all), online customers help
lines, tax and premiums and bonus calculators.
4) Sections on the various tax benefits of insurance products on offer.
5) A ‘contact’ mechanism whereby you can get in touch with their
nearest branch office or marketing personnel.
6) Customers can also compute the premium for various policies in a
matter of seconds, using premium calculators
7) These sites also serve as a virtual community for insurance
professionals with features such as the latest insurance news, career
opportunities, insurance education, message board for discussions
and events in insurance sector.
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INFORMATION TECHNOLOGY IN INSURANCE
Major factors Affecting E- Insurance
Growth of net: It is estimated that India would have
about 150 million net user’s by 2010.
These figures represent a huge buying
potential.
Competition Pressures :Insurance companies because of
competitive pressure would be driven into internet rather than a clear
ROI justification.
Customers: The availability of net-based services will be a huge factor for
customer retention.
Cross sells :When linked with other financial products, a portfolio approach to
investment, savings and risk coverage will increase cross sells and
customer loyalty and retention.
Costs :In the beginning E- insurance will be a cost factor rather than a profit
drive, but in the long run it will be a cost reducing factor.
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INFORMATION TECHNOLOGY IN INSURANCE
E-Insurance Business Challenges
Electronic insurance will not only provide many benefits but will also
pose business and technological changes.
Business ChallengesThe following points have been detailed in a study on insurance
and E-commerce done by Grace,Klien and Straub of the centre for risk
Management and Insurance Research, Georgia State University.
i. Disintermediation Increases business :
Study has shown that the cost of distribution decreases
with the increased value of connection. Products with relatively
high fixed costs and low value such as travel, credit or burial
insurance are relatively expensive to produce. Customers pay a
high price per dollar of coverage for these products. The internet
allows the disintermediation of this relatively high overhead for
these low face value products. This means that prices can be
lowered and more insurance can be sold by reducing the
transaction costs of the exchange.
ii. Reorganization of companies-virtual
companies :
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INFORMATION TECHNOLOGY IN INSURANCE
Many insurers will be prompted by the opportunities
presented by E-commerce to restructure the packaging of insurance
services. Insurance companies using E-commerce may re-engineer,
outsource, and/or streamline their management functions, or
marketing and distribution arms. To more efficiently deliver these
services, some insurers will be able to reduce their significant
investments in physical facilities and certain personnel. E-
commerce will enable independent agency insurers to more easily
adapt their distribution mechanism to market competition and
expedite their transactions with intermediaries.
iii. Insurance customers what do they want?
Customers could get better and different service through the
internet. It is possible to obtain quotes from a number of
companies. In some cases, the internet provides rating agencies
evaluation of insurers. The internet and outsourcing can provide
additional cost savings to the consumer. Technology can bring the
customer closer to the insurance contract, by removing layers of
inefficiencies. Consumers will also obtain price comparisons for
relatively generic contracts, such as life insurance and rates for a
standard set of auto insurance coverage for given vehicle and
driver characteristics.
iv. The Death of Insurance Agent?
One of the reasons why insurers have been slow to use
electronic commerce could be the fear of swallowing up the
agent’s business. The internet does not necessarily imply the death
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INFORMATION TECHNOLOGY IN INSURANCE
of the agent. Many insurers are examining their agent’s role in the
process and are also developing direct contacts with the insured
through their web presence. Agents could enhance their advisory
role to consumers as their paper and money processing functions
diminish.
Technological challenges
One of the most prominent challenges of E-commerce is security. It
is very evidence that
many users are reluctant
to do business on the
internet due to security
reasons. Issues of
transmission security,
host server security
confidentiality,
authenticity and ways to
counter these challenges
are covered in the following topics.
Security:
a. Database Security : The business database security is utmost important.
This has to be monitored by security of the web server and web
access.
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INFORMATION TECHNOLOGY IN INSURANCE
b. Web Server Security : Security policies should be defined like who is
allowed access, nature of the access and who authorities such
access? Who is responsible for security? What kinds of material are
allowed on server pages?
c. Password sniffing : Protection against password sniffing is to avoid
using plain text usernames and reusable passwords.
d. Network Scanning Programmes: Automated tools should be used to scan your
network. These tools check for well-known security related bugs in
network programs such as send mail and FTPD. Computers are
certainly being scanned by crackers interested breaking into the
systems; therefore network scanning program should be regularly
run.
e. Physical Security: One can ensure physical security by having an
alarm system that calls the police, having a key-lock on the
computer power supply. There should be adequate protection against
fire smoke, explosions, humidity and dust.
f. Web access Security:
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INFORMATION TECHNOLOGY IN INSURANCE
Host based restrictions can be implemented using a
firewall to block incoming HTTP connections to a particular web
server.
g. Transmission Security : Encryption is a key technology to ensure transaction
security.
h. Privacy : Privacy is likely to be growing concern as
internet- based communications and commerce increase. Designers
and operators of web sites who disregard the privacy of users do so
at their own peril.
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INFORMATION TECHNOLOGY IN INSURANCE
ASSESSMENT OF PRIORITY
The assessment of priority for E-Learning for each people business
segment has been done based on the needs. As per the assessment matrix,
the most of the people segment, there is potentially a high need to adopt
E-Learning across business segments.
Business Benefits of E-Learning
Some of the business benefits of e, learning across people segments:
Agents
Reduced lead time to market new products;
Learn and earn without losing customer, facing time;
Continuing education credits at the own pace helping the career
path;
Update on regulatory changes or competitor information on the fly,
giving the marketing edge; Ideal method to overcome inability and
aversion to classroom sessions_
Employees
Employees have to be up to date with any changes in products and
processes to provide efficient post sales service.
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INFORMATION TECHNOLOGY IN INSURANCE
High level of motivation leading to good service and high customer
retention;
High level of accuracy in work due to constant upgradation of
skills and knowledge;
Consistency in work across the organization;
Saving on lost revenue
Productivity when people are away from workplace.
Customers
E-Learning is the most feasible and practical method to educate the
customer, providing tangible and intangible benefits.
Educated customer is open to technological innovations and
receptive to online tools that reduce customer service costs;
Reduce incidence of losses and claims;
Increase knowledge and awareness about products and quicker
and more efficient decision-making.
AIG Consultants (AlGC), a subsidiary of AIG, offers online training to
commercial and industrial insurance customers. Clients have access to
online risk abatement training for their employees. Training focuses on
health, safety and environmental risks, thus reducing workplace liability.
Business Associates
Business associates need constant training to be on the same page with
the companies and it is not feasible to get them in a classroom.
Better, intervene with customers;
No tag between the company and the fronting partner;
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INFORMATION TECHNOLOGY IN INSURANCE
Multiple sessions on business and systems at minimal cost.
Faster Claims Settlement
Symbility Solutions is creating a different kind of insurance settlement experience with a team that is passionate about providing superior tools to analyze, adjust, estimate and settle claims. Our customers' claims settlement process is faster because our cloud-based technology platform is bringing the insurance industry closer together – driving accuracy and efficiency.
Our centralized communications hub, data warehouse, analytics engine and processing application - Symbility Claims Connect, allows multiple people to work on claims in real-time. Even in challenging offline conditions, accurate and detailed estimates can be generated quickly and remotely using Symbility Mobile Claims.
To find out about servicing your customers faster, and more fairly, than ever before - register for your demonstration today.
Technology Fast 500Symbility is growing as our products are gaining traction within
the insurance industry for their ease of data collection and significant improvements to our customers’ workflow.
In November 2012, Symbility was listed on Deloitte's Technology Fast 500™, a ranking of the 500 fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America.
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INFORMATION TECHNOLOGY IN INSURANCE
Insurance industry adoption
Over the past 18 months, Symbility has announced new customer relationships (in chronological order) including:
United Property and Casualty Insurance Company, a wholly-owned subsidiary of United Insurance Holdings Corp., that writes and services property and casualty insurance in Florida, South Carolina, Massachusetts and Rhode Island,
the Independent Mitigation and Cleaning/Conservation Network (‘IMACC”), the largest network of independent restoration contractors in the United States,
First Choice Repair, a national third party administrator, offering a Managed Repair Program through a network of credentialed contractors to assist the policyholders of property insurance carriers with restoration (Roofing, Mitigation, Flooring, Tarping, Board Up, Debris Removal and General Contracting) after damage from a claim and, Farmers Alliance Companies, specialists in providing personal, commercial and farm insurance for rural America for more than a century.
Open, honest and transparent
Symbility Solutions is publicly traded in the US on OTCQX:ATBEF and in Canada on TSX VENTURE:SY.
Symbility was recently named to the TSX VENTURE 50. The TSX Venture 50 is an annual ranking of the top 10 companies listed on the TSX Venture Exchange, in each of five major industry sectors – mining, oil & gas, technology & life sciences, diversified industries and clean technology – based on a ranking formula with equal weighting given to return on investment, market cap growth, trading volume and analyst coverage.
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INFORMATION TECHNOLOGY IN INSURANCE
Benefits to Policyholders /
Prospects:
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.
Details can also be had about housing loans or other benefits
available to policyholders
Premiums can be paid without having to go to the office of the
insurer, by direct debit to the policyholder’s credit card or bank
account.
Benefits to agents:
If the insurer has an intranet, the agent can, sitting at
his place of work, be attending the insurer’s office, making
enquiries about status of proposals or claims or discussing with any
officer or other agent, for clarification or advice, whenever he
wants to do it. The physical distance between the agent and the
office will not be of any consequence at all. The benefits to the
agents will be
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INFORMATION TECHNOLOGY IN INSURANCE
He can receive all circulars and 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 on transit, etc., are avoided.
Any doubts with regard to proposal, benefits, premium,
taxation, medical examination, insurability, etc, can be
discussed and got clarified directly from the person
concerned.
Communications to and from the office will be immediate
through e-mail and at low cost.
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INFORMATION TECHNOLOGY IN INSURANCE
IT Department in an Insurance
Company:
Functions :
The IT department in an insurance company performs the following
functions: -
Provision of hardware and software resources.
Adoption of latest technologies for competitive advantage.
Training of employees – at operating, head and controlling offices
on offices automation and networks.
Advise the top management on Business Process Re-engineering
(BPR).
Develop, maintain and implement insurance related applications.
Maintenance of networks.
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INFORMATION TECHNOLOGY IN INSURANCE
Set – up:
Technology Manager Evaluation and Acquisition of new
technologies in hardware, software,
networking and packaged solutions.
Recruitment and supervision of system and
network engineers
Conducting of various training programmes
Systems Manager Systems analysis and design
Functional Specifications
Development of application and user manuals
Assignment of work to project leaders,
System analysts and programmers
Evaluation of studiesNetwork Manager Network Administration ( Including WAN)
User administration, systems security, e-mail
etc.
Controlling and supervision of network
administratorsOperations Manager Maintenance of hardware
Job scheduling, backups and file control
Assigning work to operators and DEO’s
training of users
Controlling of data flow
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INFORMATION TECHNOLOGY IN INSURANCE
What will IT be Like in the Coming Years?
The Malhotra Committee had recommended that Information
Technology should be used as the enabler to give the insurance industry
its cutting edge over competition. It would help in reducing
administrative costs and these savings could be used to build on its
customer service and brand building. This can be done most effectively
through the use of efficient IT infrastructure. It can be argued that much
of the internet related technologies developed only in the last four years,
and were not fully available to the nationalized insurance companies. It is
also true that with all the problems of working in a public sector
environment, several quality projects like networking, implementation of
investment management software and the implementation of the
integrated software for underwriting and claims management brought the
IT preparedness of the industry to a fairly decent level. Rugged use of IT
in the year 2001 will tell whether at all the nationalized insurance
companies will give competition a run for their money.
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INFORMATION TECHNOLOGY IN INSURANCE
Future Scenario
Some of the IT solutions that are essential for the working of a
modern insurance company are given below. This will help build brand,
strengthen loyalty from customers and business partners (agents mostly),
and ensure a lean and mean company.
1. A Good web site through which customers can actually transact
business.
2. A good back office infrastructure which can deliver insurance
products and documents. This would be connected with a rugged
computer network.
3. A study call centre fully integrated with all operations which
interact with the customer for all his requirements. The objective
would be to ensure that all channels of business art fully integrated.
4. A rugged (rough) data warehouse which
5. would provide the backbone for customer Relationship
Management (CRM), Data Mining, and Channel integration.
6. Excellent storage management with failsafe disaster recovery
infrastructure.
Global best practices are best possible only when the IT
infrastructure uses best-of-class components. This will enable the
company to work efficiently with the bare minimum staff strength and
devote all its energies to customer care. The customer today is very
demanding and will not do business if feels that he is not getting
excellent service. It is essential to provide him service levels even
beyond his expectations if his loyalty to the Insurance company.
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INFORMATION TECHNOLOGY IN INSURANCE
(FIELD STUDY)
INFORMATION TECHNOLGY AND LIC
LIC has been one of the pioneering organizations in India who
introduced the leverage of Information Technology in serving and in their
business. Data pertaining to almost crone policies is being held on
computers in LIC. The computers were introduced in 1964 in LIC.
Unit record Machines introduced in late 1950’s were phased out in
1980’s and replaced by Microprocessors based computers in Branch and
Divisional Offices for Back Office Computerization. Standardization of
Hardware and Software commenced in 1990’s. Standard Computer
Packages were developed and implemented for ordinary and salary
Savings Scheme (SSS) Policies.
Front End Operations: -
With a view to enhancing customer responsiveness and services, in
July 1995, LIC started a drive of On-Line Service to policyholders and
agents through computers which enables policyholders to receive
immediate policy status report, prompt acceptance of their premium and
get revival quotation, loan quotation on demand. Incorporating change of
address can be done on line. Quicker completion of proposals and
dispatch of policy documents have become a reality.
All 2048 branches across the country have been covered under
front-end operations. So LIC claims that all its 100 divisional offices
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INFORMATION TECHNOLOGY IN INSURANCE
have achieved the distinction of 100% branch computerization. New
payment related Modules pertaining to both ordinary and SSS policies
have been added to the Front End Package catering to Loan, claims and
Development Officers’ Appraisal to reduce time lag and ensure accuracy.
Metro Area Network:
A metropolitan Area Network, connecting 74 branches in Mumbai
to pay their Premium or get their Status Report, Surrender Value
Quotation, Loan Quotation etc. from and branch in the city. The system
has been working successfully. More then 10,000 transactions are carried
out over this Network on any given working day. Such Networks have
been implemented in other cities also.
Wide Area Network:
All 7 zonal offices and all the MAN centres are connected through
a Wide Area Network (WAN). This enables the customer to view his
policy data and pay premium from any branch of any MAN city. As at
May 2002, there were 91 centres in India with more than 1200 branches
networked under WAN.
Interactive Voice Response Systems (IVRS):
IVRS, functional in 58 centres all over the country, enables
customers to ring up LIC and receive information (e.g. next premium
due, status, Loan Amount, Maturity payment Due, Accumulated Bonus
etc…) about their policies on the telephone. This information could also
be faxed on demand to the customer.
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INFORMATION TECHNOLOGY IN INSURANCE
Website :
LIC’s website, www.licindia.com, displays information about LIC
and its subsidiaries- LIC (International) E.C., LIC (Nepal) Ltd., LIC
Mutual Fund, LIC Housing Finance and their Products. The addresses/E-
mail IDs of its Zonal Offices, Zonal Training Centres, Management
Development Centre, Overseas Branches, Divisional Offices and also all
branch offices are also provided. LIC has given its policyholders a unique
facility to pay premiums through Internet absolutely free and view their
policy details on Internet premium payments.
Information Kiosks:
LIC has set up Interactive Touch screen based Multimedia
KIOSKS In Prime locations in metros and some major cities for
spreading information to general public on various products and services
offered. These KIOSKS enable the users to provide policy details and
accept premium payments.
Info Centres:
It has also set up call centres to provide information about our
products, policy services, branches addresses and other organizational
information.
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INFORMATION TECHNOLOGY IN INSURANCE
Information Technology in LIC for
Service to Policyholders:
Twenty to twenty five years ago a few of us had heard of information
technology. On 5th August there was thunderous applaud and the horizon
reverberated and everybody heard that LIC has been bestowed upon the
Nasscom Award. LIC has itself on the fast track of technology up-
gradation right from the year 198. As such it has taken about 20-25 year,
with enormous number of programmers working for 10 to 12 hours a
day. They have toiled hard to develop, test and put the systems in place.
It may be recalled that in the year 1980 various vendors while selling the
microprocessors had strongly advocated the need to induct trained and
technically qualified programmers from open market, to man the
microprocessors. It was the corporate office which expressed abundant
faith in the ability of its staff for writing programs and also to handle the
machines.
Technology is a strange creature. It gives us twin-engine commuter
planes to fly. Then it introduces faults in those planes, throwing in the
possibility of human error. today this strange creature makes us smile and
cry all at once. Smiles when a problem is resolved or new facility
provided and cry when a new discrepancy creeps –in.
Life Insurance Corporation of India is a pioneer financial institution in
leveraging Information Technology as its frontline tool to better its
overall efficiency in all areas of its activities. Today it is one of the
largest users of Information Technology.
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INFORMATION TECHNOLOGY IN INSURANCE
LIC has the largest dedicated network among all organizations in the
country and has connected about 1500 branches all over India for better
and prompt customer servicing.
LIC has multi-channel approach of using Information Technology by
taking the optimum benefits of the latest technological advances.
Front End Applications Programs:
All 2048 branches of LIC are fully computerized
covering all policy servicing aspects to give prompt computerized
services from new policy introduction, acceptance of renewal premium,
revivals, loans etc to final claims settlement.
Green Channel:
This is for on the spot policy completion. The
processing time foe a new policy is brought down from days to minutes
by cutting down the various processes in acceptance, scrutiny and
underwriting of proposals.
Single Window System:
The Single Window provides all policy servicing at
one single point. Management information system has been developed for
faster and better decision making and offering in an instant, the latest
information at all levels. The advantage of the single window system is
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INFORMATION TECHNOLOGY IN INSURANCE
that the policyholder gets the required services across one country
without having to go to different departments in the branch.
Networking :
LIC’s Wide area Network covers 100 Divisional
Offices connecting about 1500 Branches through network. It is expected
to cover all the remaining Branches by the end of this year. This helps the
customer to pay his LIC premium in any of the Branches connected to the
network. A Policyholder gets status report of his policies in these
branches as well as quotations for revival, loans surrender etc…
Online Premium Payment:
LIC has tied up with some Banks and service
Providers to offer online premium collection facility to customers in
selected cities. It is intended to extend this facility to all cities covered
under our network.
Kiosks :
LIC have installed information Kiosks at selected 150
locations which give policy status report, other details about life
insurance plans and servicing aspects. The idea behind Kiosks is to
expand the service levels by making if free from the limitations of time
and space and also to avoid the dependence on human intervention to get
information. Our Kiosks not only provide information about our products
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INFORMATION TECHNOLOGY IN INSURANCE
but also enable the policyholders to know their policyholders to know
their policy status.
IVRS:
LIC have Interactive Voice Response Systems in 59
urban centers. This is a menu driven service. Customers can get selected
information regarding their policies by calling the prescribed telephone
numbers. These numbers are advertised frequently and are also available
on the website www.licindia.com.
Info Centre:
LIC have commissioned our first policy service Info
Centre at Mumbai in March, 2002. This centre is equipped with state of
art technology and manned by trained persons. People desiring any
information regarding their life insurance needs and about their policies
can get the same by calling the Info Centre telephone number. Such
centers have also been installed at Delhi, Kolkata, Hyderabad, Chennai,
Bangalore, Ahmedabad and Pune.
Intranet :
LIC has an Intranet, ‘Jeevan Sanchar’ which
interconnects our offices and is used to make files available to
employees, send or receive e-mail, host online discussions or publish
information within the organization. The departments of the central office
have an intranet presence of their own through which they provide
information about the latest circulars and these help the offices in speedy
decision making.
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INFORMATION TECHNOLOGY IN INSURANCE
AIG E-BUSINESS RISK
SOLUTIONS
Cyber and network liability insurance is one way to address these risks
and it is becoming more popular. AIG E-Business Risk Solutions (AIG
EBRS), as well as a few other companies, have created insurance
specifically designed to address network security liability and first party I
loss. AIG EBRS was formed on January of 2000 to evaluate the risks
associated with the Internet computer networks and to design solutions
combing risk management advice, technology and insurance. "We felt
that with the growth of the e-business and network, based technology, I
we could not afford to ignore these risks," Freeman explains. "We needed
to set up a specialist group to take on these risks around the world." AlG
EBRS is made up of about 50 people, which includes lawyers,
technology specialists and underwriters. The group offers a
comprehensive suite of insurance products and risk management services.
Security threats are continually evolving, so developing a security
program is not a one-time occurrence. Security must involve more than
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INFORMATION TECHNOLOGY IN INSURANCE
just technology; it must be included in your business planning and
processes; and it must be communicated to the entire organization.
Having effective IT security means securing your policies, infrastructure
and administration.
Spending just enough on security to comply with regulations may leave
you with a weak security program. It only takes one vulnerability to
allow a hacker access to your network. Having a solid cyber risk
management plan means knowing how to identify and control cyber risk.
That means performing periodic security assessments and having a
business continuity plan in place. Companies also need to understand the
risks involved with using vendors. If your insurance does not cover
information theft, you might want to consider the alternatives.
What is Hot; what is Not in Technology
The insurance industry is undergoing an evolution and facing a wealth of
challenges. Underwriting, CRM, legacy systems, and distribution are all
undergoing changes. There is more than just hype surrounding
outsourcing, wireless devices, and business process management.
However, are they a necessity for your company? Kimberly Harris, Vice-
President and Research Director, Gartner, discussed these emerging
trends and technologies at the ACORD LOMA Insurance Systems
Forum, providing attendees with insight into which are prime time.
Facing Change
The insurance industry is facing a lot of dynamic change. "Everything
that we consider traditional and normal is changing around us," said
Harris. "There are multiple drivers of change-social, technological,
environmental, economic and political drivers. Your customers,
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INFORMATION TECHNOLOGY IN INSURANCE
employees and supply partners are using the Internet and wireless
technology more often to conduct business. However, technologically,
your core systems are getting older. There is no way we can continue to
overlook or deny the shortcomings of our legacy systems. Legacy
systems are going to be challenged continually by new technology
development, as well as changing business needs, such as supporting real
time information requirements. Environmentally, the Property &
Construction (P&C) sector will suffer losses because of things it cannot
control--environmental conditions, mold, asbestos, unpredictable acts of
nature, not to mention terrorist activity and other types of war related
traumas. Economically, companies are facing commodization. Many
companies have products that are becoming commodities; many products
are becoming harder for insurers to differentiate in the market, especially
for consumers who are driven, based upon the price. And politically,
there is more regulatory change on the horizon such as the fight against
state level insurance regulation versus national level regulation."
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ANALYSIS OF SURVEY REPORT
The number of respondent were 30, comprising 15 students and 15
working professional. The sampling method adopted was random
sampling method.
Response To Individual Question:
Q.1. Do you hold any kind of insurance policy?
Response: Out of 30 respondents, 25 of them had insurance policy. The
rest who did not have any kind of insurance policy comprised of 4
students and 1 professional.
Q.2. What is the kind of insurance policy you hold?
Response: 20 of them had life insurance policy in their name. The rest 5
people held general insurance policy for their vehicle.
Q.3. How did you get yourselves insured?
Response: Out of 25 people, the agents insured 20 of them. 3 people got
themselves insured personally remaining 2 people were insured through
internet.
Q.4. Are you aware that the premium can be paid through internet?
Response: Out of the whole lot of 25 peoples, only 15 people were
aware of the fact that they could pay their premium through internet rest
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of them had no idea about it.
Q.5. How do you pay your premium ?
Response: It was seen that the 15 people pay their premium via agent. 2
people pay their premium through internet. 7 persons pay their premium
through ECS system and the rest 1 pay premium personally.
Q.6. Do you use internet to access your policy details?
Response: Out of whole chunk of 25 peoples, only 12 of them used
internet to access their policy details.
Q.7. Would you like to get your premium reminder through E-mails?
Response: It was quite surprising that everybody out of the lot of 25
wanted to get a reminder of the payment of premium through E-mails.
Q.8. Would you prefer using internet to acquire insurance policy in
future?
Response: All of them who have policy and even those who do not
have a policy in getting their policy online the next time when they apply
for one.
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INFORMATION TECHNOLOGY IN INSURANCE
CHAPTER – 04FINDING ANALYSIS &
INTREPRETATION
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The Primary data is been collected through visiting a private insurance company named “SOURCE INDIA” and by doing survey. The method adopted for survey was random sampling method. There were 30 respondents in survey.
The insurance company was situated at Chopra Court, Near HDFC Bank, UNR-3. They provided me with information regarding “IT in INSURANCE SECTOR” & interacted with me very politely.
From the survey and visit I can say that though there has been a rapid change in Information Technology that has an impact on every sector. But implementation for the same is not done quickly it needs time for the people and organizations to accept it.
In Small Cities like Ulhasnagar 50% of people follow traditional method and organizations also don’t implement these technologies as they are only informed not aware about it.
The supporting technology requirements will be:
Interactive.
Rely on large relational databases.
All time rather than batch.
Longitudinal rather than episodic.
Connectivity rather than be self contained.
There have been a lot of changes in the insurance industry in the country with the opening up of insurance sector for competition and with the establishment of IRDA.
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CHAPTER – 05CONCLUSION
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CONCLUSION
With the growing number of people insuring themselves for
various kind of insurance, it would be rather difficult to keep track of all
the data manually. It is here that the power of computers along with their
inherent advantages of high storage capacity, high speed of processing
and easy retrievability comes into picture and enables insurance
companies to be up to date with their information and keep abreast of
technological advancements.
The growth of the internet has in fact, further accelerated the use of
technology and helped to disseminate information and acquire new
markets. E-learning has made the task of training that much easier by
making available training materials over the internet and which their
agents and other personnel can access in a cost effective manner.
Insurance companies have already started selling policies online, where
the prospective client can buy certain types of polices without interacting
with any human personnel of the company.
The potential of insurance companies in India is huge considering the fact
that the incomes are rising and only a small percentage of Indians are
already insured. Such exponential growth can only be managed by using
the latest in information technology and providing value added service to
its customers in a quick and efficient manner while keeping its costs
down.
Thus, the growth of the insurance sector is linked to its acceptance and
use of information technology.
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SUGGESTIONS
As the pace of change is going to be faster than what was witnesses in the
last decade, there is a need for system of continuous research, better
understanding the change process and its implications on insurance.
The suggestion is that we must institutionalize insurance research,
say by having an institute of insurance research to meet the above
challenges. Similarly, each bank should have a set up where insurance
specific research takes place in terms of emerging areas and their possible
solution.
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Title- Information technology in the insurance industry: the impact of electronic data processing on managerial processes and insurance functions
Irwin series in risk and insurance
Author-Robert C. Goshay
Publisher- R. D. Irwin, 1964
WEBILOGRAPHY
WEBSITES
REFFERED
WWW.RBI.ORG.IN
WWW.WIKIPEDIA.ORG.COM
WWW.BANKBAZAR.COM
WWW.INSURE.COM
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