Updated: 5 days ago
Did you know that 69% of India's general and health insurance offices are located in Tier I cities? Meanwhile, Tier V and Tier VI locations account for only 3% of insurer offices (Source: IRDAI). Blame cost factors for this imbalance. Setting up a brick-and-mortar outlet calls for heavy investments of money and resources, and profits aren’t always guaranteed in smaller markets.
But we are in a digital-forward era, and insurer offices are not the only way to sell insurance. Insurance tech companies are demonstrating more cost-effective methods of spreading the net of risk protection, and it brings benefits for insurers, agents, and customers.
Insurtech businesses are clearing cost bottlenecks.
Three types of expenditure are holding back the growth of insurance. These are customer acquisition costs, operational costs, and claim expenses. Let’s quickly explore how insure tech solutions are bringing down expenses across the board.
Customer Acquisition Costs
Insurance has traditionally been sold through physical outlets and a network of human agents. However, this comes with a cost and geographical limitations. Advertisements increase reach and draw customers, though primarily for carriers with big marketing budgets.
Insurance websites and apps have attracted a small segment of digitally savvy buyers in recent years. But their reach is limited, partly because the customer must take the initiative to buy insurance. Besides, digital channels come with expenses and complexities of their own. Maintaining databases, systems, and trained personnel costs money too.
Fortunately, the insurance environment is changing thanks to technology. Online shopping, digital wallets, mobile payments, greater connectivity, and smartphone penetration are creating new possibilities for carriers and agents. Insure tech players are using low-code software and application programming interfaces (APIs) to embed insurance products in all kinds of places.
Research shows that incumbents must issue over a million policies to benefit from economies of scale and stay profitable (Source: McKinsey, Digital Insurance Agenda). Traditional carriers may achieve that target by selling a wide variety of insurance products over multiple channels. But the more options they bring, the higher their operational costs.
Insurtech-driven digital insurers keep expenditures in check through specialisation. Maybe they focus on niche products or use an insurance API to ease policy distribution. Unlike incumbents, they are not trying to do everything at once.
Insurtech companies use different mechanisms to control operational expenses:
Insurance can be offered to captive audiences through B2B routes. For example, a car owner could upgrade their motor insurance plan when booking a vehicle servicing appointment through the service centre’s app or website.
Insurance APIs reduce human workloads. For example, when embedded insurance is offered at the digital checkout, policy forms could come pre-filled with customer information that the seller already holds. The customer could select and pay for the policy without any manual intervention at the insurer’s end.
Carriers and corporate insurance agents like banks can collaborate with insurance tech companies like Turtlefin. Developing tech expertise from scratch requires massive investment. These businesses could save on costs by leaning on our technological tools and resources to power ahead in the digital era.
Even an advanced market like the US loses around USD 80 billion to insurance fraud (Source: PR Newswire). Human underwriters can only do so much to predict risk and prevent wrongful claims. Where humans fall behind, advanced tech such as artificial intelligence (AI) can fill in the gaps.
AI can process massive volumes of customer data in the blink of an eye. The technology can be used to predict future risk behaviour, the chances of premium default, and more. Accurate assessment minimizes the insurer’s risk exposure before issuing the policy.
Later in the consumer journey, AI can be used to process standard, non-complicated claims quickly. Personnel could be involved only if the claim is a complicated one. This would hasten claims processing, reduce pressure on staff, and improve customer satisfaction. AI could reduce claim processing costs by up to 50% per one estimate (Source: Sutherland).
There is lots of scope for innovation in this space. Insurtech companies are already deploying drones to take photographs of insured homes all year round. The pictures are used while underwriting offers and servicing claims. Plus, they reduce the need for on-site visits by insurance personnel, which also brings down costs.
Insurance Sales Made Cost-Effective:
Turtlefin can help you to sell insurance online without breaking the bank. We offer APIs and customised tech solutions that will transform your online sales channel into an insurance platform. Our plug-and-play systems ensure that you don’t have to spend extensively on becoming digital-ready.
We have helped to lead financial players like DBS and YES Bank to streamline their insurance operations. We also have an insurance API that readily converts your existing tech system into a digital insurance platform. Turtlefin's technology ensures that quote creation, plan comparison, and policy purchase can happen in just a few steps.
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Whether you are a carrier or an agent, insurance tech cuts down on time, money, and resource requirements at every stage. Carriers and digital sellers can extend their reach in fresh ways without spending heavily on new verticals or technology. Technology provided by insurtech companies like Turtlefin makes all the difference here.