Intoduction to Insurance111

INFORMATION TECHNOLOGY IN INSURANCE

CHAPTER – 01INTRODUCTION

1


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

2


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.

3


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

4


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


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

6


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).

7


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

8


Purpose & Need of Insurance

9


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

10


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

11


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

12


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.

13

PRIMARYFUNCTIONSECONDARYFUNCTION


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

14


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

15


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.

16


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.

17


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

18


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

19


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.

20


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

21


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

22


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.

23


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.

24


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

25


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.

26


27


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.

28


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.

29


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.

30

Speedy and correct issuance of documents.Expenditure disposal of claimsProper building of accounts and statistics

Quality Assurance & Efficiency


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

31


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

32


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


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.

34


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

35

http://www.iciciprulife.com/

http://www.hdfcinsurance.com/

http://www.ingysyalife.com/

http://www.birlasunlife.com/

http://www.msxnewyorklife.com/

http://www.omkotakmahindra.com/

http://www.licindia.com/


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

36


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.

37


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.

38


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.

39


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.

40


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 :

41


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

42


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.

43


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:

44


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.

45


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.

46


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;

47


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.

48


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.

49


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

50


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.

51


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.

52


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

53


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.

54


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.

55


(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

56


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.

57


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.

58


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.

59


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

60


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

61


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.

62


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

63


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,

64


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."

65


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

66


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.

67


CHAPTER – 04FINDING ANALYSIS &

INTREPRETATION

68


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.

69


CHAPTER – 05CONCLUSION

70


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.

71


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.

72


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

73

http://WWW.BANKBAZAR.COM/

http://WWW.WIKIPEDIA.ORG.COM/

Documents

Intoduction to Insurance111