With the outbreak of pandemic and continual challenges, digital innovation is now a part of everyone’s strategy. The BFSI sector, that has always been enthusiastic to technology, embraced technological advancements induced by Covid as a priority. Talking about insurance industry, every customer, rural or urban, wants simplicity—a one-click experience, when it comes to buying a policy. To understand the tremendous amount of innovation happening across the insurance segments, Rashi Aditi Ghosh of Elets News Network (ENN) interacted with Anil Aggarwal, MD & CEO, Shriram General Insurance.
The BFSI industry is now a technology-driven sector. How has technology evolved in the insurance sector, lately
Finance and technology are closely associated today, and innovations in technology have drastically changed the framework for financial processes. In insurance, digital initiatives and solutions have been growing rapidly since 2017. The physical restrictions posed by the COVID-19 pandemic have speed up the process, making technological advancements a priority for the sector. This has also been complemented by increased adoption of digital channels by customers, which is reflected in the recent surge in insuretech companies.
Today, the sector is seeing innovation across the value chain led by advancements such as Internet of things (IoT) and big data analytics. Digitisation of insurance processes has enabled customised online distribution, better underwriting and increased efficiency in claims management. All these spheres are focus areas for Shriram General Insurance and we have been relying more and more on digital solutions to help us achieve our mission of financial inclusion and reaching the end-user directly.
The regulators and government bodies are also pushing for digital innovation through newer models such as the regulatory sandbox. These initiatives allow insurers to customise, innovate and create niche or targeted insurance solutions. We recently launched the Fire Loss of Profit insurance cover that was approved under the second cohort of the IRDAI sandbox.
Digital platforms have also allowed for significantly more focus on bite-sized or micro insurance and small transactions. This is necessary to be able to cater to all sections of the society in a socially and economically diverse country like India.
How is technology helping the insurance industry reach the rural and micro segments? Is the sector embracing innovation to expand its reach and serve more customers?
All customers, rural or urban, are today looking for simplicity—a one-click experience. They want convenient and tailored services, be it 24-hour access and quick turnaround time or innovative products. They also want to do their research and feel informed in terms of product features and pricing, and we strive to offer it all.
The Shriram Group believes in serving the underserved and under-insured population of the country. We have been a forerunner in adopting new technologies for strengthening security, reducing turnaround time and simplifying processes.
Affordability of insurance is still an issue and will remain one till overall penetration in the country improves. Therefore, we believe in a marketing combination of coverage and bundling multiple products for rural customers as they need product customisation.
Digital channels are expected to grow, with 88% Indian customers expressing willingness to purchase insurance products through digital channels, as per the BCG-FICCI Insurance Survey 2019.
Shriram General Insurance plans to reach 600 talukas with low insurance penetration over the next one year. Could you expand on this?
Shriram General Insurance is looking at expanding rural insurance to talukas, where insurance penetration is minimal. As a part of our growth strategy, we plan to recruit at least 1,500 employees in the rural areas between FY22 and FY25, to make our products available across 25,000 points-of-sale.
In the next one year, we will target 600 talukas which have a population of less than 1 lakh; through electronic kiosks, sub-dealers, life insurance agents, Common Service Centres, bank branches and other informal channels. Post that, we will aim to reach areas with a population of 20,000 to 1 lakh.
You had earlier said that rural insurance will be able to contribute a quarter of the company’s sales income, or 16% of the total premium income, by FY25? Are you on-track to achieve these growth projections?
Yes, because there is huge potential in this market. About 90% of the rural workforce is in the informal sector and thus, has no minimum wage or social security. In the aftermath of the COVID-19 pandemic, this segment needs insurance security the most.
Shriram General Insurance’s mission is to reach and serve the ‘aam aadmi’. We endeavour to offer simple products which can create value for the rural population. We have developed our homecare and personal accident insurance products, positioned for this customer base and the targeted demographics. It is ensured that these insurance solutions are priced, promoted, distributed, and serviced correctly. Our two top products in the rural sector are long-term two-wheeler insurance and goods-carrying commercial vehicle insurance.
We are driving distribution through Common Service Centre portals and keep investing in technological capabilities to deliver services through chat bots, online claim services and digital payment facilities. A host of services are also offered on our mobile application ‘MySGI’ (https://play.google.com/store/apps/details?id=com.svs.sgic), which we are relying more and more on. This facilitates us providing all types of services with the benefits of online availability, less documentation and quick claims settlement.
Led by a synergy of all these initiatives and increased consumer demand due to the pandemic, we expect rural insurance to grow significantly in 2022 and are confident of achieving our three-year targets by FY25.
How was 2021 with regards to penetration of rural insurance?
Awareness about, and the push for insurance penetration, has been growing for the last couple of years. However, 2021 has been significant owing to regulatory support and ongoing initiatives under the government’s Pradhan Mantri Fasal Bima Yojana (PMFBY).
Earlier this year, IRDAI released a discussion paper where it suggested setting up ‘model insured villages’ across the country to boost insurance penetration in rural areas, with a special focus on agriculture and allied activities. The regulator has mooted starting with a minimum of 500 villages in different districts and then expanding to 1,000 villages in the next two years.
Shriram General Insurance’s three-year plan to expand our rural insurance penetration is in a similar vein and inspired by the regulator’s efforts. Rural and semi-urban markets need better coverage in terms of product and distribution. So, Shriram General Insurance implemented new business models and created new products to provide risk mitigation solutions, catering to these communities.
We look towards reaching our end-customers through informal networks such as self-help group members and banking correspondents. In addition, our network of points-of-sale and 40,000+ agents also help facilitate doorstep delivery of insurance to remote locations.
A focus area for us has been the Common Service Centre model, wherein we extend insurance services via digital kiosks, as under the Rajasthan government portal ‘e-Mitra’. We are also looking to open micro-offices in order to increase our reach.
What are your growth plans for 2022?
In 2022, Shriram General Insurance will continue to build on its three-year plan for rural expansion, which was implemented in the current financial year. The pace of activity has been slower in 2021 due to the COVID-19 pandemic but we hope that things start to normalize in 2022, which is when we will go full steam ahead.
Of the 600 talukas we are targetting, 150-175 talukas will be in Rajasthan where the company is headquartered. The plan is to hire over 30 people in Rajasthan, after which we will focus on expanding in Gujarat, and then the rest of the country. We have already garnered gross direct premium of Rs 10 lakhs via rural insurance and have hired 27 new employees.
The focus is on extensive data capturing and building analytical models for our underwriting and pricing processes. This will not just help in reaching more customers but also allow us to better our claims assessment, customer service, personalisation and customisation of products and services, and fraud detection.
We will also continue to work with all our channel partners, including digital channels, for enhanced and targeted reach, and to ensure a seamless customer on-boarding experience.
Shriram General Insurance aims to provide the best customer experience, driven by technological improvements in service and processing times. That, in itself, is a driver of profit through increased customer retention.