How India's Digital Transformation Is Impacting Its Two Wheeler Insurance Sector As per The Motor Vehicles Act, 1988, it is mandatory to ensure your bike if you want to ride legally on Indian roads, failing to do so will result in fines and legal hassles

The Indian digital ecosystem has undergone significant transformation in the recent past. Consumers have come a long way from merely researching products and services online to performing unassisted purchases on a regular basis.

This paradigm shift is a result of the amalgamation of several factors such as availability of smartphones with 3G/4G connection, E-commerce boom, digital wallets, infusion of capital by venture capitalists, millennial population with disposable income, pro-insurance regulations, government incentives, etc. The Indian insurance sector has also benefited from this evolution. Here's how India's digital transformation is impacting its two-wheeler insurance sector.

Two-wheelers & Insurance

Two-wheelers are convenient. They are a low-priced form of transportation in rural areas. In urban areas, they warrant for swift movement in comparison to cars. Also, they occupy less parking space. These are important reasons why India is the world's largest two-wheeler market.

As per The Motor Vehicles Act, 1988, it is mandatory to ensure your bike if you want to ride legally on Indian roads. Failing to do so will result in fines and legal hassles. Apart from the compulsion, insurance is a good way to secure your finances in case of bike-related mishaps. Despite the law, the majority of two-wheelers are uninsured in India. This is a challenge as well as an opportunity.

Preference for Online

"60per cent Of Two-Wheeler Insurance Bought Online for Reviving Lapsed Policies'. This was the headline of an Economic Times article in December 2018.

Digital insurance is emerging as a preferred platform for buying/renewing bike insurance policies because of its convenience and rural penetration. The low-ticket size of two-wheeler insurance is ideal for the online platform. With a rise in InsurTech companies and increase in Indian citizen's acceptance of a digital way of life, purchasing bike insurance online might soon become the norm across segments.

Phase-Wise Impact of Digitization

When insurers focus on offering policies online, there is a decrease in the number of intermediaries, sales branches, and manpower. As a result, there is an overall reduction in the operational cost. This way, policies can be offered at a lower price as compared to the offline channel. However, low-priced policies are not the only factor that encourages people to purchase policies online. Let's have a look at how digitization has affected the life cycle of a two-wheeler insurance policy sold online in India.

• Pre-Purchase Phase

Prospective policyholders can now educate themselves about different types of policies by conducting a quick online search. Insurers provide information in a simple manner on their websites to ensure transparency. As there are no intermediaries involved, one can make an informed choice.

With Web Aggregators and online insurance calculators on insurers' websites, purchasing a two-wheeler policy or going for bike insurance renewal online is a cakewalk! This basic research can be conducted via a smartphone as well. There are chatbots available to offer specific information within seconds. If you feel the need for human intervention, you can contact the insurer's support team via call or email. The online platform makes the pre-purchase phase of purchasing a bike insurance policy easy, bias-free, and convenient.

• Purchase Phase

Traditionally, ensuring a bike involved a lot of paperwork. The impetus was more on selling than purchasing. Policies were sold via bike dealers, agents, and branch offices. The process was and had a lot of hurdles. Online bike insurance has overcome most of the hurdles to make the purchase process user-friendly.

In the online method, there's no need for paperwork and the process can be completed within two minutes. The policies are better priced due to smart underwriting. They are low-priced without compromising the coverage offered. Going ahead, there's scope for total Usage Based Insurance (UBI) which will personalize the entire purchase process.

The purchase journey is similar to popular E-commerce transactions so that the user feels at home. The policy is made available immediately once the online payment is made successfully. If there are any issues, changes can be made effortlessly via an endorsement.

• Post-Purchase Phase

Settling claims is the most important aspect of an insurer. Reputations are built based on how an insurer handles the claims raised and settles them in a hassle-free manner. This is reflected in the Claim Settlement Ratio which is published annually by the Insurance Regulatory and Development Authority of India (IRDAI).

Digital-first insurers are aware of their responsibility when it comes to smooth claim settlement. The post-purchase phase in case of online insurance is swift and smooth. Policyholders can raise a claim in a simplified manner.

In most cases, the policyholder just has to notify the insurer and not worry about follow-ups. The insurer hand-holds the policyholder throughout the process and ensures that the claim is settled prudently and accurately. Features such as Cashless and Instant settlements mitigate the complexities involved and aid in providing a hassle-free claim settlement experience.

Key Performance Drivers

Blockchain, Artificial Intelligence, Robotic Process Automation, Augmented Reality, Cognitive Technologies, Telematics, Machine Learning, etc. are not buzzwords anymore. They are an integral part of an Indian insurer's growth strategy. They are crucial talking points in the present and are going to be key performance drivers in the future. Technology will drive changes with respect to strategic partnerships, revamping organizational structures, creating new executive roles and fostering continuous innovation.

All this will ultimately empower policyholders as they will get personalized low-prized policies, enhanced coverage, better features & benefits, more options to choose from, and overall, a satisfactory insurance experience.