Among the three primary reasons why India’s microinsurance objectives are not being adequately met, is the problem of remote access. Most of India’s large hinterland comprises scattered human habitats, which are sparsely populated. Pre-pandemic, at least 988 million Indians, or 75% of the population, were not covered by any form of Life Insurance. Awareness (or the lack of it), continues to be a deterrent in distribution of insurance but access or high touch contact, requiring the agent to be in front of the prospective policy buyer is the evident challenge.

Digital microinsurance (DMI) is a subject of discussion in many a forum and this drives the objective to cover low-income individuals, assuring their families at least some form of financial protection in an eventuality. The IRDAI (Insurance Regulatory Development Authority of India) specifies that the sum assured for the family of a life insurance policy holder under a microinsurance scheme can go up to rupees 2 lac and in the case of medical insurance, the health insurance contract covers up to rupees 1 lac.

An agent earns 10% of the premium on a life insurance policy and 15% of commission on a health policy, which impacts the already low margins. Add to this the accessibility and distribution cost of having to travel distances to reach the policy buyers and the proposition becomes unattractive to all stakeholders. Hence, the emergence and growing importance of DMI, to help contain costs. With low or no touch contact, reduced costs of distribution are realized and here’s how technology pans out.

The rise of intelligent chatbots is effortlessly complementing human intervention at traditional call centres and helps structure the dialog flow to reduce the time and costs expended in a new customer acquisition process. A typical chatbot interaction will include disseminating basic information on available plans, it ought to capture customer information such as age, occupation etc. It will also throw up recommendations of suitable products, based on the customer’s profile and lifestyle related information.

Some superior chatbots integrate voice capability, as well, and support natural unstructured conversation. The hallmark of unstructured conversations is that they are typically multi-step and can have a large number of permutations in which the conversation flow can happen. This allows for interruptions and ‘barge-ins’.

With voice assisted chatbots, also comes the language requisite. A large volume of Indians is conversant with Hindi, including Southern states, where a smattering of Hindi is spoken. Chatbots with voice and text responses are beginning to break new ground, but these are early days. It is not uncommon to find chatbots that will respond by saying, ‘I’m still learning’, but the essence to an intelligent virtual agent is the extent of data that it is provided to it. In industry terms, the machine needs to be ‘taught’, which has led to the fast-becoming familiar domain called Machine Learning.

For insurance agents to physically reach a potential policy buyer is extremely challenging and near impossible, with the exception being your postman selling insurance (something that the IRDAI permitted, in 2019). The game changer, therefore, comes with mobile phone-based technology, which allows an insurance agent to acquire a new customer without having to be physically present. One such solution of ours, received a US patent in December 2022. The agent and his/her customer can collaboratively engage with exchange of control over the application form and the process is carried out seamlessly. Documents are uploaded, video verification is carried out and signatures are captured, all with the help of this remote technology.

Adoption by Indian insurance carriers and intermediaries of the low or no touch customer contact such as those mentioned may take a while but is bound to happen sooner than later, considering the enormous task of insurance for all by 2047.

The primary reasons of awareness (or lack of it), affordability and access can be effectively addressed with the help of remote agent technology and virtual engagement. The lower the human intervention, the lower the cost of the premium. The higher the reach of virtual assistants, via chatbots and multiple language powered voice bots, the greater the awareness and inclination.