You are on page 1of 11

International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169

Volume: 4 Issue: 8 115 - 125


_____________________________________________________________________________________________________
Impact of Technology on Business Values and Marketing in Insurance Sector in
India

Rajesh Raghunathrao Gawali (Author)


Sinhgad Institute of Management and Computer Applications (SIMCA), Narhe
Pune, India
e-mail: rajeshgawali2009@gmail.com

Abstract Today Internet has provided brand new distribution channels to the Insurers. The technology has enabled the Insurer to innovate new
products, provide better customer service and deeper and wider insurance coverage to them. On insurance front, people started relying on
internet to research about the kinds of products. However, with each passing year, digital insurance industry gradually expanded its footprints in
India. E-business affects the whole business and the value chains in which it operates. It enables a much more integrated level of collaboration
between the different components of a value chain than ever before. Adopting e-Business also allows companies to reduce costs and improve
customer response time. This paper highlights Changing Scenario, impact, Latest Trends, Challenges to Enhance Technology in Insurance
Sector and Penetration of e-commerce in the Indian Insurance Industry.

Keywords- Internet, Digital insurance, E-business, E-commerce, Technology


__________________________________________________*****_________________________________________________

The insurance sector will grow steadily rather than


I. INTRODUCTION rapidly. The law and regulations in place are adequate to
The term E-commerce' has become widespread; a ensure financial strength and solvency of insurers. Because of
force that is here to stay. E-Commerce and the Internet are the Information revolution, customers are free to choose from
increasingly becoming one of the most important drivers of a wide range of new and innovative products. Collaborate,
strategic change for business and governments. [1] look to all your partners, peers and competitors to, at the very
least, learn from them and, at best, work with them on
Similarly, it is beginning to have a significant impact achieving something new or learn how to approach
on people's lives. Everyone from shops to financial institutions opportunities from a different perspective. The real evolution
is looking for ways to leverage the Internet for increased is however emerged out of Internet boom. The Internet has
revenues, improved profitability and greater customer/brand provided brand new distribution channels to the Insurers. The
loyalty. technology has enabled the Insurer to innovate new products,
provide better customer service and deeper and wider
Today, electronic commerce is breaking the insurance coverage to them. At present, Insurance companies
traditional concept and rules of operations, transforming the are giving customers a distinct claim id to track claims on-line,
way enterprises do business and making them confront a new entertaining on-line enrollment, eligibility review, financial
competitive edge. It has been said, therefore, that only reporting, and billing and electronic fund transfer to its benefit
organizations that recognize the power of customers and clan customers. It is estimated that India would create ample
satisfy their needs will move toward sustainability. In many opportunities for the development of insurance backed by
firms, information technology (IT) gives a major transforming regulations in line with international best practices. There is no
advantage in marketing, operations, and other activities of an doubt that, in a decade, Indian insurance market will be among
organization by providing the sales force with a wide array of the front-runners in the world.
hand held and laptop computers that enable the firms to collect
detailed customer and market data, and by managing the entire II. E-BUSINESSES
order fulfillment process, including demand planning.[2] E-business affects the whole business and the value
chains in which it operates. It enables a much more integrated
It is important to acknowledge the fact that for level of collaboration between the different components of a
effective management and growth of an organization in any value chain than ever before. Adopting e-Business also allows
sector, whether banking, insurance, engineering, companies to reduce costs and improve customer response
entertainment, etc., there has to be a conscious effort by the time. Organizations that transform their business practices
management towards making it customer oriented. Customer stand to benefit immensely from innumerable new possibilities
relationship activities also include learning a customers brought about by technology.[3] E-commerce as anything that
individual interest and then tailoring services to meet them. involves an online transaction. This can range from ordering
Such programs help companies retain customers not only by online, through online delivery of paid content, to financial
providing a useful service but also by making customer feel transactions such as movement of money between bank
appreciated. Information technology is the processing and accounts. One area where there are some positive indications
distribution of data using computer hardware and software, of e-commerce is financial services. Online stock trading saw
telecommunications, and digital electronics. sustained growth throughout the period of broadband

115
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
diffusion. E-shopping is available to all these who use a IV. TECHNICAL AND OPERATIONAL FACTORS OF E-
computer. COMMERCE

III. E-COMMERCE 1. Protocol (Standards) Making Process: A well-


established telecommunications and Internet
E-commerce as anything that involves an online infrastructure provides many of the necessary
transaction. This can range from ordering online, through building blocks for development of a successful and
online delivery of paid content, to financial transactions such vibrant e-commerce marketplace.
as movement of money between bank accounts.[4]
2. Delivery Infrastructure: Successful e-commerce
E-commerce is the fastest growth area in the global requires a reliable system to deliver goods to the
economy and almost carries potentials beyond measure. It business or private customer.
provides consumers with the benefits of anytime, anywhere
transactions, with lower costs. Moreover it, shortens the 3. Availability of Payment Mechanisms: Secure forms
distance between the buyer and the seller and shrinks the of payment in e-commerce transactions include credit
world into a small village. cards, checks, debit cards, wire transfer and cash on
delivery.
Electronic commerce, commonly known as E-
commerce or e Commerce, is a type of industry where the 4. General Business Laws: The application of general
buying and selling of products or services is conducted over business laws to the Internet will serve to promote
electronic systems such as the Internet and other computer consumer protection by insuring the average
networks. Electronic commerce draws on technologies such as consumer that the Internet is not a place where the
mobile commerce, electronic funds transfer, supply chain consumer is a helpless victim.
management, Internet marketing, online transaction
processing, electronic data interchange (EDI), inventory 5. Public Attitude to E-commerce: The public attitude
management systems, and automated data collection systems. toward using e-commerce in daily life is a significant
Modern electronic commerce typically uses the World Wide factor in the success of ecommerce.
Web at least at one point in the transaction's life-cycle,
although it may encompass a wider range of technologies such 6. Business Attitude to E-commerce: The willingness
as e-mail, mobile devices, social media, and telephones as of companies to move away from traditional ways of
well). doing business and develop methods and models that
include e-commerce is essential.
Trading electronically offers a number of advantages
to companies. To take advantage of the opportunities created V. E-COMMERCE MODEL
by e-commerce, companies implement websites that operate at Electronic commerce, commonly known as E-
a high level of e-commerce. Moore's classification identifies commerce, is a type of industry where the buying and selling
the different e-commerce capabilities that a website has. It is of products or services is conducted over electronic systems
acknowledged that websites can be basic, including only such as the Internet and other computer networks.E-
company information or more advanced with functionality for Commerce model classified by the nature the transactions or
generating market sales. Electronic commerce is generally the relationship among the participants into these categories:
considered to be the sales aspect of e-business. It also consists
of the exchange of data to facilitate the financing and payment 1. Business-to-Business (B2B): E-commerce model in
aspects of business transactions. This is an effective and which all the participants are businesses or other
efficient way of communicating within an organization and organizations for example A Auto Company sells its
one of the most effective and useful ways of conducting products to other companies.
business.
2. Business-to-Consumer B2C: E-commerce model in
Electronic commerce may have large economic which businesses sell to individual shoppers for
effects in the future. Internet commerce will change the face of example any person can enter amzon.com and buy
business forever. Moreover, e-commerce will change products from that web site.
Insurance industry in 21st century. The e-commerce has
affected the global economy in many different ways. First of 3. Business-to-Business-to-Consumer (B2B2C): E-
all, it has affected the information technology, and all the commerce model in which a business provides some
economic sectors, all and above e-commerce has enhanced the product or service to a client business that maintains
productivity growth worldwide. The impact of ecommerce on its own customers for example Intel manufacturing
developing countries could be even stronger than that on computer processors and sell it to HP which makes
developed countries because the scope for reducing computers that final consumer can buy.
inefficiencies and increasing productivity is much larger in the
developing countries. 4. Consumer-to-Business (C2B): E-commerce model in
which individuals use the internet to sell products or

116
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
services to organizations or individuals who seek better coordination in the sales, production and
sellers to bid on products or services they need. distribution processes and to consolidate operations
arid reduce overhead.
5. Business-to-Employees (B2E): E-commerce model
in which an organization delivers services, 8. Reduction of Friction: Electronic Commerce
information, or products to its own employees. It is research and its associated implementations is to
considered a subset of Intra-business EC. reduce the friction in on line transactions frictions is
often described in economics as transaction cost. It
6. Consumer-to-Consumer (C2C): E-commerce model can arise from inefficient market structures and
in which consumers sell directly to other consumer. inefficient combinations of the technological
Various marketplaces plays the role of mediator by activities required to make a transaction. Ultimately,
enable the user to buy from other users like the reduction of friction in online commerce will
ebay.com. enable smoother transaction between buyers,
intermediaries and sellers.
VI. IMPORTANCE AND USES OF E-COMMERCE
Exploitation of New Business: Broadly speaking, 9. Facilitating of Network Form: Electronic Commerce
electronic commerce emphasizes the generation and is also impacting business to business interactions. It
exploitation of new business opportunities and to use popular facilitates the network form of organization where
phrases: generate business value or do more with less. small flexible firms rely on other partner, companies
for component supplies and product distribution to
1. Enabling the Customers: Electronic Commerce is meet changing customer demand more effectively.
enabling the customer to have an increasing say in Hence, an end to end relationship management
what products are made, how products are made and solution is a desirable goal that is needed to manage
how services are delivered. the chain of networks linking customers, workers,
suppliers, distributors and even competitors. The
2. Improvement of Business Transaction Electronic: management of online transactions in the supply
E-Commerce endeavors to improve the execution of chain assumes a central role.
business transaction over various networks.
VII. HOW E-COMMERCE WILL AFFECT THE ECONOMY ?
3. Effective Performance: It leads to more effective The electronic economy will force change within
performance i.e. better quality, greater customer nation states. The modern nation state remains the most
satisfaction and better corporate decision making. prevalent unit of governance in the developed and the
developing world. The concept has, in the last 50 years, been
4. Greater Economic Efficiency: We may achieve extended rather than retracted. There are now more than 200
greater economic efficiency (lower cost) and more hugely different nation states, with different legal and
rapid exchange (high speed, accelerated, or real-time regulatory systems, existing in the world. During its 200 year
interaction) with the help of electronic commerce. history, the nation state has endured many changes. However,
the advent of the electronic economy is confronting the nation
5. Execution of Information: It enables the execution state, with intimations of a future in which its relevance to its
of information-laden transactions between two or citizens and enterprises will be challenged. The apparatus of
more parties using inter connected networks. These economic regulations and taxation through which nation states
networks can be a combination of old telephone operate was developed to support and facilitate industrial
system (POTS), Cable TV, leased lines and wireless. economy. That economy produces tangible and location bound
Information based transactions are creating new ways services that are sold and distributed within and between fixed
of doing business and even new types of business. borders. In that familiar world of national and international
trade, nation states have a variety of tools at their disposal to
6. Incorporating Transaction: Electronic Commerce achieve their economic ends. They can levy tariffs on imports,
also incorporates transaction management, which raise taxes, protect consumers rights, punish economic
organizes, routes, processes and tracks transactions. It criminals, set commercial standards, and provide guarantees of
also includes consumers making electronic payments monetary payment. Until recently, these tools were supported
and funds transfers. by governments majority control over communications
networks and information dissemination. Because of the
7. Increasing of Revenue: Firm use technology to emergence of global communications networks, the nation
either lower operating costs or increase revenue. state is gradually losing monopoly control of information and
Electronic Commerce has the Potential to increase financial flows.
revenue by creating new markets for old products,
creating new information-based products, and Private individuals and enterprises and groups now
establishing new service delivery channels to better have the ability to source, package, and transmit information
serve and interact with customers. The transaction in compressed time and space. Through digitization
management aspect of electronic commerce can also currency, services, and even some goods can be conveyed
enable firms to reduce operating costs by enabling immediately, transacted invisibly across the globe. Interactive
117
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
networks are creating a new, network-linked world without formed in 1870. Other companies like Oriental, Bharat and
borders, in which many commercial transactions are beyond Empire of India were also set up in the 1870-90s. It was during
the reach of national jurisdictions, laws, and taxation systems. the swadeshi movement in the early 20th century that
As a result, many of the economic instruments and processes insurance witnessed a big boom in India with several more
of the nation state need to be reexamined in the light of these companies being set up. As these companies grew, the
new challenges. It is nation state powerless before this new government began to exercise control on them.
global economic system. As electronic commerce grows, there
is some risk that those nation states that have not fully The Insurance Act was passed in 1912, followed by a
embraced the changes could become marginal to the creation detailed and amended Insurance Act of 1938 that looked into
of economic value and electronic economy. Could the changes investments, expenditure and management of these companies'
erode the individuals sense of national belonging, undermine funds. By the mid-1950s, there were around 170 insurance
tax bases, bypass national laws and undermine the rights of companies and 80 provident fund societies in the country's life
citizens. insurance scene. However, in the absence of regulatory
systems, scams and irregularities were almost a way of life at
VIII. INSURANCE most of these companies. As a result, the government decided
Insurance is an agreement where, for a stipulated nationalizes the life assurance business in India. The Life
payment called the premium, one party (insurer) agrees to pay Insurance Corporation of India was set up in 1956 to take over
to the other (the policyholder or his designated beneficiary) a around 250 life companies.
defined amount (the claim payment or benefit) upon the
occurrence of a specific loss. This defined claim payment Insurance has a long history in India. Life Insurance
amount can be a fixed amount or can reimburse all or a part of in its current form was introduced in 1818 when Oriental Life
the loss that occurred. The insurer considers the losses Insurance Company began its operations in India. General
expected for the insurance pool and the potential for variation Insurance was however a comparatively late entrant in 1850
in order to charge premiums that, in total, will be sufficient to when Triton Insurance company set up its base in Kolkata.
cover all of the projected claim payments for the insurance History of Insurance in India can be broadly bifurcated into
pool.[5] three eras - Pre Nationalisation, Nationalisation and Post
Nationalisation. Life Insurance was the first to be nationalized
The premium charged to each of the pool participants in 1956. Life Insurance Corporation of India was formed by
is that participants share of the total premium for the pool. consolidating the operations of various insurance companies.
Each premium may be adjusted to reflect special General Insurance followed suit and was nationalized in 1973.
characteristics of the particular policy. Normally, only a small General Insurance Corporation of India was set up as the
percentage of policyholders suffer losses. Their losses are paid controlling body with New India, United India, National and
out of the premiums collected from the pool of policyholders. Oriental as its subsidiaries. The process of opening up the
Thus, the entire pool compensates the unfortunate few. Each insurance sector was initiated against the background of
policyholder exchanges an unknown loss for the payment of a Economic Reform process which commenced from 1991. For
known premium. this purpose Malhotra Committee was formed during this year
who submitted their report in 1994 and Insurance Regulatory
Under the formal arrangement, the party agreeing to Development Act (IRDA) was passed in 1999. Resultantly
make the claim payments is the insurance company or the Indian Insurance was opened for private companies and
insurer. The pool participant is the policyholder. The payments Private Insurance Company effectively started operations from
that the policyholder makes to the insurer are premiums. The 2001.[6]
insurance contract is the policy. The risk of any unanticipated
losses is transferred from the policyholder to the insurer who X. THE INSURANCE INDUSTRY OF INDIA
has the right to specify the rules and conditions for The insurance industry of India consists of 53
participating in the insurance pool. The insurer may restrict the insurance companies of which 24 are in life insurance business
particular kinds of losses covered. For example, a peril is a and 29 are non-life insurers. Among the life insurers, Life
potential cause of a loss. Perils may include fires, hurricanes, Insurance Corporation (LIC) is the sole public sector
theft, and heart attack. The insurance policy may define company. Apart from that, among the non-life insurers there
specific perils that are covered, or it may cover all perils with are six public sector insurers. In addition to these, there is sole
certain named exclusions. national re-insurer, namely, General Insurance Corporation of
India. Other stakeholders in Indian Insurance market include
IX. HISTORICAL REVIEW OF INSURANCE agents, brokers, surveyors and third party administrators
Insurance in India can be traced back to the Vedas. servicing health insurance claims. Out of 29 non-life insurance
For instance, yogakshema, the name of Life Insurance companies, five private sector insurers are registered to
Corporation of India's corporate headquarters, is derived from underwrite policies exclusively in health, personal accident
the Rig Veda. The term suggests that a form of community and travel insurance segments. They are Star Health and
insurance was prevalent around 1000 BC and practiced by the Allied Insurance Company Ltd, Apollo Munich Health
Aryans. Burial societies of the kind found in ancient Rome Insurance Company Ltd, Max Bupa Health Insurance
were formed in the Buddhist period to help families build Company Ltd, Religare Health Insurance Company Ltd and
houses, protect widows and children. Bombay Mutual Cigna TTK Health Insurance Company Ltd. There are two
Assurance Society, the first Indian life assurance society, was more specialised insurers belonging to public sector, namely,
118
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
Export Credit Guarantee Corporation of India for Credit struggles to move out of the shadows cast by the challenges
Insurance and Agriculture Insurance Company Ltd for crop and uncertainties of the last few years, the strong fundamentals
insurance. of the industry augur well for a roadmap to be drawn for
sustainable long-term growth.
India's life insurance sector is the biggest in the world
with about 360 million policies which are expected to increase The available headroom for development, sustainable
at a Compound Annual Growth Rate (CAGR) of 12-15 per external growth drivers, and competitive strategies would
cent over the next five years. The insurance industry plans to continue to drive growth in the gross written premiums.
hike penetration levels to five per cent by 2020. The countrys However, insurance companies would need to address the key
insurance market is expected to quadruple in size over the next concern around losses that continue to be a drag on the capital
10 years from its current size of US$ 60 billion. During this and on the shareholders return expectations. In order to
period, the life insurance market is slated to cross US$ 160 achieve profitable growth for long term sustainability, insurers
billion. have two key imperatives. Firstly, they would need to
conserve capital and optimize the existing resource
The general insurance business in India is currently at deployment and distribution networks. Secondly, they would
Rs 78,000 crore (US$ 11.44 billion) premium per annum need to innovate not only in terms of value propositions but
industry and is growing at a healthy rate of 17 per cent. The more importantly in terms of operating models in order to
Indian insurance market is a huge business opportunity develop sustainable competitive edge. Consumer awareness
waiting to be harnessed. India currently accounts for less than and protection has been a prominent part of the regulatory
1.5 per cent of the worlds total insurance premiums and about agenda. Regulatory developments in the recent years show the
2 per cent of the worlds life insurance premiums despite focus on increasing flexibility in competitive strategies such as
being the second most populous nation. The country is the niche focus, merger and acquisitions and on removing
fifteenth largest insurance market in the world in terms of structural anomalies in the products and operations. While
premium volume, and has the potential to grow exponentially these initiatives would enable long term industry growth, the
in the coming years.[7] role of the regulator in providing an enabling environment to
achieve profitable growth in the near to medium term cannot
Insurance Sector Reforms be undermined.
In 1993, Malhotra Committee, headed by former
Finance Secretary and RBI Governor was formed to evaluate E-commerce and Insurance Industry
the Indian insurance industry and give its recommendations. The conditions for doing business are rapidly
The committee came up with the provisions that Private changing. The Internet and related advances in information
Companies with a minimum paid up capital of Rs.1bn should technology significantly affect financial services in general
be allowed to enter the industry. Foreign companies may be and insurance markets and institutions in particular. The
allowed to enter the industry in collaboration with the growing importance of e-commerce represents a watershed
domestic companies.Only one State Level Life Insurance event for insurance markets and institutions, as it does for
Company should be allowed to operate in each state. It was most industries. By lowering information costs, e-commerce
after this committee came into effect the regulatory body for will enable insurers to classify, underwrite, and price risk as
insurance sector was formed with the name of IRDA. The well as settle claims more accurately and efficiently. Overall,
IRDA since its incorporation as a statutory body has been the Internet will significantly enhance the efficiency of
framing regulations and registering the private sector insurance markets and institutions and benefit consumers by
insurance companies. IRDA being an independent statutory lowering transaction and information costs. The effects of e-
body has put a framework of globally compatible regulations. commerce are the subjects of intense debate in insurance
industry.
Changing Scenario of Insurance Industry in India
The Insurance industry in India has undergone The recent growth of Internet infrastructure and
transformational changes over the last 20 years. Liberalization introduction of economic reforms in the insurance sector have
has led to the entry of the largest insurance companies in the opened up the monopolistic Indian insurance market to
world, who have taken a strategic view on India being one of competition from foreign alliances. Although the focus of e-
the top priority emerging markets. The industry has witnessed commerce has been mainly on business to consumer (B2C)
phases of rapid growth along with spans of growth applications, the emphasis is now shifting towards business to
moderation, intensifying competition with both life and business (B2B) applications. The insurance industry provides
general insurance segments having more than 20 competing an appropriate model that combines both B2C and B2B
companies, and significant expansion of the customer base. applications.[8]
There have also been number of product innovations and
operational innovations necessitated by increased competition Traditional insurance requires a certificate for every
among the players. Changes in the regulatory environment had policy issued by the insurance company. However, paper
path-breaking impact on the development of the industry. certificates encumber problems including loss, duplication and
While the life insurance industry got affected by the forging of the certificate. The conventional certificate is now
introduction of cap in charges, the general insurance industry replaced with an electronic certificate that can be digitally
got impacted by price de-tariffication and Motor third party signed by both the insurer and the insurance company and
risk pooling arrangements. While the insurance industry still verified by a certifying authority. Online policy purchase is
119
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
faster, more user-friendly and definitely more secure than the Insurance services are sensitive to information, which
traditional processes. Therefore it is more attractive to the means that the flow of information between different parts of
insurer. At the same time it incurs less cost and requires fewer customers and insurance companies is necessary. ICT is
resources than traditional insurance and is therefore more emerging as a phenomenon with its own attractions and has an
profitable for the insurance company. important role in insurance market. Development of e-trade
makes insurers more than product orientation to customer
E-commerce is potentially applicable to marketing orientation. Since search costs for policy holders is less,
and sales as well as R&D with respect to insurance value Transparency in pricing, products quality and insurance
chain. On the other hand, as far as insurance products concern, services increases. The usage of ICT in insurance industry
auto insurance, marine and aviation, life insurance and fire increases production capacity, specialization of activities and
insurance were highly perceived to suitable to sale online. improves speed and quality of services. In general perspective,
Finally, the insurance companies were chiefly believed that in electronic insurance provides customers access to insurance
the case of e-commerce application they would get these services by using safe intermediates and without physical
benefits: brand and image promotion, extended corporation presence.
with partners, lower invest for establishing the sales and after
sales services network, cost reduction in value chain According to another definition, e-insurance is
management and decentralization and no restrictions imposed application of information technology and redesigning
by national borders. E-insurance also makes the insurance business procedure in order to provide optimal insurance
procedure more secure since the policy details are stored services and facilitating inter-action between people and
digitally and all transactions are made over secure channels. insurance industry. E-insurance is divided into two areas. The
These channels provide additional market penetration that is first area offers the electronic services in a way that removes
absent in traditional channels and help in earning more the barriers of traditional methods and replaces them with easy
revenue than traditional insurance processes. access methods. The second area involves the simplification
and improvement of business process and insurance operation
XI. THE IMPACT OF TECHNOLOGY ON INSURANCE SECTOR in a way that reduces the operational needs and expectations of
Insurance industry is an important part of the insurance industry. The Internet provides an opportunity for
economy and a supporting system of financial markets. The insurance companies, recently entered this market to avoid
funds appropriated from the sales of various insurance costly and lengthy process of traditional sales network. It
policies, leads to economic prosperity, creating employment should be noted that the sale of insurance products via the
and long-term and profitable investments. On the other hand, Internet- especially for complex insurance products with high
insurance industry by compensating losses due to adverse value that need some advices and information- is
events and providing insurance coverage against various inappropriate.
risks/claims supports all sectors of the economy. Thus, it
provides the security and safety of the community and its With e-commerce giants impacting the way
people. In recent years, usage of information and consumers shop for insurance, one of the biggest trends has
communication technology as a centerpiece of global been the adoption of multiple channels by insurers to market
developments is undeniable and causes to expedite things and sell their policies. Technology now allows insurers to
done. Nowadays, in any business, such as e-banking, e- move from the traditional broker scenario towards a direct-to-
learning and e-insurance we can find the signs of IT and market approach cutting out the middleman and going straight
Internet as a key tool, make it possible to use effective and to the customer.[10]
efficient utilization of information within the organization.
E-Insurance and Its Role in E-Commerce:
An important application of information and General meaning of e-insurance is the use of internet
communication technology, the use of these technologies for and information technology to produce and distribute the
re-engineering: the architecture of the insurance industry, insurance services. And the specific meaning of e-insurance is,
increasing the speed of access to information, greater providing insurance coverage through an insurance policy, in
efficiency and better service to the customer. The ICT has which all request, proposal, contract, negotiation will be
developed an electronic insurance. Other major usage of ICT performed online. Although paying insurance premium,
is in the service sectors such as banking, insurance, marketing, distributing insurance policy and process of paying the claim
trade, education and tourism cause a lot of advantages for can be done online, in some countries, regulatory and
them.[9] technological restrictions may not allow doing quite electronic
operations. Internationally, however, in order to support the
Applying information and communication technology paying insurance premiums and online distributing insurance
in the insurance industry for rapid access of information and policy, regulations are modifying continuously. The accepted
use it for decision making and planning is essential. So, a lot impacts of e-insurance on the efficiency are included:
of developing countries are trying to code and implement
electronic insurance projects, adapt to the realities of the new 1. E-insurance will reduce managerial and
environment and benefit from its advantages. In fact, if the administrative costs through the process of business
insurance plan is designed and implemented so efficiently and automation, and will improve the managerial data.
purposefully, the public and private sectors of insurance 2. E-insurance, by selling insurance policy, directly will
industry have profound institutional reforms. reduce commission paid to middlemen.
120
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
XII. PENETRATION OF E-COMMERCE IN THE INDIAN The advantages and benefits of e-commerce based
INSURANCE INDUSTRY: insurance are investigable from three perspectives of
The first stage of buying decision making process in insurer, under contract agencies, and policyholder:
online industry is too aware about the requirement of
purchasing the insurance policy through online. Consumers 1. The advantages of insurer-
search from different insurance companies for products that More speed, in the process of issuing insurance
they are willing to purchase. They evaluate the various policy and getting damage.
products from different companies to determine the one that Increasing the accuracy in the insurance activities.
best suits their needs.[11] Upgrading mechanized insurance system, according
to the latest hardware and software facilities.
The insurance company then conveys the terms and Eliminating costly and time-consuming stages, such
conditions of the insurance policy to the customer and the as issuing letter of introduction, inquiries from
customer responds with details including a description of the centers.
entity being insured, the terms and the duration of the Reducing the office space of insurance companies
insurance policy. When both the customer and insurance through developing virtual space.
company agree to go ahead with the transaction, the buyer Encouraging policyholders to further use of
pays the initial premium to the insurance company and the insurance affairs through a perfect informing.
policy certificate is sent to the buyer. The post-sales phase of Attracting organizations to contracts with
e-insurance is however considerably different from e- insurance.
commerce. In ecommerce, human intervention is required for Retaining policyholders and current contract
activities in the post-sales phase such as repair or replacement centers.
of parts. However, a major interaction between an insurer and Facilitating the insurance affairs such as documents,
the insurance company occurs in the post-sales phase if the reporting.
insurer submits a claim for the amount insured. Online claim The possibility of further controlling and managing
settlement involves complex interactions between the insurer, the affairs of insurance.
the insurance company and possibly legal and judicial The possibility of intelligent performing of some
authorities and, in an automated environment, requires close insurance processes such as introducing the
interactions between humans and automated agents. This policyholder to the medical centers, only by
phase is therefore the most difficult to implement over the phone or internet.
Internet and online insurance sites mostly rely on human Inhibiting fraud and forgery.
intervention for this phase.
Exact analyzing the costs.
Advantages of E-Insurance:
2. The advantages of under contract companies-
In general, e-commerce involves any kind of business
The possibility of rapid identifying insurance
or economic activities such as buying, selling, transferring or
coverage.
exchanging products, services or information those are
performing through electronic connections. Most of Reducing the time repayment to the Center, from
discussions in e-commerce is limited to internet, which insurer.
primarily is related to the electronic commerce. Nowadays, the Inhibiting offence and fraud.
internet and e-commerce has brought about fundamental The possibility of issuing special insurance policies in
changes in the methods of business.[12] Center place without referring to insurer.
Rapid identifying the policyholders.
In recent years, due to the rapid growth of Increasing the clients in order to use provided
information and communication technology, and above all, the facilities.
development of internet, the process of these variations has Rapid identifying letter of introduction.
been accelerated. Since the new millennium, insurance Reducing the administrative costs of the above
companies throughout the world are actively presenting their mentioned centers in order to communicate with
services to e-insurance, particularly internet. E-insurance is the insurer.
result of evolution in communications and information Increasing the rate of interaction between institutions
technology, in other words, it is an insurance operations, and insurer affairs.
which are performed by using internet. The style of life and
work are influenced by increasing demand of accessing to 3. The advantages of insurer-
internet in order to receive information and services, therefore, Increasing the rate of identifying actual insurer.
the insurance companies could not be indifferent to these Reducing the frequency of actual presenting in the
requests. The insurance companies could take advantages of branches of insurance.
new information and communication technologies to provide No need to manually completing forms.
better services. Meanwhile, e-insurance will reduce the real- The possibility of observing the information of
time of activity and management costs. insurance policies related to the policyholder.
No need to providing a letter of introduction.
Ease of paying and receiving related funds.
121
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
Reducing the time and the cost of using insurance 3. Training insurance agents: Agents are one of the
coverage and the resultant satisfaction. trusted channels for selling insurance products.
Increasing familiarization with the insurance affairs Insurers are increasingly investing in training and
by insurer website. education of agents in order to enable them to deliver
The possibility of taking insurance free consulting better service to customers.
through accurate informing of insurers website.
Possibility of direct communicating (virtually) with 4. Social media and collaboration: Social media is
the managers and administrators in any time and about helping people connect. Social media platforms
space. such as Facebook, LinkedIn and Twitter, are
Instant access to statistics and thereby quickly frequently used in marketing to drive brand
producing reports. awareness and connect with customers. These
platforms can also be used to improve collaboration,
IRDA guidelines for e-insurance policies: decision-making and processes both within the
The IRDA has stated that the main aim to initiate the company and in interacting with distributors.
insurance repository is to help the policyholders revise,
modify, or change their plans in a correct and quick manner. 5. Distribution channel management: In a multi-
According to the guidelines, the providers of e-insurance channel world, existing distribution channels remain
policies will need to avail the services of authentic repositories as new channels emerge, complicating channel
and the e-policies will also be regarded as legitimate contracts. management. Today they are managed as discrete
For an insurance repository to be regarded as certified, it distribution channels unable to integrate for seamless
should have a minimum net worth of INR 25crores sans any interactions. Different elements of insurers'
investment from outside India. Also no single insurance communications are shifting at different speeds and
company should own more than 10 percent of its stakes or older channels are not going away. This increases the
enjoy a managerial position in an insurance repository.[13] burden and confusion for insurers, who are required
The IRDA has also made it mandatory for the to invest in supporting new channels without being
insurance repositories to take steps that will make sure that all able to shutter older channels.
crucial information will be adequately safeguarded and there
will be effective systems that will prevent any E-services offering by Insurance Company:
misappropriation of deals and records. The guidelines also The companys success is promoting the products
state that insurers can make deals with more than one depends on understanding the needs and wants of the
insurance repository to make sure that e-insurance policies are customers. There must be compatibility between the products
properly maintained. and the requirements of the insurers. A decade back,
penetration of products have been made through excessive
Latest Trends in the Indian Insurance Sector: promotional strategies especially advertisement. Even those
The insurance industry has experienced immense advertisements can have broadcasted less frequent and time
changes in the past few years and the challenges are expected bound. Advertisements are made either through passive
to intensify in the coming years. Insurers are expected to focus channels like newspapers, magazines, billboards, radio and
on customer centricity, reducing costs and improving service television, or, through active channels like human insurance
standards.[14] agents. At present the policy is tailor-made to the needs of the
buyer. E-insurance employs the Internet to reach customers
The latest trends seen in the insurance industry are as follows: through advertisements more effectively. Lot of advertisement
banners, pop-ups and road blocks occupied significant portion
1. Online insurance: Over the last few years, the shift in the online marketing to grasp the mind of the customers.
to online insurance has brought to the customer a Companies and insurance agent can contact the clients through
large number of protection and savings solutions that email to answer the queries about the products. The home page
were not available earlier. Connectivity and the shift of the company provides companys profile which facilitates
to mobile e-commerce will soon play a significant the customers to make decisions. Now Insurance companies
role in the sector. Increasing use of mobiles and offering e-services to their clients. It can be classified into the
mobile apps is impacting how companies conduct following categories:
business and interact with stakeholders. This is also
why online insurance is the focus area for the future. 1. Webpage: The insurance companies have a separate
web page for promoting their online insurance services.
2. Big data and analytics: Big data and analytics The webpage will provide almost all the details about
provide valuable and actionable insights. Big data the products and the features, reason to buy, duration of
plays an important role in risk management, enabling the policies, sum assured and assumed bonus, etc., this
companies to analyze risk characteristics and claims online facility will maximize the strength of the
statistics. Big data helps companies monitor brand company to move further in the minds of the customers.
reputation by analyzing comments in social media. LIC is a public sector company provides all the details
By doing so, companies can immediately address about the products to the customers.
issues that may damage their reputation or brand.

122
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
2. Power shifts from seller to buyer: Unlike traditional proved to be a promising approach to intensify the customer
marketing, the power has been transferred to the buyer, relationship in the insurance business.
will help them to know, analyze, and make decisions
based on the alternatives of policies. Indian Insurance Sectors and Information Technology
3. Greater transparency: Companies are maintaining Needs:
greater transparency can be maintained in disseminating The insurance sector in India is nearly 150 years old.
product details through the websites. Customers will It is now in the third phase of its existence. The first phase was
know about the new arrivals of products and the the long growth phase before the two nationalizations in 1956
changes in the policies time to time. and 1971 of life and general insurance respectively. At that
point of time, there were more than 200 life insurance
4. Middlemen: Middlemen are intermediaries who do not companies and 108 general insurance companies. They were
sell the insurance policies directly but they help the all private sector insurers with the exception of one state-
potential customers of the insurance companies for owned general insurer. Several overseas insurers were
choosing the products. operating in India through branches. In the second phase, the
entire sector became a state monopoly. In the third phase, we
5. Aggregators: Aggregators have own sites that will help now have several new private sector players competing with
the clients to know the variations between the policies the large public sector insurers.[15] There is an evolutionary
will be given. Moreover they will give some additional change in the technology that has revolutionized the entire
information about the products. insurance sector. Insurance industry is a data-rich industry,
and thus, there is a need to use the data for trend analysis and
XIII. CUSTOMER RELATIONSHIP MANAGEMENT AND E- personalization. With increased competition among insurers,
COMMERCE IN THE INSURANCE INDUSTRY: service has become a key issue. Moreover, customers are
E-commerce and the internet are increasingly getting increasingly sophisticated and tech-savvy. People
becoming one of the most important drivers of strategic today dont want to accept the current value propositions, they
change for business and national governments. A body of want personalized interactions and they look for more and
research specifically focused on the use of E-commerce in the more features and add ones and better service. The insurance
insurance industry shows that the adoption is positively related companies today must meet the need of the hour for more and
to increases in productivity. Yet, the insurance industry has more personalized approach for handling the customer.
been lagging behind other financial services to embrace this
new change within its activities. Most insurance organizations Today managing the customer intelligently is very
recognize that web services and electronic collaborations are critical for the insurer especially in the very competitive
the key buzzwords of todays organizations, but the bulk of the environment. Companies need to apply different set of rules
job in many firms is still done via manual paper-based and treatment strategies to different customer segments.
processing. For example, customer orders are still received via However, to personalize interactions, insurers are required to
old methods, and the process for handling these documents is capture customer information in an integrated system. With
time consuming, wrong and unnecessary. the explosion of Website and greater access to direct product
or policy information, there is a need to developing better
The result is that customers maintain relationships techniques to give customers a truly personalized experience.
with several companies and finish contact quickly if they are Personalization helps organizations to reach their customers
not satisfied with quality of service. Efficient insurance with more impact and to generate new revenue through cross
markets are essential basis for the transition countries to selling and up selling activities. To ensure that the customers
achieve integration into global economy and sustainable strong are receiving personalized information, many organizations
economic growth. Insurance market is a vitally important are incorporating knowledge database-repositories of content
economic institution where mutual beneficial exchange that typically include a search engine and let the customers
between consumers and insurance companies is carried out. locate the all document and information related to their queries
The information intensive nature of the insurance sector of request for services. Customers can hereby use the
affects all the activities of the value chain, which are based on knowledge database to manage their products or the company
the ability to process information efficiently. For this reason, information and invoices, claim records, and histories of the
investments in E-commerce, which represent almost all service inquiry. These products also may be able to learn from
investments in technical capital, affect productivity more than the customers previous knowledge database and to use their
in other sectors. Furthermore, contacts between the insurance information when determining the relevance to the customers
company and its customers are rare because the contracts are search request.
by nature long-term and promissory. So far, insurance
companies only offer value-added services to support their Effect of Information Technology (E-commerce) in
customers in the moment of truth, that is, after a loss. As a Insurance Sector:
consequence, customers have a second thought, whether the Client Data: Insurance carriers maintain accurate and
buying decision was right while nothing happens. These updated client data records. Information technology
added services are a promising approach to keep customer must be both secure and comprehensive enough to store
relationship alive in the insurance business by vital interaction. multiple names, addresses, telephone numbers, email
Where these technologies were put in place, they have actually addresses and other pertinent details.

123
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
Policy Details: For those insurance companies rating technicians, this process is now automated, with
providing policies across multiple lines of insurance, only the most unusual risks requiring personal attention.
information technology requirements become even
more complex. Details of each insurance policy, Emerging Challenges to Enhance Technology in Insurance
ranging from life, home, auto, boat, liability and Sector:
business products, need to be accurately recorded and The major challenge staring at Insurance sectors in
merged with client data. India relates to the need to introduce innovative, customer
friendly products and services for which newer technologies
Claims Management: Investigating, paying and have to be brought in multiple areas to reduce the overall
recording claims data is crucial to any insurance transaction costs. Traditionally, efforts in technology driven IT
companys financial stability. Information technology implementation has targeted the metros or big urban
plays a vital role in allowing carriers to record claims customers. The time has now come to make the benefits of IT
details and share data with police, other carriers, penetrate to the rural population as well. There may be also a
attorneys and beneficiaries. Advanced computer need to provide for multi-lingual facilities, which is a
software ensures important information remains migration from the existing English-only paradigm, in a
accessible and updated. manner akin to some of the other countries like China, Korea
and Japan. If these benefits have to accrue, it will be necessary
Beneficiaries: Life insurance companies utilize to have adequate infrastructural facilities. Efficient and
database technology to record policy owners effective communication networks hold the key to success in
beneficiary designations. Aside from the personal attaining the desired results of network based IT usage for
details of the insured individuals, beneficiary names, transaction processing systems of insurance sectors. The need
addresses, telephone numbers and death benefit to train and retrain staff on a continuous basis given the fast
portions are of monumental importance. paced changes in the technical sector.

Payment Information: Perhaps the most essential area On-line Insurance Current Scenario:
requiring accurate and efficient information technology Most existing insurers started selling online in 2010-
is an insurance companys client payment details. 2011 and at present, almost close to 33 insurers are offering
Above all else, billing and invoicing systems generate more than 1000 products online. A majority of them are
the necessary revenue to keep the company in business. currently focused on term insurance but many brands are
Cash flow remains vital to daily operations and without looking beyond just distributing transactional products like
superior information technology and processing term insurance and car insurance. They are considering the
systems, the carriers financial stability is at risk. Internet as a channel of the future which will make significant
contributions to business and growth. Three insurance
Actuarial Analysis: Insurers base their rates on companies, which have included Internet and online
actuarial models that seek to determine what risks are aggregators as a major focus in their distribution strategy.
more or less likely to experience a loss. Insurance
companies are using technology to analyze years of The online insurance industry in India is witnessing a
claims and policyholder data searching for correlations phenomenal level of growth for the past few years. Indians
between risk characteristics and claims. Technology has were already aware of the online platform to fulfill their
allowed actuaries to analyze risk at a much more educational and banking needs until sometime ago. When it
precise level of granularity. came to investments, fixed deposits and mutual funds were the
most preferred purchases. On insurance front, people started
Policy Administration: Most insurance policies are still relying on internet to research about the kinds of products.
printed and delivered to policyholders by mail each However, with each passing year, digital insurance industry
year. The process of creating these documents used to gradually expanded its footprints in India. And therefore,
be accomplished by armies of clerks, technicians and online mode is not limited to just research and life insurance
typists. In most cases, this repetitive task has been comparison.
completely re-imagined using technology. Customer
data is maintained in massive databases, where it is In todays scenario, Indians are no more afraid to
accessed by computer systems that automate the purchase online protection policies. They buy, renew, make
renewal of each policy. Policies are assembled using payment of premium online and even avail post-purchase
complex software packages and printed using advanced services. Going back in time, insurance sector started to
high-speed printers. penetrate the digital platform in the year 2005. Everything
began with the concept of online comparison and research of
Automated Underwriting and Rating: Every insurance insurance policies and this was made possible due to some
policy undergoes an underwriting process that web aggregators. Web aggregators provided extra comfort to
determines if the insurance company is willing to buyers by letting them compare policy online. Though, it was
provide insurance. If the risk is acceptable, it is then never easy to persuade researchers to buy policies through
rated, to determine the price the company will charge. online mode. Nevertheless, transparency and safe payment
Once the purview of highly trained underwriters and gateways influenced more than half of the researchers and
appealed them to make a purchase. Insurers also recognized
124
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________
International Journal on Recent and Innovation Trends in Computing and Communication ISSN: 2321-8169
Volume: 4 Issue: 8 115 - 125
_____________________________________________________________________________________________________
the imprint online mode had made on the minds of consumers 11. Karthi (2015) - Influences of online marketing in the
and therefore they initiated to promote online term insurance prospective Indian Insurance Industry - IOSR Journal of
quotes and policies. In 2010-11, most of the insurers started Business and Management.
selling online. And at present, insurers have made online mode 12. Leila Meshkat and Fatemeh Farkhondehnia (2012) -
Electronic Insurance and its application in e-commerce -
a priority in their distribution strategy. Though, many insurers
Interdisciplinary Journal Of Contemporary Research In
are still focusing on term plans, but a few of them have moved Business - Institute of Interdisciplinary Business Research,
ahead beyond term and car policies. Vol 4, No 8.
13. Charanjit Kaur Banga and Shraddha Mayuresh Bhome
XIV. CONCLUSION (2015) -A Study On Customers Opinion About
The electronic economy will force change within Digitalisation of Insurance Sector (E-Insurance) - Global
nation states. The modern nation state remains the most Journal For Research Analysis, Volume-4, Issue-12.
prevalent unit of governance in the developed and the 14. K S Gopalakrishnan (2015) - Online insurance is the focus
developing world. For the growth of insurance sector there has area for the future http://economictimes.indiatimes.com
15. Meikanda Ganesh Kumar and P. Anbuoli (2013) -Impact of
to be a conscious effort by the management towards making it Information Technology in the Service Delivery of Indian
customer oriented. Major challenge staring at Insurance Insurance Sector - IJSR - International Journal Of Scientific
sectors in India relates to the need to introduce innovative, Research, Volume 2, Issue 7.
customer friendly products and services for which newer
technologies have to be brought in multiple areas to reduce the
overall transaction costs. Trading electronically offers a
number of advantages to companies. The online insurance
industry in India is witnessing a phenomenal level of growth
for the past few years in india. Today indians are no more
afraid to purchase online protection policies. Traditionally,
efforts in technology driven IT implementation has targeted
the metros or big urban customers. The time has now come to
make the benefits of IT penetrate to the rural population as
well.

References:
1. Anshu Arora (2003) - E-Insurance: Analysis of the Impact
and Implications of Ecommerce on the Insurance Industry -
Dissertation submitted to Business School, Row London.
2. B. E. A. Oghojafor, S. A. Aduloju and F. F. Olowokudejo
(2011) - Information technology and customer relationship
management (CRM) in some selected insurance firms in
Nigeria - Journal of Economics and International Finance
Vol. 3(7), pp. 452-461.
3. Alka Raghunath & MurliDhar Panga (2013) -Problem and
Prospects of E-Commerce - International Journal of
Research and Development - A Management Review,
Volume-2, Issue 1.
4. Alka Raghunath & MurliDhar Panga Problem and
Prospects of E-Commerce - International Journal of
Research and Development - A Management Review,
Volume-2, Issue1.
5. Nour-Mohammad Yaghoubi and Tajmohammadi (2011) -
Review and Ranking E- Commerce Characteristics on
ECommerce Application in Insurance Industry -
Interdisciplinary Journal of Research in Business Vol. 1,
Issue. 10.
6. (Information Technology In Insurance Industry Commerce
Essay -
https://www.ukessays.com/essays/commerce/information-
technology-in-insurance-industry-commerce-essay.php)
7. http://www.ibef.org/industry/insurance-sector-india.aspx
8. Prithviraj Dasgupta and Kasturi Sengupta(2002); E-
Commerce in the Indian Insurance Industry; Electronic
Commerce Research; Vol.2, 2002; pp.43-60.
9. Parvaneh Salatin, Fatemeh Yadollahi and Sahar
Eslambolchi (2014) -The Effect Of Ict On Insurance
Industry In Selected Countries, Volume 9, Issue 1.
10. Anand Vyas (2015) -How technology impacts the insurance
sector - http://betanews.com

125
IJRITCC | August 2016, Available @ http://www.ijritcc.org
_______________________________________________________________________________________