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Digital technology in insurance - how to overcome suppression

What prevents life insurance digitalization and online technology development in this segment in Russia?
Digital technology in insurance - how to overcome suppression

Author: Dubrovin Viktor Viktorovich, Deputy General Director - Administrative Director of LLC "Sberbank Life Insurance" (Russia)

We, the insurers, strongly believe the legislation of insurance market is conservative. A simple example: anti-money laundering legislation does not limit a simplified identification for all other financial markets, which allows identify the customer remotely. Insurers are the only financial institution that is obliged to carry out a so-called full identification with amounts over 15 thousand rubles, which implies the personal presence of the insured and the beneficiary. Thus, the legislation does not allow even trying to sell investment insurance or universal life insurance online. We can only sell inexpensive insurance products not requiring full identification online.

In our communication with legislators we explain that it is difficult to work this way; that we are long behind the technologies. And most significantly, those initial FATF recommendations, which form the basis of our law, have already been abolished. FATF does not require such identification anymore, but it remained in our legislation. A bill to mitigate the described requirements has been prepared, but unfortunately, it still remains at the stage of the first reading. I hope this year it will push forward. But, so far the legislation restrains our online movement.

However, not only the life insurance market needs regulation improvement; the insurers are also far from digitalizing. We can clearly see what is happening in other financial institutions and realize that insurance is the industry that seems to be moving towards digitalization at the lowest pace. Almost all banking operations can be done today through mobile and online applications, without going to the bank. These are high-demand services. It is not the case in insurance; it requires frequent face-to-face meetings with the insurer for insurance contract conclusion and other operations.  Insurers have learned to sell travelers’ accident insurance for small amounts on websites. As for serious products, they still require presence of the insured person and the beneficiary. It is necessary to come to the office to terminate the contract as well. And if a person wants to declare a loss, he will have to collect documents and come to the insurance company office. Of course, this is all inconvenient for the client; the scheme is extremely outdated.

The maximum transition to impersonal communication of client with insurance company, a move toward digital modes of interaction is, in our opinion, one of the main topics for insurance development. And this is also related to information exchange. What the state is building now on the "Government Services" portal, when everything is done in one place, all information flows into a single person's private office, and he does not need to take any additional actions, is very positive. And we must take an active part in this. Now, in case of an insured event, a person has to collect documents (from a health facility, Civil Registry Office, etc.) and bring them to the insurance company. But this is a very obsolete model, as the state is creating a portal where all this information is or will be in a single data system. Connecting insurers to these systems for easy instant information exchange will make it possible to quickly make payments and simplify our policyholders’ lives.


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