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Why insurance companies need to go online

Online settlement of insurance events will allow insurers to save several hundred million rubles a year, and their clients - 4 hours of life, which will be released from paper red tape. Why is it still difficult to fully digitalize the insurance market? Dmitry Rudenko from Forbes Contributor asks this question.
Why insurance companies need to go online

Digital technologies are increasingly penetrating our lives. You no longer go for plane tickets to the air ticket offices, but buy them via a mobile application or on a website. However, the owner of an expensive country house, commercial real estate or car (if something happens to them) will not be able to do without a visit to his insurer for processing and receiving a payment. Or will he?

Only a lazy person does not stalk about insurance market digitalization now, but so far all the digitalization usually ends with the automation of online sales and telematics launch.

However, for the client, insurance begins to work not at the time of buying a policy on the insurer's website, but when an insurance event occurs. And here is when this digitalization does not work much. At the moment, only certain players can boast with the possibility of online settlement in certain types of insurance. Perhaps, this option is just another market speak, and the market does not need it at all?

Electronic half measures

Actually, quite a few players go into the online settlement at least partially. For example, an insurer may well start working at a loss case on copies of documents and evaluate the extent of damage from photos from the scene. Technically, to implement such a service is not a problem, although this requires some investment. The innovation, however, does not free the customer from paperwork completely.

The electronic digital signature (EDS) technology is able to convert the entire document flow, but it is not yet very popular in the insurance market; and in most cases, the insurers prefer to work with traditional paper. But if working with companies online is really time consuming, since they will need to get a strong EDS, update it in time and store it correctly, then interaction with people, has practically no difficulties: just a two-stage customer identification system needs be set when a client accesses it.

But insurance companies are delaying the introduction of technological innovations, as they fear growth in fraud. The losses from accident policies cannot yet be settled online, since the loss rate is quite high, and almost every one can forge a medical clearance certificate. Therefore, before scaling such IT solutions for all types of insurance, the companies will have to learn how to identify a potential fraud even at the stage of policy conclusion.

Competitive position

However, this does not mean that insurance companies do not have to make any efforts towards the development of online settlement of losses. The availability of services allowing save time of, both the client and the company, is practically the only real competitive advantage today. Insurers, who will continue to ignore this trend in the future, are at risk losing their customers.

It is unlikely that anyone will deliberately choose a company that forces the client in the insurance event to go to the other end of the city to file documents about the loss, or sends him to a remote area for car repairs, while other insurers will be able to obtain a damage assessment and direction for repairs, sending copies of documents and photos from the scene.

Such consumer services can significantly reduce the costs of the insurer. Simple math: one of the leaders in terms of fees in the market, according to official information, has 300 loss-settlement centers, which employ five people each. If we take Russian Statistics Committee's data on the average wage in Russia (35,369 rubles as of January 2017); then the payroll will be more than 53 million rubles a month or about 635 million rubles a year.

And now let us estimate how much the traditional settlement format costs for the economy in general. If we assume that in average a client spends about four hours net for presentation of documents to the insurance company, then, given the number of settled losses for three quarters of 21 million, it would be possible to save almost 19 billion rubles of working time (based on the average wage level). The calculations are, of course, rough, but you can figure out the approximate size of the benefits.

Minimizing the communication of a client with an insurance company in the usual format at the time of the insurance event can also reduce reputational risks of an insurer. A furious or desperate customer will be released from communication with call center operators who often make mistakes and ping pong a client back and forth in search of their problem solution.

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