As rightly said, the nation’s prosperity and economy is directly proportional to uninterrupted access to financial services by one and all.
With BFSI being the core sector, it has now become the necessity to adopt the integrated technologies such as location intelligence, 3D mobile technology, AI & ML, Geo CRM, Geo-Tagging, etc.
Keeping the opportunities and the right focus in mind, GeoSmart India 2022’s day two had some thought provoking sessions with eminent industry leaders discussing how location intelligence is transforming insurance sector.
Parameters of Insurance
Insurance is the business of managing the risks. Penetration of general insurance in India is 1% and that of life insurance is 3%, whereas the health insurance coverage in the US is approximately 91%. And Covid has made us realize that no matter how prepared you are, you can never manage all the risk areas. The definition of insurance goes by three parameters: cost, coverage and claims. Use of data, location intelligence and external factors can help in evaluating all three parameters,” Sachin Seth, MD & CEO, BSE EBIX Insurance.
“Geospatial data is making all the difference. Right costing matters because when you place the price higher than what it should be, you are putting burden on the buyer, who can be a farmer or rikshawdriver,” Seth added.
He added, “Coverage is important from the data perspective. Today being geospatial data available makes a huge difference because whatever coverage are you providing, at the end of the day claims come into picture, you should be able to establish whether it is a genuine claim or false claim. Measurement of the coverage is possible if you are using geospatial data, to be able to provide the time stamp, location, exact occurrence and severity of the incident.”
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G Senthil Kumar, Manager – Research & Development, Agriculture Insurance Company of India Ltd. Pointed out that “climate change is affecting productivity.”
He said Pradhan Mantri Fasal Bima Yojana (PMFBY) that came in 2016 is a game changer in crop insurance market.
He also pointed out what are the demands in the crop insurance industry:
Insurable interest: Farmers are the last mile customer in crop insurance and we have to reach to them. So convincing the farmers and getting their farms insured is a big challenge. Location intelligence is driving the entire activity, it is helping insurers to identify the insurable farms. Besides getting the crop sown insured in the farm is another big challenge.
Historical data: Pricing is heavily dependent on the historical data available. Average crop insurance was priced at 10% in 2016 and now it has reached to 15%, this shows how important is historical data. This also shows how climate change is affecting productivity.
Verification has a linkage with insurable interest, where GIS and location plays a major role because the attributes in the vector data can be mapped and automated in the entire crop insurance system.
Risk profiling has linkage with historical data for pricing and developing heat maps, which will help insurers as well as the government to analyze risks.
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Customer behavior drives the market
“Today customer behavior is driving the market, there is AI/ML data that we are using in insurance variables to understand the needs of the customers. Say for example location intelligence has made address verification, address geocoding and risk assessment so much easier and to make better offers for the customer,” Dr. Neena Priyanka, Product Manager, Precisely (Lepton Partner).
She said that importance of location can be seen clearly in real estate insurance sector because the value of property depends on the risk factors associated with demography, and social environment, the locality can be a crime centric and thus the insurance cost varies accordingly. Cost benefit plays a key challenge in this space.
