Information technology (IT) is vital and has become an integral part of the insurance industry. The insurance industry deals with a large volume of data and it has to be used in the right way to get the synergy of the operations. The insurance industry is facing the real challenges of risk management, rating, claims handling, provision of terms and fraud management, etc. They would like to operate more efficiently and expect real co-operation and coordination among the different units within the organization and the outside bodies.
While some insurers like Aflac Insurance don’t offer auto insurance, it is a fact that motor insurance has become one of the major portfolios of insurance companies. It is also the major portfolio of several consumers. Hence it requires major attention. The regulation has put a lot of pressure on the motor insurers to provide the covers mandated by the regulators and face competition from the fellow insurers. The escalating costs of spare parts and labor charges have put the insurers in a dire situation. Information technology has helped in reducing the data handling cost and it has also become a tool for underwriting and handling fraud.
Information technology can play an important role from the negotiation stage till the expiry of the policy period and it will continue on the renewal.
IT can be used in the following stages of product life.
- Selling
- Underwriting
- Claims
- Accounts
- Renewals
Let’s check some of these stages:
Table of Contents
Selling
IT has come as a boon to selling function. Selling is nothing but converting the service or product into money. Selling is one of the major functions of insurance and it starts with planning, prospecting, and continues during the policy period and at the time of renewal. During the negotiation, it can help the salesman in giving the presentation of the product and storing the information related to the customer, which will help him customer segmentation and mapping of the customer.
It will help the salesman in making reminders of the meetings of the customer and sending the information needed by the customer like the coverage details, proposal forms, claim forms, list of network providers, satisfied customers list, and also personal greetings as a part of the sales process. It also helps in identifying the profitable customers and the productive agents and brokers. It makes the job of the insured and the insurers easier.
The insurers have less botheration in preparing and submitting the quotation and renewal reminders. Nowadays it is easier to get online quotes and online renewal or purchasing of the personal lines policy. It is much simpler to get first month free car insurance policy, it has helped people save their time and money on insurance.
Underwriting
Underwriting is the process of identifying the risks as insurable and uninsurable and if insurable then providing the necessary terms and conditions for insurance. It heavily relies on information technology in looking at the historical data as well as the actuarial pricing, which in turn uses the information technology in working out the prices.
Nowadays there are smart systems and software which help the underwriting in arriving at the right rate for a risk-based on the information and parameters pre-fed into the system. The systems help in providing the risk profile information, policy content, identifying the areas of reinsurance, endorsements, and payment terms with reminders, etc.
Accounts
Collection of premiums and settlement of claims are two major functions of the insurance company. Apart from this the insurance companies also invest their funds to make sure that they generate income out of the investments. The IT has helped the insurance companies in integrating these functions and providing the tools for better decision making. With IT the job of the Accountant has become easier, he can send the account statements online without going into the printing and posting option as was done in the past.
Renewals
Insurance contracts are usually for twelve months and the policies need to be renewed every year. IT helps the insurance companies in providing information related to renewal in nutshell and it also assists the insurer to red flag the policies which are not to be renewed.
The renewal even though may not be an obligation on part of the insurance company in a general sense but it may be a mandatory requirement in some states. Even from business prudence, it is advisable to send the renewal notice to the existing customers at least a few weeks in advance.
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