The Hindu Business Line : Insurers get aggressive with tech adoption

IT companies are ploughing the insurance industry for rich yields. In the past two years, insurance companies have become high spenders on information technology.

The IT business of the insurance sector in the country, which is considered less automated in comparison to banking, is estimated at Rs 80-100 crore per annum.

Mr Manoj Kunkalienkar, Executive Director, 3i Infotech Ltd, provider of technology support to the IT sector, said the insurance industry had become aggressive in terms of IT spending.

"The insurance sector witnessed a 58-per cent growth in IT spending in 2004-05. According to a survey, IT spend in the insurance vertical in 2004-05 stood at Rs 84 crore, compared to Rs 53 crore in 03-04," he said.

LIC has made major investments in IT.

Among the private insurers, Birla Sun Life is one of the highest spenders. The company has spent about Rs 35 crore on IT, since inception.

It has created system-based speedy underwriting, Web-enabled technology connecting branch offices and centralised processing (purchased from Sol Corp) and outsourcing data capture.

In terms of customer-oriented IT, Birla Sun Life has invested in an Interactive Voice Response System for customer transactions and verification of policy details using an ID and password.

The key areas that insurance companies have been spending on in terms of IT are underwriting, policy administration, claims processing, document management and centralisation of all processes.

In the case of general insurance companies, there is an acute need for collection of data for improved underwriting.

Mr Zubin Pardiwala, COO, Insurance Assist BPO, said insurance companies are investing in a great deal of technology to convert data into knowledge. "Technology is being used to decrease the turnaround time in terms of transactions."

Insurance Assist is conducting dry runs with four insurance companies.

In the general insurance sector, the four PSUs are believed to be the highest spenders. They have purchased an insurance management system called GENISYS (General Insurance System) from CMC.

According to a senior official at a PSU general insurance, in the case of PSU companies, of technology is slow. This is because there is so much data and so many documents to be collected. "In our case, investments in IT have to be done in a phased manner," said the official.

Teradata, a division of ATM manufacturer NCR corporation, is providing LIC with the largest data warehouse for a life insurance company.

Mr David Piesse, Business Development Director Insurance, Sun Micro Systems, who was in talks with twelve insurance companies in India, said Indian insurance companies need to implement core solutions to improve profitability. Companies should go in for data warehousing, portals for claim settlement as well as solutions that work on financial agreements, capital change and merger and acquisitions.

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