Chapter 16

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					                             Chapter             16

               Information Technology for Insurance Sector


The developments in Information technology (IT) are working wonders in terms of
responsiveness, improving productivity in various fields of activity. It has become
possible to send and receive cumbersome information almost instantaneously. In
insurance sector, using ordinary mail and circulars. For example, if mail and circulars
do not reach agents on time or their doubts are not cleared quickly or the agent does
not have details of new plans announced in the press, the agent may face awkward
situation with the prospects. IT can help to fulfill this gap in (timely) information.

Insurance agencies have been quick in adapting the use of Technology historically.
Since insurance companies basically deal with data, its interpretation, handling of
files, data and sending/receiving information in time and at reasonable cost have
always been one of the top priorities for insurance companies.

All state insurance of USA e.g. as early as mid 60’s employed vacuum tubes for
carrying files from one floor to another, and one table to another at its H.Q. near
Chicago. Today information can flow from agent to officer, and from one town to
another, from branch to RO, from RO to HQ, one department (say underwriting) to
another (say marketing) electronically or through computers e-mail.

IT can be used for various applications in insurance sector, e.g. for data capture,
analysis, transmission, proposal processing, agent training, receiving premiums,
crediting agents accounts with their remuneration, displaying product information on
company websites etc. The extent of IT applications may and will vary between
insurers. The broad possibilities are discussed in this chapter.

16.1 Intranet and Internet

The Internet is a worldwide system accessible through computers. It is referred to as
World Wide Web (w.w.w. in short) also. Information travels through the Internet at
incredible speeds. The information does not recognize national or international
boundaries. Information posted on a website is available to every body anywhere in
the globe, at no cost unless the access is protected, or available on payment, or to
specific sets of people. Such specified individuals can be issued ‘passwords’ for
accessing the information

While the Internet allows access to anybody from anywhere, an Intranet is an in-
house network, though working on the same principle as www. The analogy is similar
to a national newspaper (internet) and an in-house newsmagazine (intranet) which is
for private circulation only. If an insurer has an intranet system, the information will
be available to its officers, personnel, and associates. Thus, policyholders will not be
able to access such data from the company’s intranet. On the other hand, there may
be specific information for policyholders, which can be accessed by them only.

Circulars meant for internal circulation can be posted on the intranet, and everybody
can have instantaneous access to them, how far, they may be located. In the
intranet also, it is feasible to restrict some information to certain sets of persons,
who can be issued with specified set of ‘passwords’.

Both Intranet and Internet users can do tasks including the following on 24 hours,
7days(in a week), 365days(of the year) basis. This is sometimes called 24*7 access.

  i.    Send and receive mails. Since these are sent electronically, they are called e-
        mails. Every person has a distinct e-mail id (identification), which is his/her
        address on the net.
  ii.   Search, read and retrieve (download) data, files, and pictures.
 iii.   Exchange letters and interact through e-mail.
 iv.    Join discussion (chat) groups, and have audio (on the net), video (on the net)
        conferences. In conference web cams (cameras) are now available, which can
        send pictures of those interacting from different locations.
 v.     Communicate in real time (without any delay whatsoever) across long
 vi.    Display information (and update as often as required) for whomsoever is
vii.    Buy and sell using electronic means and Internet (e-commerce).

16.2 Benefits to Agents

If an insurer has an Intranet, an agent can while sitting at his/her place of work,
become capable of attending the insurer’s office, also he can make enquiries about
status of proposals or claims or discuss with any officer or other agents, issues for
clarification or seek and give advice.

The physical distance between the agent, insurer’s office or personnel becomes
irrelevant and person-to-person meetings are not required.

The benefits to agents thus will be:

  i.    S/he can receive all circulars, instructions and product information issued by
        any office.
  ii.   All delays on account of postal transmission, being forwarded from one level
        to another, dispatch department, absence of persons, wrong address,
        misplaced letters or lost in transit can be avoided.
 iii.   Any classification regarding proposals, benefits, riders, premium calculations,
        insurability etc, can be discussed and classified from relevant persons directly.
 iv.    Communication to and from agents to company officials can be direct,
        immediate and at low cost.

16.3 Benefits to Policyholders/Prospects

Prospects/policyholders can benefits in following ways:

  i.    They can get details of various polices, their benefits, riders, premiums
        payable etc.
  ii.   Prospects can get advice on suitable insurance plans for themselves. They
        can, thus, device a suitable policy knowing their own financial situation and
        requirements without the intervention of agents.
 iii.   Policyholders can get information regarding status of the policy, the premiums
        due, bonuses attached, loan availability, surrender value, retrieval
        possibilities, procedures and costs from nearest office for transactions.
 iv.    Details/possibilities regarding housing loan, or other benefits.
  v.    Premiums can be paid online using credit/debit cards or through bank
        accounts without the need to go to insurance company office.

Some companies post other relevant information for policyholders, e.g. on health
issues. For example, see LIC’s website and other life insurance site.

16.4 Kiosks

Kiosks or information kiosks are unmanned information centers, placed strategically
at public places.

Normally, such kiosks have interactive touch screens. This does not require keying in
(some persons are still hesitant about using key boards).

A kiosk is a self-contained mechanism combining hardware and software, which can
have all currently available technologies including graphics, video, text and sound. It
consists of a touch sensor and monitor.

The user is expected to touch the relevant sensors as per the choices offered by the
kiosk visually on the monitor. The kiosk then takes the person through various
interactive screens to provide him/her the required information or transact the
required business.

Various insurance companies are in the process of providing kiosks at various

LIC has installed kiosks at more than 100 locations covering its Divisional
Headquarters. The kiosks provide information on policy status, product information
about all products including group insurance products.

ICICI Bank’s ATMs provide information regarding ICICI prudential products similarly,
HDFC Bank’s ATMs provide information regarding HDFC life insurance products.

16.5 IT in the Rural Areas

A number of organizations are expanding the availability of information in rural areas
using IT.

As an when business houses expand in rural areas, they also bring in the required
infrastructure. With the expansion of telephone availability in the rural areas, the
base for building Internet is becoming available ITC, the diversified cigarette & food
processing company has taken the initiative by installing information copulas
available in over 1000 villages now.

Insurers, if they find it feasible, may work with ITC to utilize the infrastructure for
information relating to crop or weather insurance or may install systems of their
It will be a big boost to agents working in rural areas, if this happens.

It will be also become easier to expand the services to the policyholders in the rural

Candidates are requested to click on the following link to read this article:

Role of Information Technology in increasing penetration of Life Insurance
in India :
By shivaji Dam (Om kotak Mahindra Life Insurance company ltd)

(Article presented at CII 7th Insurance Summit Nov '2002)

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