The world is digitising faster than ever before. It is difficult to point out a country which has not yet tasted the perks of digitisation - be it on an individual or an industrial level. It is also hard to identify an industry that has not yet adopted some sort of digitisation to enhance its operational capacity or quality. The insurance industry is no different. As with other industries, the insurance industry continues to seek the help of digital means to improve its current operations, to create new markets using disruptive innovation, and to expand into those markets using disruptive technology ('disruption' here has been used to denote positive change). It is a positive sign not only for the industry itself, but also for the global economy and for the lives of the people.
So, how exactly is the insurance industry digitising? And where does Bangladesh stand compared to the global trends? Let us first address the leading question. The insurance industry, like many other industries, is becoming more and more customer-centric than product-centric. The availability of high-speed internet and big data has made it easier for organisations to analyse customer behaviour, needs and demands, and that is helping more companies to come up with new marketing strategies. It is also helping insurance service providers to interact directly with customers and to cut back on various costs that require human intervention, thus reducing the number of errors or gaps in communication that may cause financial or reputational damage. The advancement of social media and other interactive digital channels has enabled insurance companies to communicate with current and potential customers regarding products and services that they need, and to quickly respond to any concerns. All these are making the insurance companies develop a relationship of greater trust with the customers.
Customers are benefiting by receiving services that they rightly deserve. Furthermore, the increasing availability of app-based digital technology enables customers to identify their insurance needs, and consult with their insurance service providers in case they need any assistance in reducing potential risks. This is enabling insurance service providers to extend better support in case any risk turns into a reality, but as a major part of their acticvities, transforming them into effective consultants in risk reduction and management. Moreover, the increasing personalisation in the nature of the services provided by insurance companies as a result of digitisation is leading to a greater relationship of trust among the insurance service providers and customers.
It is predicted that the global insurance industry will grow by 4.5 per cent per annum on average (3 per cent adjusted for inflation) during 2017 and 2018. The growth is expected to be pushed mainly by the emerging markets in Asia. Increasing need and resultant demand from emerging markets as well as a boost provided by digitisation makes the future of the insurance sector look very bright indeed.
Coming to the question of where Bangladesh stands in terms of digitisation of the insurance industry, we have to first understand the current situation of the insurance industry within the country in general. As of 2015, overall insurance penetration in Bangladesh was observed to be 0.72 per cent. Although the number is relatively low compared to other emerging markets (3.4 per cent in India), the potential for growth is huge. Bangladesh has maintained a very upward trend in economic growth rate of between 6 and 7 per cent over the last few years. The number of middle income families who are eligible for insurance services are increasing.. A report by Boston Consulting Group (BCG) in 2015 projected that "each year for the next decade, the annual income of around 2 million additional Bangladeshis will reach $5,000 or more". This enormous size of the current market that is growing every year makes it a very potent market for insurance service providers.
However, in terms of digitisation, Bangladesh is still lagging behind despite the signs of rapid progress. Some of the leading insurance service providers have introduced digitisation in operations as well as various aspects of their services. Though, much remains to be done when it comes to comprehensive digitisation. It is nevertheless necessary, as digitisation helps to develop a greater degree of trust between customers and insurance service providers by enabling greater direct communication between them. The resultant growth of the sector would benefit not only the economy through the contribution of the sector, but would also help the common people by providing them a cushion against a diverse range of unpredictable events.
In support of the vision of 'Digital Bangladesh' we dream of a Bangladesh which will continue its progress on the road to sustainable development with the help of digitisation in all spheres of life and society. Comprehensive digitisation across industries as well as in the lives of the common Bangladeshis will catalyse that road to development, and the insurance industry should be ready to take that leap towards digitisation as well-- the faster the better.
The writer is Senior Manager, Business Excellence Department at MetLife Bangladesh.
