February 15, 2010 by akhilendra

Need of IT solution for business of Insurance

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Insurance companies in India traditionally tend to have a narrow approach towards IT spending for their companies. They still prefer to follow traditional method of manual processing for most of the processes. Few companies have shifted to automated IT products for certain process, but still the large portion of the companies operation are done by manual methods. Insurance operation involves a large number of different processes which integrates into one central and huge database of policies. Looking at Indian population, one can imagine the number of policies being processed and data managed by each of these companies.

Last year recession in some ways has been fruitful for corporate, which were on a spending spree in other areas like expanding before recession, were forced to stop overspending due to liquidity crisis. Then, they started looking at various cost cutting measures which included bringing down the cost of running and managing business.

And that’s where now Indian insurance companies are now moving towards having a broader approach towards implementing IT solutions or using IT to higher degree in their day to day operations.

Insurance operation includes registering fresh application, their underwriting, issuance and then finally policy administration which include renewal premium updating, maintaining data regarding policy and insured details. Implementing IT solutions for managing operation would provide great ease in doing business, it would bring down cost by cutting down on manpower and also will remove many hurdles associated with manual process system. The youngest and one of the most promising sectors in India is Life Insurance Sector. After opening the market for private players in 1999, India has witnessed a very robust growth in the sector and in the first decade of century, count of private life insurance companies in country has gone to 23.

Most of these players are quite new and most of the companies are yet to break even. Companies are currently focusing upon increasing their presence in the country, so they are increasing the numbers of branches in various cities, hiring more and more number of insurance agents and trying to increase their New Business collection. In the future, these companies will face problems regarding managing such a huge business modal. So, opportunities for IT companies in Indian insurance sector is huge and as these companies will grow in size, demand for a smooth, integrated and automated systems will rise.

Those companies which started in early have now grown in size and managing large number policies has become a cumbersome task. So, they have already started investing in IT but they are still somewhat hesitant in doing that. With the entry of many new players in the market and due to ever growing competition, need of a sophisticated and automated system is bound to increase. Understanding future challenges, most of the new companies are looking positively towards implementing IT solutions.

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