International Journal of Advanced Trends in Engineering and Technology (IJATET)

Impact Factor: 5.665, ISSN (Online): 2456 - 4664

(www.dvpublication.com) Volume I, Issue I, 2016
DIGITALIZATION OF INSURANCE SECTOR: ISSUES AND
CHALLENGES TO AN INSURANCE ADVISOR
Meenakshi Acharya* & Dr. C. K. Hebbar**
* Research Scholar, Department of Post Graduate Studies and Research in Commerce,
Mangalore University, Karnataka
**Associate Professor, University College, Mangalore, Karnataka
Cite This Article: Meenakshi Acharya & Dr. C. K. Hebbar, “Digitalization of
Insurance Sector: Issues and Challenges to an Insurance Advisor”, International Journal
of Advanced Trends in Engineering and Technology, Page Number 5-9, Volume 1, Issue 1, 2016
Abstract:
People are getting a taste of the digital experience in each and every corner of the world except
insurance. This has made digitalization as need of the hour. Digitalization has improved the reach, quality of
service provided by company. In the present paper, try has been made to understand the issues and challenges
faced by a life insurance advisor. A sample of 50 life insurance advisors of Mangaluru city, both from public
and private insurance company, was studied. Author came to conclusion that, advisor needs more training and
support from company. As customers are more attracted towards digitalization, advisor should also update
himself to ride the digital wave.
Index Terms: Digitalization, Insurance Advisor, Mobile, SMS & Social Media
1. Introduction:
"Vasudhaiva Kudumbakam" - this ancient Indian philosophical statement cannot but be more relevant
now. The whole world is now interlinked via digitization. (Raghavan, 2016) Technology has brought about a
silent revolution globally. In certain areas of business activity, the embracing of technology by corporates has
become indispensable. Banks and other financial institutions have already established themselves in
digitalization phase, but insurance industry was lagging behind. People were getting a taste of the digital
experience in each and every corner of the world except insurance. When people start expects the same from
insurance industry, industry has left no option except digitalization. Digitalization in insurance sector has
become need of the hour. It makes the key operations and back-office functions more efficient and agile.
Modern insurance market is driven largely by new consumer demand for simplicity, self-service, transparency
and choice.
Digitalization is made at both supply side and demand side. Changes due to digitalization in supply
side (company) are increased use of internet, mobile and social media to inform the offers, due dates etc.
changes due to digitalization in demand side (customers) are, more informed and more demanding customers,
who have more choices.
The insurance industry today is at a transformative stage, where it is witnessing an unrelenting march
of digitization and a proliferation of devices. This is leading towards an integrated experience across multiple
channels. (mindtree) Digitization and digitalization is considered as fourth Industrial Revolution. Digitalization
in insurance sector results in reduced costs, lower error rates and increased customer satisfaction. Online sale of
insurance is getting more importance. Demat form of insurance policies is in its way to enter the market.
1.1 Conceptual Framework:
1.1.1 Digitalization: The literal meaning of digitalization gives an apparent idea of development and technology
dependent world. Digitalization means computerization of systems and jobs and distribution for better ease and
accessibility. It is a new market force that is driving a massive change in consumer expectations. It will require a
different set of skills, culture and measurement. Digitalization is about meeting customers where they live.
Digitalization and its impact can be explained with the help of a diagram of digitalization triangle.

1.1.2 Insurance Advisor: In Insurance industry the term “agent”, is ordinarily applied to a person engaged by
the insurer to procure new business. Advisors are the backbone of any insurance company. Insurance Act 1938
defines “Insurance Agent” as insurance agent licensed under Sec42,being an individual who receives or agrees

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 International Journal of Advanced Trends in Engineering and Technology (IJATET)
Impact Factor: 5.665, ISSN (Online): 2456 - 4664
(www.dvpublication.com) Volume I, Issue I, 2016
to receive payment by way of commission or other remuneration in consideration of his soliciting or procuring
insurance business including business relating to the continuance, renewal or revival of policies of insurance.
1.1.3 Digitalization and Insurance Advisor: Before opening the insurance sector to private insurance
companies, advisors used only traditional methods to approach their clients as well as prospective customers.
Earlier Model:
Personal contact
Less reach and
Advisors Slow approach
Towards customer
Post Cards
After opening up of insurance sector, many multinational partners introduced new technology to
insurance sector, which was already present in banking and other financial sectors except insurance. This has
resulted in broader approach by advisors to customers, thereby enhanced the quality of service provided by
advisors.
Present Model:
Personal contact
Telephone call More reach,
Advisor SMS (mobile) quick and transparent approach
Internet towards customer
Social media
2. Literature Review:
As per the report of Capgemini, with the rise in penetration of the internet, there has been a gradual
change in customer preferences around buying insurance products. This change has been both behavioural and
attitudinal in nature, and is more prominent among younger customers.
Odoyo and Nyangosi (2011), stated that, the technological advances place in the hands of insurance
companies and agents, the tools to bring new savings and better services to the consumers. Digitization has
made it possible to process and communicate information faster, cheaper and more easily and reliably than ever
before.
According to the 2014 Insurance Barometer survey by the Life and Health Insurance Foundation for
Education (LIFE) Foundation and LIMRA eighty-three per cent of consumers would use the Internet to research
life insurance before purchasing a policy if they had the option and face-to-face contact with an agent is the
most preferred method for buying life insurance.
EY Global Insurance Digital Survey 2013 specified that there’s no doubt that tomorrow’s top-
performing insurance companies will have stronger digital capabilities as well as new skills, refined metrics,
upgraded tools and re-oriented cultures. To get there tomorrow, insurers must move fast today. Because in the
digital world, standing still or just keeping up means falling further behind.
Ranjit Shankar (2016) in his blog in www.finextra.com had an opinion that, main components of a
successful digital strategy include enhancing customer experience and focused management of customer
relationship. Owing to increasing market competitiveness in the insurance industry, a cost involved in acquiring
customer share is rising. Therefore, it becomes imperative for companies to retain customers. This can happen
with continuous improvement in delivering a better customer experience that is digitally inclined.
Pahuja and Chitkara (2016), analysed the data related to the study on perception towards E-insurance
and awareness, collected through structured questionnaire returned by sample selected through convenience
sampling technique. Hypothesis was tested through one way ANOVA. Author concluded that age and gender do
not have any relationship with use of E-insurance.
Jagendra Kumar (2016), quoting industry research and analyses of BCG, said that in the 2-3 years,
three out of every four insurance purchase decisions will be influenced by digital channels of sales and
marketing. That’s an astounding number. It simply demonstrates the power of digital media and its growing role
in the insurance sector in India.
3. Objective of the Study:
Present study has following objectives,
 To understand the awareness of digital concept of insurance advisor and policy holders.
 To know the benefits derived by advisors due to digitalization.
 To examine the relationship of age of advisors regarding digital usage
4. Research Methodology:
The study is both descriptive and exploratory in nature, which considers both primary as well as
secondary data. Primary data include the convenient sample of 50 agents in Mangaluru city of Karnataka,
working in both private and public life insurance companies. Responses were collected through questionnaire
and interview. Secondary data include journals, reports, newspapers, websites etc. Likert 5 scale questions were

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 International Journal of Advanced Trends in Engineering and Technology (IJATET)
Impact Factor: 5.665, ISSN (Online): 2456 - 4664
(www.dvpublication.com) Volume I, Issue I, 2016
framed in the questionnaire starting very high with a scale 1 to very low with a scale 5. Data analysis was done
by the use of statistical tool. Study was conducted in the month of September and October 2016.
5. Data Analysis:
Questionnaire had three sections. In the first section information related to demographic profile of the
insurance agents were collected. Second section related to digital awareness of insurance agents and customers
were assessed. In the third section questions were framed to gather information related to digital use of company
and sales managers. The following table shows the demographic profile of the agents
Table 1: Demographic Profile of Agents
Gender Number of persons Percentage
Male 28 56%
Female 22 44%
Total 50 100%
Age Number of persons Percentage
18-28 04 08%
28-38 14 28%
38-48 14 28%
48-58 12 24%
58-68 06 12%
Total 50 100%
Company Number of persons Percentage
Private 24 48%
Public 26 52%
Total 50 100
Experience Number of persons Percentage
< 1 year 10 20%
< 5 year 25 50%
< 10 year 11 22%
>10 year 04 08%
Total 50 100%
Source: Primary data
Out of total respondents, majority (n=32, 64%) respondents were aged below 48. 48% respondents
were from private sector and 52% were from LIC. 70% of the respondents had less than 5 years of experience.
30% respondents had more than 5 year experience as life insurance advisor.
Awareness of Digital Concept:
In the questionnaire three questions were asked to know the digital awareness. First question was to
know the level of customer’s response towards digital insurance. Second was, to know whether advisors use
mobile, internet or social media to contact their customers regarding premium due dates, maturity date, new
product information etc. Third question is to know whether advisor has got any new policy/ customer due to
social media, SMS or email. Following table shows the response of advisors to above questions.
Table 2: Response of Advisors Regarding Awareness to Digital Concept
Level of customers response and
Number of Persons Percentage
satisfaction towards digital insurance
Very high 4 8
High 12 24
Moderate 27 54
Low 4 8
Very low 3 6
Total 50 100
Usage of mobile, internet and social
Number of persons Percentage
media by advisors
Very high 6 12
High 13 26
Moderate 11 22
Low 16 32
Very low 04 08
Total 50 100
New customer/policy due to usage
Number of persons percentage
digital media

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 International Journal of Advanced Trends in Engineering and Technology (IJATET)
Impact Factor: 5.665, ISSN (Online): 2456 - 4664
(www.dvpublication.com) Volume I, Issue I, 2016
Very high 4 8
High 7 14
Moderate 17 34
Low 14 28
Very low 8 16
Total 50 100
Source: Primary data
As per advisor customers response and satisfaction towards digital insurance is moderate to very high,
majority of advisor (n=43, 86%) ticked for the same. This shows that customers, who got highly customer-
centric digital experience in other fields, also expect the same from insurance. Through digitalization customers
expect improved experience. For the second question, with regarding usage of digital devices to connect with
customers n=30 (60%) advisors specified that they are using moderate to very high. But 20 advisors ticked for
low to very low. This shows still 40% advisors are not updated to the new way of life. Answer to the third
question, whether they got any new policy due to usage of digital device, 56% (n=28) specified they got at least
two new policy due to digital usage. Four advisors told they got more than five new policies due to social media.
22 (44%) advisors ticked for low to very low. Eight advisors who ticked for very low didn’t have even a single
lead due to digital usage or they don’t use any digital device to approach customers.
When respondents were asked about the best method to approach the customers and close the calls,
majority (80%, n=40) respondents told that a combination of direct face-to-face contact and contacting through
e-mail, mobile and social media will give a better impact.
Digital Usage by Company and Sales Managers:
In this section, two questions were framed. First question was to know the usage of digital devices by
company to approach customers. Second question was to know about the digital usage by sales managers to
approach advisors.
Table3: Response of advisors regarding digital usage by company and sales managers
Usage of mobile, internet by company to
Number of persons Percentage
approach customers
Very high 00 00
High 02 04
moderate 31 62
Low 10 20
Very low 07 14
Total 50 100
Usage of mobile, internet by sales
Number of persons Percentage
managers to approach advisors
Very high 10 20
High 27 54
Moderate 08 16
Low 04 08
Very low 01 02
Total 50 100
Source: Primary data
In response to usage of digital devices by company to approach customers majority (n=48, 96%) have
ticked for moderate to very low. So even a single advisor ticked for very high. This shows that, after the issue of
policy companies will have less contact with the advisors. Majority of advisors who ticked for moderate and
high, are from private insurance companies. Advisors of private insurance companies told that their company
will send birthday wishes, offers etc. to customers through SMS. This shows the digital culture to connect
customer with the company, yet to start in public insurance company.
In response to usage of mobile, internet and social media by sales manager to advisors, majority (n=45,
90%) ticked for moderate to very high. This was irrespective of whether private or public company. This shows
sales mangers use more digital devices to approach advisors.
When the age of advisor is compared with the usage of digital usage, primary data showed a positive
relationship. Out of 32 respondents (64%) who are aged below 48 years, 30 respondents (60%) were ticked
moderate to very high in the digital usage. Out of remaining 36% respondents (n=18) respondents, majority
who were aged above 48 ticked low to very low.
6. Findings of the Study:
This study found that insurance firms have implemented digitalization in their firm with private sector
slightly higher than public sector. It was also found that majority of agents are young in age with high potentials
of easily understanding the application and efficient use of new systems. Few senior advisors find it difficult to

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 International Journal of Advanced Trends in Engineering and Technology (IJATET)
Impact Factor: 5.665, ISSN (Online): 2456 - 4664
(www.dvpublication.com) Volume I, Issue I, 2016
adjust with the changing environment. Majority of customers are interested in digital changes in insurance
sector. Some private companies have already transmitted themselves as leaders in digitalization, and some
companies yet to follow those practices.
7. Suggestions:
 Training and certificate programmes to agents (especially to senior agents).
 More support by sales managers and company to both agents as well as customers.
 Companies should adopt more innovative methods, similar to banks.
 Advisor should take up initiative to learn the modern trend, so that they can survive in the changing
world.
8. Scope and Limitations:
Study is related to life insurance advisors experience to digitalization of insurance sector. The present
study was conducted in Mangaluru city. Major limitation of the study is, it is limited to life insurance advisors
and to a particular city (Mangaluru) and for a limited period, so generalisation of the findings may not be
possible.
9. Conclusion:
Today’s innovative method will be standard operating procedure tomorrow. Digital connectivity allows
for far deeper engagement and opportunity. For his survival insurance advisor should cope-up with the changes
taking place in the industry. Advisors have to be prepared to adopt themselves to ride the digital wave. In this
age of drones unprepared advisor suffers from the danger of quitting from race.
10. References:
1. Horvath and partners (2015), White Paper: The Impacts of Digitization on the Management of
Insurance Companies Steering Business in a Digital World. Retrieved from www.horvath-
partners.com/fileadmin/horvath-partners.com/assets/05-Media-Center/PDFs/englisch/WP-Insurance-
Digitl-web-g.pdf
2. Kumar, Jagendra(2016) Time for Data driven Marketing decisions to Insurance Intermediaries, IRDAI
Journal, Vol. 14, No2, pp. 45-50
3. Odoyo,S,Fredrick and Nyangosi, Richard (2011), E-Insurance: An Empirical Study of Perceived
Benefits, International Journal of Business and Social Science, Vol2, No. 21, pp. 166-171.
4. Pahuja, Anurag and Chitkara, Saloni(2016), Perceptual Exploration of Factors and Issues Affecting
Adoption of E-Insurance, Case Studies in Business and Management, Vol3, No.1, pp. 99-112.
Retrieved from file:///c:/Users/DELL/Downloads/9623-35371-1-PB.pdf
5. Raghvan.R.(2016) IIB Bulletin, vol2,issue2, pp.1.
6. www.finextra.com