IT can help develop insurance sector

Insurance companies, being one of the constituents of financial services market, always endeavour to provide its clients with the competitively-priced products. In sluggish trends of the economy in 2014, the growth rate (6 per cent) of insurance business was not up to the mark because of adverse export, import, investment and infrastructure development scenario. This soft market has a direct bearing on setting rates and terms of insurance products and on retention of customers and maintaining competitiveness by a particular insurer.
Consequently, the insurers are prone to adoption of cost control strategy through implementing diverse cost-minimising approaches, effective internal audit, enhanced supervision, and sophisticated information technology (IT) system.
A meaningful IT system can make all the difference for the top management by ensuing overall control of operational activities including controlling cost. For meeting these, the formal initiatives are to be in place, and this requisite needs to be essentially incorporated into the corporate objectives so that all employees can put efforts accordingly.
IT can be defined as an activity of using computer and other electronic equipment to store, process and transmit information in a meaningful manner to the intended users with security and speed. In the present context of service standard of financial services industry, the insurance companies cannot stay away from information technology in its day-to-day operations as the success of its application has been evidenced in its banking counterpart. The need of IT should be embedded into the corporate strategy of the insurers for reaping its benefits with speedy and reliable services to the customers.  
Use of IT is essential in each and every department of insurance companies as it can process a larger volume of data accurately, quickly and meaningfully, and simultaneously allowing multiple users' access to the data base. The following are the uses:
POLICYHOLDER DATABASE: Maintenance of a database for insurers' clientele is far easier than ever with IT that can record details of insurers, brokers, and co-insurers. Entries can also be made regarding the sum insured, limit of liability, premium charged, terms and conditions, policy, coverage offered, addresses of the insured along with previous loss history for a consecutive period of five years.
ACCOUNTS AND MANAGEMENT INFORMATION: The management information, if linked to information technology, can be more meaningful for the decision-makers of the company. The well-programmed IT system successfully facilitates the compilation and aggregation of accounting data, preparing journals, vouchers and determination of financial positions. It is only possible for IT system to accept different modes of receipts and payments from customers.
PRUDENT UNDERWRITING: Studies show that the ease of purchases has significant effect on the potential buyers. The online insurance services such as offering rates and terms, charging premium based on input into the systems, confirming acceptance of coverage, receiving notice of policy alteration, can add a new dimension to the underwriting department.
REINSURANCE PLACEMENT: The application of IT on reinsurance programming of an insurer can be fruitful in segmentation, determining exposures, computation of own retention, making reinsurance cession, and preparing reinsurance closing accounts.
CLAIMS HANDLING: The IT system can provide customers with information regarding claims handling procedures in place, claims notification, appointment of surveyor, loss adjuster and claims progress reporting to the insured. Mostly, the post- sale activity based on IT is cost-effective.
BRANDING INSURANCE: Branding is the application of marketing techniques to a specific product, product line, or brand. With the help of internet, branding is easier than ever at the cheapest expenses.  
According to the BTRC, the internet users in the country stand at 4.08 million and facebook users are 3,352,680. These huge numbers suggest the potential to penetrate the domain of insurers. A positive image to the vast community will convert them to be loyal customers of various insurance products. It is high time for the insurance companies for taking part in social media (facebook, twitter, youtube etc) at least for branding purpose for the time being. According to SIGMA Report (No 2/2014) of Swiss Re, direct internet sales account for around 20 per cent of all UK personal motor insurance products both in terms of premiums and number of policies.
FRAUD REDUCTION: Fraud is a new challenge for insurance companies. The proper use of information technology can reduce the level of fraud in insurance. Experts view the IT-based fraud detection technique is by far the most effective. It may sound astounding that about 30 per cent of the world insurance transaction is more or less pertinent to fraud.
BENEFITS FOR POLICYHOLDERS: The ease of access to the services provided by different insurers can further be facilitated with the use of information technology. The personalised and proactive services can win and retain the customer. It is IT system that is the catalyst here. In the Sri Lankan insurance market, online premium payment and online policy underwriting mechanism via agents and brokers have gained enormous success in the recent past. In India, various IT-based insurance products such as cyber security insurance cover, weather index-based insurance, etc have already been introduced. The uniform design of the websites of the insurance companies can contribute to the understanding of mass people regarding insurance products.  
BENEFITS FOR INSURACE REGULATOR: The regulatory activities are largely benefited by sophisticated IT system with which the regulator can have easy access to insurers' system in order to unearth any required information regarding complaints handling, claims settlement, and money laundering activities. The regulator can effectively handle compliance issues such payment warranty, cash before cover, etc.
Furthermore; it can help the insurers reduce fraudulent claims through applying advanced fraud detection software. The maintenance of different databases on policyholders, claims, accidents, and settlement extracting data from insurers' system can significantly stimulate the evolution of the entire sector facilitating market research.
The initiatives based on information technology, beyond doubt, will strengthen the power of the Insurance Development and Regulatory Authority (IDRA) in its supervision of insurance companies and ensuring consumer protection to a greater extent.  
It is time for the concerned authorities to pay due attention to education, training and professional development of the IT professionals so that they can cater to the needs of insurance companies. A basic orientation course, conducted by either the Bangladesh Insurance Academy or the Association can be made compulsory for insurance professionals.
Meaningful use of IT can essentially be a healing tool in the long-prevailing crisis of insurance sector of Bangladesh, benefiting not only the insurers but also the regulator.
The writer is associated with the Reliance Insurance Limited, and a member of the Chartered Insurance Institute, London.
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