India is currently undergoing an impressive digital transformation. In just a few years, the world’s most populous country has managed to set up a robust digital infrastructure for its society and economy that is nothing short of groundbreaking. What the success factors for this were – and how they have impacted the insurance industry: An analysis.

Imagine being able to make a digital payment within 480 milliseconds. 480 milliseconds. That’s roughly equivalent to the blink of an eye, a heartbeat or a flash of lightning. Although this period of time is visually and audibly perceptible, it’s still so breathtakingly fast that you can barely react to it. Now imagine that you didn’t even need an internet connection to make the payment. That’s just not possible, you’re thinking? Oh, but it is!

At the end of May, the Indian fintech Neofinity presented a sticker that will soon do precisely that: the “NeoZAP”. You simply attach the sticker to the back of your smartphone. Linked via an app and India’s RuPay domestic card payment network, it can then be stocked up with money. This allows payments to be made via near-field communication (NFC) without a physical card or even an internet connection. NeoZAP will be usable for all transactions, including use of the public transport systems in Delhi, Mumbai, Pune, Chennai and Bengaluru. The development would not only be the fastest contactless payment method on the market. It would also be another example of how India is embracing digitalisation.

For the past 15 years, the South Asian country has been on a unique digitalisation journey. Within a very short time, the world’s most populous country according to the UN, with over 1.4 billion people, has developed into a global technology pioneer. This transformation is the combined result of political initiatives, technological innovations and growing demand for digital solutions. India’s digitalisation story is inextricably linked with the introduction of “Aadhaar”, an identification system rolled out by the government in 2009 and now covering more than 99% of the population.

The 12-digit “Aadhaar” number serves as proof of identity...

Aadhaar assigns a 12-digit number to every person living in India, based on their biometric and demographic data. It is meant to simplify the reliable identification of citizens, increase the efficiency of state administrative processes, promote financial inclusion and create the basis for the wider use of digital services. The programme was launched primarily with the aim of also improving living conditions for the rural population. Around 65% of Indians live in rural areas. Prior to 2009, it was difficult or sometimes impossible for those living in these areas to prove their identity in dealings with the authorities, gain access to bank accounts and financial services, or participate in society. These people were excluded from a lot of things.

Aadhaar was intended to change that. Over the years, the system has become an integral part of India’s digital infrastructure and now plays a key role in its digital transformation. Whether for financial services, tax returns, mobile phone contracts, university enrolment, employment contracts or health services – the Aadhaar number is used as the standard means of identification.

...and forms the foundation of the “India Stack”

Moreover, it’s the foundation of what’s known as the “India Stack”, a set of publicly accessible application programming interfaces (APIs) and digital infrastructures which the Indian government has gradually developed since 2010 and provided free of charge. It is aimed at enabling residents to attend to all matters quickly, easily and digitally, while institutions and enterprises can use it to develop efficient and innovative services. The India Stack consists of four layers:

• The presence-less layer allows citizens to easily identify themselves digitally, anywhere and anytime, e.g. for digital dealings with the authorities. This is done using their Aadhaar number.
• The paperless layer allows information or documents to be saved, processed and shared. The technological developments behind this include eSign, DigiLocker and eKYC. The electronic signature service eSign has allowed users to sign documents digitally since 2015. DigiLocker is a cloud-based service for storing, approving and verifying documents. Since 2015, more than 4.6 billion documents have been issued via DigiLocker – from driving licences and educational qualifications, all the way to insurance policies. In turn, the eKYC (electronic know your customer) API uses Aadhaar-based authentication to confirm people’s identities. This is used in dealings with banks, telecommunications providers and insurers, for example. Since the app’s introduction in 2012, around 10.4 billion eKYC checks have been carried out.
• The cashless layer is aimed at simplifying and expanding the use of cashless payments. To this end, the UPI (Unified Payments Interface) was developed: a uniform real-time payment system, introduced in 2016, to enable instant mobile transactions between bank accounts. UPI has revolutionised India’s payment landscape and made the country a globally leading provider of digital payment solutions like the QR-code-based Paytm, the number one mobile payment app in India. Paytm already has over 400 million registered users and over 30 million merchants who accept its digital payments.
• In the consent layer – the so-called Account Aggregator framework – users can store, withdraw or change their consent to the exchange of data in a central location. Users thus have control over what data on them is shared digitally with service providers in order to obtain e.g. loans, insurance or other services.
   

The India Stack is aimed at enabling a smooth and comprehensive digital transformation in India. It was established through a process in which new components and platforms were continually developed and integrated. The individual elements of the Stack are managed by different public bodies and are in principle also available to other countries via APIs or third-party suppliers like Digio, Karza, Signzy and OnGrid. With the India Stack, India has created an important basis for delivering services to its citizens more quickly. But the Stack also promotes an increasingly cashless economy – whereas in 2019 around 70% of all retail sales in India were still made using cash, in 2022 the figure was only 27%.

“Digital India” for more digital infrastructure, expertise and services

Besides the India Stack, the introduction of “Digital India” was another milestone in the country’s digitalisation. Digital India is a comprehensive initiative launched by the government in 2015 to comprehensively transform the country. It aims to promote digital infrastructure, digital competence and digital services throughout the country – e.g. through the development of broadband networks and high-speed internet, the availability of digital devices, support for and promotion of innovation centres, and retraining and upskilling for IT specialists.

While the India Stack focuses on the provision of digital tools and infrastructures, Digital India therefore includes a large number of programmes and projects for promoting various aspects of digitalisation. The two initiatives complement each other. They have also had an impact on the insurance industry in India.

The insurance industry also stands to benefit

For example, Aadhaar allows fast, paperless identity checks, which speeds up the policy issuing and management process. Customers can sign documents electronically with eSign, thereby saving insurers time and reducing the need for physical documents. DigiLocker allows citizens to securely store digital copies of important documents and share them with service providers such as insurers. Insurance premiums can now be paid using UPI, which makes the payment process easier for customers and speeds up payment processing for insurers. The Digital India initiative has in turn led to increased internet availability in rural and remote areas, thus enabling insurance companies to offer their services in previously hard-to-reach markets and increase insurance penetration. The improved digital infrastructure has also made it possible for insurers to develop mobile apps that simplify access to insurance products and services.

Advances in connection with the India Stack and Digital India have helped improve the efficiency and accessibility of insurance services in the country. As a result, insurance companies have been able to increase their reach, reduce costs and optimise customer service. The two initiatives have also paved the way for offering innovative products and services in line with the platform economy.

HDFC ERGO: one of the most digitalised units in the ERGO Group

ERGO also has experience in this regard, with India-based HDFC ERGO General Insurance being one of the insurance group’s most digital units. The company set off on a digital transformation journey in 2019, but it was not only the general increase in digitalisation in India that was an important driving force behind this. Innovative regulatory changes made by the Indian supervisory authority IRDAI (Insurance Regulatory and Development Authority of India) also played an important part. Measures like the 2016 “Use and File” initiative, under which insurers in India can launch new products without prior regulatory approval, not to mention the introduction of industry-led marketplaces for insurance services and accelerated licensing procedures for new players, have revolutionised the Indian insurance sector and increased competitive pressure. Innovation became the top priority.

In the wake of this, HDFC ERGO General Insurance developed the Here app. The offering was launched in August 2023 and designed as a unique insurance-led ecosystem for Health and Motor. It is available to both HDFC ERGO customers and non-customers. The app provides a central point of contact where both insurance services and other services relating to Motor, Health or Pet insurance can be found. For example, users can use the Here app to book car towing services, pay speeding tickets or exchange information on hospitals, medical specialists, etc. with other users. Since being released about a year ago, the app has already been installed over 4.5 million times.

Another channel that HDFC ERGO has consistently expanded for its customers is WhatsApp: Via Messenger, not only can the entire customer journey be displayed at HDFC ERGO in more than 12 local languages; there is also a complete, AI-supported claims-handling process for Motor. In April 2023, HDFC ERGO also entered into a partnership with the Meta Group for WhatsApp Business, which allows customers to quickly and easily renew their motor insurance.

One thing is certain: India is currently undergoing an impressive digital transformation which is also impacting the insurance industry. Within just a few years, the country has managed to consistently identify needs and develop corresponding solutions which are accepted and used by over a billion people, enterprises and institutions. Here of course, one must always keep a close eye on aspects like data privacy. However, in combination with affordable mobile data, a young, tech-savvy population, a lively Indian start-up scene and a steadily growing IT sector, as well as technology and innovation centres like Bengaluru, Hyderabad and Mumbai, the country has created the ideal conditions for becoming a role model for digitalisation. Other countries should learn from it – especially Germany.

Please note: This article was first published by Versicherungsmonitor.

Text: Mark Klein, CDO ERGO Group AG