Online insurance is insurance that can be accessed and managed digitally through online applications or features 1 . The types of insurance available online vary widely, including Health Insurance, Life Insurance, Education Insurance, Property Insurance, and others 1 . Insurance companies are currently more focused on distributing their insurance products digitally 1 . This trend is very positive as an effort to keep up with developments, even increasing purchases of this product in Indonesia 1 .
Ease of Access and Process
One of the main advantages of digital insurance is ease of access 1 . Through digital platforms, such as mobile applications or websites, policyholders can easily access information about their policies, file claims online, and communicate with insurance companies through digital services 1 . Compared to conventional insurance which is often time-consuming, digital insurance offers a faster and easier process 1 . Claims can be submitted directly through the application or website, and decisions can be made in a short time 1 .
Lower Costs and Flexibility
Digital insurance reduces the administrative and management costs associated with conventional operations, so premiums are often lower 1 . This allows more people to get insurance coverage without having to pay high costs 1 . In addition, policyholders can easily customize their policies according to their needs and changes in their lives 1 . They can change the scope of coverage, increase or decrease benefits, or even cancel the policy with more flexibility 1 .
Easy Communication and Education
Digital insurance provides a platform to communicate directly with insurance companies and get educated about various insurance products and their benefits 1 . This helps policyholders to better understand the coverage they want to have and make better decisions regarding insurance 1 .
Development of the Insurance Industry in the Digital Era
In recent decades, technology has played a significant role in changing the way insurers operate, interact with customers, and manage risk 2 . In the 2000s, technological developments continued with the increasing use of big data and data analytics 2 . Insurance companies began to leverage large amounts of data from various sources to analyze risk patterns, understand customer needs, and personalize insurance products 2 . With the ability to process large amounts of data, the underwriting process became more sophisticated and precise, allowing companies to offer more competitive premium prices that are tailored to each individual's risk profile 2 .
Insurtech and the Era of Digitalization
In the 2010s, the Insurtech phenomenon emerged , a technological innovation designed to disrupt and renew the insurance sector 2 . Insurtech companies are leveraging cutting-edge technologies such as artificial intelligence (AI), blockchain , and the Internet of Things (IoT) to transform the way insurers operate and serve customers 2 . Insurtech has played a major role in introducing automation in claims, AI-based underwriting , and the use of IoT devices for real-time risk monitoring , such as vehicle sensors or health devices 2 . With these developments, digital transformation has become a top agenda for many global and local insurers 2 . Mobile technology and digital applications have made it easier for customers to interact, allowing them to purchase policies, pay premiums, and file claims via mobile devices 2 . The existence of AI-based chatbots also helps answer customer questions quickly and efficiently 2 .
The history of technology adoption in the insurance industry shows a remarkable evolution from manual processes to a fully automated and efficient digital era 2 . With the continued advancement of technology, the insurance industry is at a very significant inflection point, where the ability to adopt new technologies will determine future success 2 . This transformation will not only improve internal company efficiency, but also improve the overall customer experience, ushering in a new era for the insurance industry 2 .
Impact of Technology on Insurance Business
Technology has profoundly changed the face of the insurance industry, having a significant impact on various aspects of operations, customer interactions, and risk management 2 . This transformation has not only accelerated business processes, but also created new opportunities and challenges for insurers who must adapt to the ever-evolving landscape 2 . The impact of technology on the insurance business is broad, including increased efficiency, better customer experiences, more accurate risk analysis, and new challenges related to cybersecurity 2 . Insurers who are able to leverage technology well will gain a competitive advantage, while those who fail to adapt will be left behind in the increasingly fierce competition in this digital era 2 .
Insurance Digitalization Roadmap
Digitalization in the insurance sector has grown rapidly along with the adoption of modern technologies that have transformed the way the industry operates, provides services, and manages risk 2 . In Indonesia, the insurance digitalization journey is driven not only by market needs, but also by regulations led by the Financial Services Authority (OJK) 2 . OJK's role in supporting this digital transformation is crucial to ensure that the insurance industry adapts to technological changes while still complying with existing regulations 2 . Currently, digitalization in the insurance industry is no longer limited to administrative processes, but has expanded to areas of customer service, marketing, risk assessment, and technology-based claims management 2 . The use of mobile apps , AI-based chatbots , and real-time data analytics are now standard in insurance operations 2 .
The OJK 4.0 program launched in 2019 is a major initiative by OJK to support digital transformation in the financial services sector, including insurance 2 . This program includes encouraging the adoption of fintech and insurtech , simplifying regulations for digital innovation, and improving cybersecurity in company operations 2 . OJK also continues to educate consumers about digital insurance to improve financial literacy among the wider community 2 . OJK programs such as the National Strategy for Financial Literacy and Inclusion and OJK Fintech are very relevant to the insurance digitalization journey 2 . The goal of this program is to create an inclusive and technology-integrated financial ecosystem, where insurance services can be accessed by more people in a faster, more transparent, and safer way 2 . OJK also plays an active role in ensuring that technological innovation in this industry is in accordance with applicable regulations, maintaining a balance between innovation and consumer protection 2 .
Digital Transformation with IoT
The insurance sector is currently undergoing a significant digital transformation, driven by the adoption of new technologies, particularly in the context of IoT ( Internet of Things ) and elements of Industry 4.0 3 . These changes have a major impact on insurance products, customer interactions, market structures and the long-term financial viability of insurance companies. Many of the key changes in the insurance sector are emerging from disruptive technologies such as Artificial Intelligence (AI), Robotic Process Automation (RPA), Blockchain and IoT .
One of the most striking innovations in the insurance sector is claims automation. By adopting RPA and AI technologies, repetitive tasks in business processes can be automated 3 . In the insurance industry, RPA is used to automate various administrative tasks, such as claims processing, policy processing, and data validation 3 . By leveraging RPA, insurers can improve operational efficiency, reduce errors, and save time and money 3 . For example, AI-based systems can process handwritten claims documentation and import video evidence from dashcams to speed up liability assessments 3 . Fujitsu and Aioi Nissay Dowa Insurance have demonstrated that advanced claims processing systems can reduce claim payment times by up to 50% 3 . This not only reduces operational costs but also significantly improves customer satisfaction, which is crucial for maintaining customer loyalty 3 .
Utilization of AI Technology
Artificial Intelligence (AI) technology has changed the paradigm of the insurance industry, especially in risk analysis and improving personal services 4 . Through AI algorithms, insurance companies are now able to explore data more deeply to assess risks more accurately and adjust premiums appropriately 4 . Moreover, AI opens up opportunities to provide more personalized services, such as product recommendations that suit each individual's needs and more responsive and efficient claims handling 4 . With the integration of AI, insurance is not only more effective in managing risk, but also better able to meet the expectations and specific needs of customers in this digital era 4 .
Innovation of Sharia Insurance Products in the Digital Era
Digital transformation in the financial services sector in Indonesia has triggered new developments in the way services are provided, including in sharia insurance 5 . Innovation in sharia insurance covers several important aspects 5 :
Digitalization of service processes: With the digital platform, administrative processes such as registration, premium payments, and claims can be done online 5 .
Data-Driven Product Development: Big data and AI enable Islamic insurance companies to offer products that are more tailored to the individual needs of participants, such as Islamic microinsurance or products that target specific segments based on analyzed behavior and risks .
Transparency Through Blockchain : Blockchain can be used to ensure that financial transactions in Islamic insurance are more transparent, in accordance with the principle of openness recommended in Islam 5 .
Some of the main opportunities for Islamic insurance in the digital era are :
Increased Accessibility: By utilizing the internet and mobile applications, sharia insurance can reach areas that were previously difficult to reach, so that insurance penetration in Indonesia can increase significantly 5 .
Cost and Process Efficiency: Digitalization enables Islamic insurance companies to cut operational costs, which in turn can benefit participants in the form of lower premiums or better service.
Thus, the evolution of digital insurance marks a significant shift in the insurance industry, with continuous innovation driven by technology to meet evolving customer needs.
