Using ONDC framework for Bima Vahak and Bima Sugam

ONDC for Insurance: Open Network for Digital Commerce (ONDC) is an initiative aiming at promoting open networks for all aspects of the exchange of goods and services over digital or electronic networks. ONDC enables the shift from the 'store value' concept to the 'flow of value' concept of platforms with an open network. India has many digital platforms by both the government and private players, it is prudent to establish an open network that will connect these platforms to leverage the true potential in the long term. ONDC can further open the digital commerce market for insurers and the Indian insurance sector might serve as a template for the world to emulate.

The key premise of ONDC is based on two concepts: 

1. Unbundling → Customer & seller → Acquisition to reduce GTM
2. Interoperability → Different apps operate in different domains

ONDC network is composed of 5 types of network participants

●      Buyer Apps

●      Seller Apps

●      Technology Service Providers (TSP)

●      Logistics Providers

●      Online Dispute Resolution (ODR) Providers

Technical Architecture: ONDC is based on the Beckn Protocol which allows for the creation of an open and inclusive network. 

BIMA VAHAK/SUGAM Project for Insurance Digitisation- 

• BIMA SUGAM (DIY) - Mainly for Urban Population in India

This will be a one-stop solution for all the needs related to insurance where all the insurance companies will be present and the customers can transact directly. It will be a trusted platform where customers can buy the products that they require from the platform. There will be a facility for the storage of policies, lodging claims and dispute resolution. This is going to be a one-stop solution for all the needs related to insurance.

• BIMA VAHAK (Assisted) - Mainly for Rural Population in India

This would be a multi-insurer portal that aims to provide insurance distributors and agents with a unified platform to sell and service simple bundled insurance products covering health, property, life, and personal accidents etc. The platform is intended to be app-based and integrated with all insurance companies, with insurance providers offering a wide range of insurance policies, including individual and combo products in one place.

• ONDC for Micro Insurance- ONDC can enable micro-insurance, where insurers can offer insurance policies with minimal underwriting and fewer data fields. This can help increase insurance penetration in underinsured markets, such as rural areas, where traditional insurers have limited reach. This is in line with the initiatives of the IRDAI, such as BIMA VAHAK, which aims to increase the penetration of insurance in rural areas. By leveraging the ONDC, insurers (on the seller’s app) can offer insurance policies with minimal underwriting and fewer data fields, making it easier for people in rural areas to access insurance coverage. 

How ONDC Can Be Used for BIMA SUGAM & BIMA VAHAK ?

The insurance industry has either tied up with the delivery partner/agent or offered personalised packages to the consumer.  ONDC would serve as a digital insurance marketplace that enables customers to transact directly with multiple insurance companies. ONDC can support both DIY and Assisted modes of operation depending on the requirement. 

A pan-India agent network (BIMA VAHAKs) can be built on ONDC without any office setup. In fact, the live location coordinates of the agents can be shared on the network for faster servicing of the customers. This can lead to lesser cost per lead for insurance companies and more revenue for insurance agents and companies. 

ONDC Subnets for Last Mile Connect: With any large network running on a protocol, sub-netting is a critical necessity in case of servicing in Insurance. There are strong possibilities that in the near future city ONDC subnets emerge hooked to the main ONDC subnets. Creating these subnets is an opportunity which can yield mutual benefits for Insurance Carriers & Agents/Customers in the ecosystem. City Subnet will further move towards State Subnets.

ONDC will democratise discovery which means as insurers participate in the digital marketplace they will become more discoverable to their buyers/agents irrespective of the platforms they use. It can be used in the digital discovery of under-penetrated segments. 

The timing is right for insurers as ONDC solves for UX & trust in online transactions.

Bima Vahak Distribution Model Aligned with ONDC Architecture -

Key Takeaways- 

●  ONDC open protocol will unlock the process for more open and inclusive innovation further solving information asymmetry and access. 

●  As discovery gets democratised, a Pivot towards innovative strategy can help insurers build customer reach and serve customers more intimately, digitally.

●  This framework further eases insurers for generating more online insurance businesses that can be STP (straight-through processing). ONDC can be a further impetus for insurers' own platform strategy, enabling them to leverage the standardised and interoperable network to build partnerships, reach a wider audience, and offer their products and services more efficiently.

More Use Cases-

• Travel Insurance:

A buyer can log onto an application like Cleartrip to browse various holiday packages offered by multiple travel agencies. Along with these packages, insurers can provide customised offerings based on the destinations. This would eliminate the need for customers to visit an insurer's website specifically to purchase insurance. Instead, the convenience of purchasing through ONDC, coupled with numerous options from different insurers, would be a game-changer for the industry.

• Health Insurance:

With ONDC-integrated applications, buyers can access discounted health insurance products, including those designed for gym-goers, in just a few clicks. Insurers can provide real-time quotations based on factors like age and gender, with streamlined processing for a hassle-free customer experience. Additionally, consistent data such as gym attendance can help insurers monitor their clients' health and wellness.

• Extended Warranties for OEMs:

ONDC serves as a central distribution marketplace for financial products offered by distribution partners, such as extended warranties for OEM products. The customer journey for purchasing these warranties is made simple or attached to the product. With healthy competition among network participants, the platform benefits both customers and OEMs looking to acquire and retain customers.