Rest Insured! Adequate, Affordable Insurance via AA

24 May 2023

Aditya Birla Sun Life Insurance | NADL AA | Finarkein Analytics

The country’s Digital Public Infrastructure (DPI) has transformed the economy by shaping public and private service delivery.

1.4 billion people 1 billion mobile connections 8.9 billion digital payment transactions
1.37 billion Aadhar enrolments 800 million internet users 81% of adults with bank accounts.

The digital rails of innovation have laid the foundation stones for the financial inclusion of more than 100 million households in the country. With foundational identity, payments, and data-sharing services, this digitally savvy population segment has fired up its aspirations with a capacity to pay and a point to prove. Enabling insurance coverage for this segment is imperative.

Traditionally, insurance application underwriting has involved a lot of friction. Around 10-15% leakage is observed post-payment, while 40-50% leakage in the whole solicitation of the business.  As insurance involves a lot of paperwork, the industry is trying to phase out incumbent processes for a paperless system. This is what a complete digital insurance pipeline looks like:

1. Quotation 2. Form filling 3. KYC Validation 4. Liveliness
5. Digital Payment 6. Bank details 7. Financial Underwriting 8. Medicals (VFMR)

Financial Underwriting for Insurance with AA

Financial underwriting is critical in the insurance industry as it determines an individual’s or entity’s financial eligibility for insurance coverage. This process involves evaluating the applicant’s financial stability, creditworthiness, and risk profile to assess their ability to meet insurance premiums and fulfill policy obligations. The pilot project for this use case is live on the Assisted Account Aggregator (AAA) model in which the Customer Service Executive hand-holds the user throughout the process. The process has reduced drop-offs and the time taken to process the application.

Challenges The Account Aggregator Way Results
Accessibility One-click journey 12% reduction in cancellations
Frauds Directly from source Improved TAT.
Misuse No middlemen Financial UW decision in less than 10 minutes
Friction – Customer Real-time, convenient Five crore insurance coverage approved basis of bank statement
Friction – Distributor Ease of procurement Business worth 19 crores cleared using AA
Latency Latest financial data Reduction in pending requirements for AML

Way Forward

More than 15 cross-sectoral databases will be live on AA, including mutual fund data, insurance, loans, etc. A wave of hyper-personalization will take over the financial services industry across consumer segments. At the same time, use cases will proliferate, such as

Income Estimation & Upsell Investment Profiling and Advisory Life and Health Insurance CC Onboarding and Activation BNPL UW and Merchant Offers

AAs will transition the insurance industry from predominantly prepaid transactions to postpaid relationships. Although this might sound like a distant reality, these changes are possible in the next few years. It is essential to realize these possibilities through an ecosystem approach and extensive participation on the FIP side.

B) Aegon Life Insurance | NADL AA | Finarkein Analytics

Life insurance has long been known as a complex product, often considered a push product that is difficult to buy. However, a significant transformation in the insurance industry is underway, driven by the development of algorithms that enable real-time underwriting and issuance of term life insurance policies without extensive paperwork and documentation.

Algorithms can assess customers in real-time by analyzing their digital data. This advancement makes buying life insurance as effortless as purchasing a t-shirt from an eCommerce platform, marking a complete disruption in the traditional insurance landscape.

Aegon, a fully digital life insurance company, has harnessed the power of algorithms to focus on serving underinsured and uninsured segments, particularly in low-income areas and tier-II, tier-III cities. Thanks to the implementation of Account Aggregators (AAs), Aegon has successfully reached customer segments that were previously unreachable.

DIY Insurance Lifecycle

The major shift enabled by AAs is the transition from assets and income-proof-based financial underwriting to using alternate signals of affluence and lifestyle. With instant access to customers’ financial data, AAs facilitate real-time assessment and underwriting. The journey for customers is entirely user-led and digital, with the option of contacting an assistance call center if required.

Along with financial underwriting, banking data can define the exact persona of the customer: life stage, economic behavior, lifestyle, etc. Using other alternate data such as non-financial digital footprints, it is possible to define a very accurate persona of the customer and provide a comprehensive financial solution.

The impact of AAs on the insurance industry is nothing short of transformative. Previously unreachable segments, like the self-employed or lower-income individuals, such as Kirana shop owners and small business operators, can be assessed and catered to effectively.


The results speak for themselves, as AAs have led to a significant shift in Aegon’s portfolio. The proportion of self-employed customers in their portfolio has jumped from 20% in FY17-FY22 to an impressive 45% in FY22-23. Similarly, the proportion of low-income users (earning less than five lakhs) has soared from 10% to a staggering 70% during the same period. As the insurance industry embraces technological advancements, the future promises even greater accessibility, convenience, and financial protection for all.

Catch the complete session recording along with the live use case demonstration here:

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