The section summarises the activities of the project over the last three years and the changes in the cattle portfolio of the company. Cattle insurance is a constituent of TAGIC’s rural insurance portfolio. Its product features, total portfolio, distribution channels and various processes are discussed.

Product features

 TAGIC offered a standard cattle insurance product which insured the loss of an animal due to death by: accident (including fire, lightning, flood, inundation, storm, hurricane, earthquake, cyclone, tornado, tempest and famine), diseases, surgical operations or riot and strikes. The cover against permanent total disability of livestock was available as an option at a higher premium. The sum assured is either the value of the animal recognized at the time of insurance enrolment or its market value at the time of loss, whichever is less. However, in practice, the former value i.e. full sum assured, recognized at the time of enrolment, is paid back in most cases. Overall, this is a standard product offering for livestock insurance in India.

Use of mobile technology in cattle insurance

Rationale: The process of cattle insurance enrolment presents a number of challenges to an insurer. Each animal needs to be tagged and photographed to ensure proper identification. Other information such as cattle species, breed, body colour, shape of the horns and tail end colour also needs to be recorded. Traditionally this was done on paper and the postal services were used to send the information. However, TAGIC found this process inefficient and time consuming. Especially for government subsidized schemes, through which cattle owners tend to insure weak and sick animals, it is important for the underwriter to assess the physical condition of the animal. However, it is impossible to travel to each location. Even usual methods of sharing pictures and data are time consuming. These methods also lead to additional costs in computer memory devices and postal services. Given these factors, the project pilot tested a mobile phone based process. It was hoped that this solution would decrease the cost and time taken to transfer data and pictures from the field and enable quick policy issuance and claim settlement, as well as better data management through central servers.

Description of the pilot project: TAGIC developed and deployed a mobile phone-based software application which could be used to record enrolment and claims data, take pictures at the time of enrolment or claim settlement, and share these with the TAGIC central server. The application works on android mobile phones, which are provided to the tagging vendors.

Finding a suitable vendor to develop the application at a reasonable cost was a challenge. Since it was a first time development in the sector, very high prices were quoted. However, after repeated negotiations, M/s Mobileware was selected as the application development vendor.

Developed at a cost of US$ 20,000, the software and android phones that could use this software were provided to the on ground tagging vendors.

An important advantage of the software was that it was connected to the internet and all the recorded data and pictures were directly transferred to TAGIC central servers. This data could then be accessed by anybody, including the underwriters.

The enrolment and claims processes

Tata AIG agents follow these steps during the enrolment process:

1. Cattle owner details, such as name and address, and cattle details, such as breed, age, horn shape, tail description and colour, are captured on a mobile application.
2. The application provides the premium rates applicable to the location and the subsidy details (if applicable). These data are preloaded on the agent’s phone.
3. Value of the cattle (sum assured) is decided in conjunction with the farmer and local veterinary surgeon and entered into the mobile phone. The premium payable by the farmer is automatically calculated by the mobile application.
4. Five cattle photographs are taken using the phone’s camera. The agent is guided by the mobile application on the details to be captured in each photograph.
5. Details of the payment method (cheque or cash) are captured, providing an auditable trail that can help during reconciliation.
6. Once all the farmer’s cattle are enrolled, data are relayed to a central server.

The enrolment process has been reduced to 30 minutes and the turnaround time for claims from 21 days to 7 days. This has improved trust among cattle owners.

The figure below depicts the process:

Figure:  Enrolment process map using mobile phones

TAGIC also uses the mobile phone application to approve and settle claims. Through the application developed especially for claims, the agent sends photographs of the dead animal to the central server. The central server immediately sends an email to the claims team with the on-the-spot survey report. Previously, it used to take up to 20 days for the documentation and survey report to reach the claims team. Claims assessors compare the photographs with those taken at the time of enrolment. Specific features like the distance between the horns, or coloured patches on the skin are compared to verify the identity of the animal. Once the claim is approved, confirmation is sent to the client by SMS. This process has reduced the claims turnaround time from 30 days to 6 days. However, the biggest challenge currently is ensuring that assessors are comfortable with the process. There is a need to have the software in the local language to increase their understanding.

Experience with mobile technology in cattle insurance

Table 1 Experience with the mobile technology for enrolment and claim settlement

The mobile phone-based processes for enrolment and claim settlement were pilot tested in two locations. The experience was positive with a decrease of more than 40 per cent in both policy issuance and claims settlement times. This helped in increasing the surveillance of the cattle insurance portfolio as the underwriter could view images on the same day as enrolment and also compare them at the time of claim settlement. Anecdotal evidence provided during interviews with the insurer suggests that this has also marginally reduced the impact of adverse selection and moral hazard. Back-end data management has also become more organized and efficient. Similarly, various costs such as photo storage, sharing and camera have been removed for the tagging vendor.

On the other hand, the software development and purchase of mobile devices are additional costs^[1], which were funded by the ILO in this pilot but will have to be paid for by the insurer in future. TAGIC has also learned that data entry fields need to be developed in vernacular languages to facilitate use by tagging vendors. This will lead to additional expenses when the software is scaled-up to other geographies. Costs are also involved in training the field staff to use the software application. However, TAGIC believes that the additional expenses are worthwhile as the software will bring efficiency (in both time and costs) in the management of their cattle insurance portfolio over time. 

Current challenges for scaling up the mobile technology

TAGIC faces the following challenges as it looks to scale-up the mobile technology:

1. Device management will become important as each additional device will add further expenses to the loss ratio. Therefore, TAGIC needs to figure out the optimum number of devices required in one geographical unit to prevent excessive purchases.
2. The tagging vendor currently has to fill in a policy schedule and give it to the cattle owner as proof of insurance. This is the only remaining paper-based component of the enrolment process at the front end and requires extra effort from the vendor who has to fill in the details twice, once in software and once in the policy schedule. TAGIC is exploring the option of attaching a Bluetooth-enabled external printer, which could print out the policy schedule and make the data entry process even more efficient.