HDFC ERGO Q3FY26 Profit Surges 168 Percent; CTO Says Technology Played a Key Role

Given the nearly 168% year-on-year surge in net profit in Q3 FY26, how much of this improvement can be attributed to automated risk selection and cost-optimization tools?

The improvement is the result of a combination of strategic initiatives rather than any single factor. A key contributor has been disciplined underwriting decisions, supported by actuarial analysis. Our actuarial team has leveraged data extensively to refine pricing models and conduct cohort-level assessments, evaluating multiple risk indicators beyond pricing alone.

Additionally, we have fine-tuned our strategy from a demographic standpoint to better align with targeted customer segments. Technology, including AI, plays an important role in strengthening our decision-making frameworks.

The surge in profitability reflects the cumulative impact of these efforts—robust underwriting practices, data-driven actuarial insights, demographic alignment, and advanced technology enablement. We are confident that this growth is sustainable, as our underlying digital and analytics capabilities empower underwriters, claims teams, and actuaries to make well-informed decisions.

How far have you reached in modernising your core platforms?  Once the baseline is strong, would the associated activities like AI, or integrating the regulatory requirements become seamless?

Our company philosophy has always been to consistently deliver superior customer experiences. To this extent we started working on a major digital transformation program focussing on building a holistic ecosystem of products and services powered by a modern core platform.

This transformation journey had at its crux digitally transformed customer and partner facing front-end ecosystems. But we realised, in absence of the underlying clean data, granular APIs and a strong scalable and performing back-end to support it, there's limited scope for feature additions. Thus, we started moving from our legacy system to a modern digital core called Duck Creek and have made decent progress in the last 18 months. 

Among our various insurance Line of Business offerings, we initially focussed on two lines of products -- fire and health insurance, which are now implemented on the Duck Creek system. So far, it has shown good results. We started off with some clear objectives – quicker go to market, powering embedded insurance journeys with various digital partners and an ability to react much faster to developments happening in the industry. 

The company has achieved the majority of the milestones visualised behind implementing the new digital core. In the coming years, we will be able to move the company’s entire insurance product suite from legacy to the digital core.

Insurance companies are equipping themselves to launch more and more products. So when you are converting your legacy infrastructure to the digital core, does it enable multiple product launches?

Yes, that's really the idea. Traditionally, there were only a set of standard products available for consumers from the insurance providers. With the digital core, we have broken the traditional product into the next level of granularity i.e various ‘covers’, which are basically components of an insurance product. This enables us to bundle covers as per customer needs or cohorts and offer more personalised offerings.

This functionality of the new core allows us to offer combinations of covers across lines of business depending upon the distribution partner needs, subject to regulatory approvals. Additionally, the digital core also gives the freedom to operate beyond the standard constructs and be innovative in what we can bring to market under the sandbox scheme. As we penetrate deeper into the Tier 3/4 locations across the country, this also offers us flexibility to cater to microinsurance needs of customers which is critical from a ‘Insurance for all’ perspective. 

Recently, the regulator has also opened up the value-added space. It will now give the new digital core the opportunity to not only bundle the covers but also the value-added offerings to provide a compelling proposition to the consumer.

What are some of the products that you have been able to launch only because of your digital core? 

We have added many offerings on the customer front-facing ecosystems with the power of APIs. One of the marquee digital assets we have developed is ‘Here’. 

One-of-its-kind insurance-led ecosystem, Here hosts multiple ecosystems including the motor, health, cyber, pet ecosystem. Many value-added offerings have also been added in these ecosystems.

Here has registered good traction. We have one crore downloads of this app from our various storefronts. The interesting part is more than 60% of the people who have downloaded the app are not even our customers. They have downloaded the app because of the value it offers.

The concept of the Here app is to gain the mindshare of the customer. As a result, the market share will automatically fall in place. 

Another super app 1Up has been launched for the partner community, for various channels of distribution; be it agency, broking, bancassurance, direct and digital. The idea behind this super app was similar to Here -- going beyond the transactional capabilities of issuing a policy, taking a claims intimation, sharing the status of claim or doing a renewal. These are all standard services, but beyond that we have added multiple other features to equip our partners like product and process training, onboarding new agents effectively into the system, providing them with tools to connect to the customers on social media and sending their customers nudges with a clear call to action. 

More than a lakh of our advisors are using this currently. Beyond this, there are other transactional apps we have rolled out. On commercial lines, an intelligent quotation management system has been implemented with built-in AI features.

How has your AI journey been?

We started our AI journey many years back focussing on fraud models and image based claim assessments consuming more than 20 years of data available, since we started operations. We also have a mature data warehouse, which fulfills most analytical needs of our organisation across the spectrum. 

We have now built a comprehensive data lake hosted on the cloud which powers our front facing ecosystems. For setting up the hybrid Cloud infrastructure, HDFC ERGO has partnered with the likes of Google and NTT. 

The above data construct powers our GenAI aspirations. This is the stack that powers our front-end ecosystems. To ensure personal data is protected all the policy, renewal and claims data has been anonymized and then used for consumption to train models.

Currently, our GenAI investments are in the assist and augment space. We have rolled out co-pilot for all our employees, where GenAI is helping our workforce better service the needs of customers and partners. 

We are now able to generate various cohorts of customers with the underlying data which forms the basis for nudges to drive outcomes in various user journeys. 

For example, the first nudge that a partner would see as soon as he logs on to the partner ecosystem is the list of renewals due with a clear call to action. Right from within the app, he can then send a reminder to the customer, make a call or send a WhatsApp based on his communication preference reminding him about the pending payment. A payment link can also be messaged from the app to facilitate instant renewal.

On the customer side as a part of the Here auto ecosystem, we track the PUC details and traffic violations of a registered car. If the PUC has expired or if a payment for a traffic violation is overdue, the system triggers a notification with the address to the nearest facilitating centre. 

Overall we believe GenAI is a great transformational enabler which can hugely enhance customer experience apart from helping our company meet the goal of sustainable and profitable growth.