Maturing insurtech supported by enabling regulation – India’s insurance industry stands at the cusp of unprecedented growth
As we stand on the brink of 2024, it is customary that we look back at the journey of insurance in India and discuss what the future holds for this sector. The current state of India’s economy, IRDAI’s recent initiatives, and technological innovation in the area – bodes well for the insurance industry. Earlier this year, the IRDAI chairman had shared with the industry the dream of “Insurance for all by 2047”. The industry is taking firm, confident steps towards making this dream a reality.
Historically, the insurance sector has had a somewhat complex relationship with India. In its journey from the joint family system to an increasingly nuclear one, society should have clung to insurance for financial safety, but it didn’t. Limited financial awareness on the part of customers coupled with an agent-centric industry setup, had stunted the adoption of insurance.
India’s need for insurance can be fathomed by the fact that the middle class in India is expanding at a rapid rate of 6.3 percent annually. Over the past two decades, technology has helped bring customer-centricity and transparency into insurance. Artificial Intelligence and voice analytics have allowed the industry to get insight into customer behaviour opening up the stage to greater empathy and accuracy in customer relations. As industry players have done their part in creating customer-focused products, the regulator too has held their hand firmly by fostering dialogue about the importance of insurtech in the industry. IRDAI’s sustained efforts have helped pave the way for the growth of insurtechs in the country.
Creating a pull-based marketplace for a growing DIY customer base
Since the average Indian found a whole new world of online marketplaces, customer behaviour has changed almost permanently. A case in point is that traditionally, India was seen as a strictly do-it-for-me, agent-reliant market. However, the DIY trend has started drawing customers’ attention and is expected to grow at 17% annually in the next three years.
This evolving behavior is perfectly aligned with the efforts of new-age digital insurance marketplaces that have been trying to inspire a pull towards protection products among Indian consumers. Digitization gives customers a window into making informed insurance decisions. Today, a Term Insurance customer doesn’t have to go in blind. He/ she can simply use a Human Life Value calculator to find the cover amount that best suits their family. The government’s call to simplify policy information coupled with steps like telemedicals for NRIs empowers the customer, putting him/ her at the center of the insurance experience right from the point of policy selection.
Sealing shut gaps in the claims experience
The business of insurance tends to “see-saw” between anxiety and trust. The customer buys a policy with a sense of trust that in the moment of need, there will be a financial cushion. This is often followed by an anxious question, “What if my claim doesn’t come through at the moment of truth?” The only way for ‘trust’ to be the true winner in this game of seesaw is for the claims experience to be seamless.
The government’s nudge towards fastracking claims, the push towards cashless claims in Health Insurance alongside InsurTech initiatives like 30-minute claims assistance is set to tip the scales. Moreover, initiatives like Claim Samadhan Diwas assures customers that even if a claim does get rejected, they have the power to get it reevaluated.
Personalized products for historically neglected sections
Traditionally, men have been seen as primary decision makers and policyholders in the insurance space. This dangerously undermines the contribution that women make to the financial security of a family. Of late, government bodies as well as industry players have recognised that the goal of inclusivity in financial security can only be attained when women are factored in as equals. This has led to creation of independent Term Insurance policies for women. Today, the industry offers independent Term Insurance plans to homemakers and salaried women alike.
Digital insurance marketplaces have helped create adequate awareness about the need for such women-centric products. According to a recent Policybazaar study, 81% of salaried and 66% of self-employed women are actively involved in the decision of purchasing Term Life insurance.
Even on the Health Insurance front, the industry's rapid digitization due to the pandemic played a crucial role in helping it cover larger ground. Virtual onboarding, telemedicine, and streamlined renewal and claims processes made insurance more efficient. Health insurance now includes broader coverage for mental health, maternity benefits, OPD costs, modern treatments, and shorter waiting periods for pre-existing conditions.
A phygital approach to penetrate the market beyond metros
IRDAI’s dream of “Insurance for all by 2047,” had inspired Policybazaar’s tagline of “Har Family Hogi Insured.” Digitization can ensure that insurance goes beyond metro cities, giving tier2 and tier3 customers increased accessibility to insurance. As India gets wealthier, the need for insurance across the country becomes even more crucial. At this point, insurance needs to be more about coverage per person than the number of plans sold. The industry has approached this challenge with a phygital model. This gives customers the time efficiency and trackability of the digital medium along with the psychological comfort of the physical medium. The consolidated industry effort has made a clear difference. There was a time when 2/3rd of Policybazaar’s business would come from metro cities and roughly 1/3rd from the tier-2,3 cities of India. Post-digitization, 2/3rd of the business comes from tier-2 and 3 cities and 1/3rd from the metros.
India is the fifth largest insurance market in the world’s emerging Insurtech landscape, growing at a rate of 32%-34% each year. The opportunity as well as the responsibility facing the industry are huge. There’s every reason to believe that the vision of Har Family Hogi Insured, underpinned by innovation and collaboration, is poised to become reality.
Author: Yashish Dahiya, Chairman and CEO, PB Fintech Ltd.
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same.