From being completely government controlled – Life Insurance of India (LIC) and General Insurance of India (GIC), both government-owned and enjoying a monopoly, to being FDI-friendly to now leveraging new-age tech – the Indian insurance sector has come a long way.
Today there are 24 life companies including LIC and 33 non-life companies in India offering innovative products to drive better customer experience.
Additionally, insurance is becoming dynamic, highly customised and relevant to each customer individually. Interactions are increasingly becoming digital.
The adoption of tech by insurance companies is also giving rise to many new startups in the fintech space.
As per outlook money Gross premiums written in India have reached USD 82.8 billion in 2019, with, USD 58.5 billion from life insurance and USD 24.3 billion from non-life insurance .
Technology – A key enabler
Insurance traditionally has been a push product, where selling is done by reaching out to the customer. In such an ecosystem, insurers give more consideration to intermediaries rather than the end customer. Further, interaction between insurers and customers is less frequent and, as a result, insurers have limited data about customers.
But this is changing.
Increasingly, insurers are looking at digitising business processes to provide better customer experience, achieve more efficiency and reduce cost.
According to research, digitisation can reduce around 20–30% of the cost of non-life insurance products and 15–20% of the cost of life insurance.
Speaking to The Blue Circle, Anoop Pabby, CEO & MD, Pramerica Life Insurance, says, “The insurance landscape is rapidly evolving and is becoming increasingly simplified with the adoption of technology and integrating it with different stakeholders across the value chain.
Enabling purchase of life insurance, through a single click, with zero additional documentation, has now become possible due to deep integration between service providers and insurance carriers. This is opening up the space for newer propositions in enhancing the overall insurance penetration across the country and is likely to see rapid growth in times to come.”
The Insurtech Era
Insurance, one of the oldest industries of modern civilization, has been a late adopter of technology, but is now witnessing a disruption.
Insurance providers today are making investments in leveraging technology to drive better customer experience, faster closure of claims and ease of buying insurance policies,.
With the customer data being collected, the accuracy of the data is helping companies understand market dynamics better and launch more user-friendly products with easy premium options.
IFFCO Tokio General Insurance is leveraging AI for image processing to analyse the extent of the damaged vehicle, which helps them generate a list of repairable and replaceable parts that were damaged in the accident.
Within a few minutes, the assessment and the cost are given to the customer, which they can either accept or reject. If the assessment gets accepted, the payment is made within fifteen minutes directly to the customer’s bank account.
Evolving value chain
The adoption of tech by insurance companies has also given rise to many new startups in the fintech space, some of which, such as PolicyBazaar and Paytm life insurance, have already attained unicorn status.
For instance Bajaj Allianz General Insurance has introduced a new group personal accident cover for school kids. Using IoT, Bajaj tracks school kids during travel hours through GPS, and beacons inserted in the identity cards of kids.
Blockchain is bringing all parties on one common platform, while simplifying the quote and claim processes.
Three years ago, 13 Indian Life insurance providers collaborated to create a blockchain consortium. They also announced the first solution to facilitate cross-company data sharing to reduce data breach risks, fraud, and money laundering.
In recent years, the government has been one of the biggest catalysts in strengthening India’s insurance sector. Decisive measures like Pradhan Mantri Jeevan Jyoti Bima Yojana, Rashtriya Swasthya Bima Yojana, Ayushman Bharat, etc., are playing a vital role in boosting this sector.
Exciting Times Ahead
While the Indian insurance industry has grown rapidly since 1991, there is still significant scope for further growth.
A vast majority of Indians remain uninsured, signifying a huge untapped market.
And with increasing disposable incomes & high Internet penetration, coupled with the emergence of tech, things will further change, likely for the better.