Insurance in India has seen a jump in the premium collection from “₹ 2.56 trillion in FY12 to ₹ 7.31 trillion in FY20” according to India Brand Equity Foundation. That rapid growth is a sign of the massive potential of insurance in India. As a nation of over 1.3 billion people, there is tremendous potential for the insurance industry.
The challenge is that, to date, insurance has been seen as a luxury, rather than a necessity. That is quickly changing thanks to Insurtech. Technology-backed solutions have made insurance more economical and accessible, opening up new markets in India.
Potential of Insurance in India
According to the IRDAI 2018-19 Annual Report, insurance penetration in India stands at 3.7% as of 2018. While there are plenty of factors responsible for that low number, complex plans, confusing terms and conditions and paperwork are all major roadblocks.
A Financial Express report stated, “What customers are demanding is essentially three-fold – transparency, speed and a hassle-free claim settlement.” Through digital technology, Insurtech companies have managed to address those three issues. Insurance in India is now simple and accessible, thanks to the variety of Insurtech solutions created by India’s thriving start-up ecosystem and most importantly by different initiatives taken by the IRDAI.
These unique digital solutions have addressed all types of insurance policies, from travel to home, and mobile repair to health. Despite the unique challenges of each sector, there are some common elements that are possible only because of the digital nature of these Insurtech solutions.
These advantages can be split into two areas – consumer trends and product trends. The former deals with consumer-facing aspects like user experience and engagement. The latter deals with aspects like plans and features. Here’s a more in-depth look at the two.
- Digital user experience: Right from comparison to purchasing and managing, consumers prefer digital experiences. That’s why new Insurtech products have app-based solutions and a digital-first experience. All the required information is now available on the web, easily accessible anywhere, at any time.
- Constant Connection: Before digital innovations, limited engagement meant that customers weren’t aware of new offerings or the additional features of their plan. Now, thanks to social media and email, customers are always in touch. An active relationship not only builds greater trust but also helps keep customers more aware.
- Greater Awareness: Previously, insurance agents and companies had to work hard to make consumers aware of the various insurance in India options. Now, they need to work hard to stand out. Thanks to Google, finding an insurance plan is easy. More people are investing time into comparing products, so companies have got to find ways to show why their product is better.
- Reliable Information: Getting accurate information was a challenge, with insurance agents pushing only their products. Now, consumers can easily understand all their insurance in India options, from reliable sources. Insurtech solutions have also ensured that there is complete transparency when it comes to the terms and conditions. Consumers get the information they want and need.
- Insurance as a Utility: Previously insurance used to be a luxury, but thanks to the rising middle class, it is now being seen as a utility. Like all utilities, consumers are looking for usage-based options that fit their finances. They want options, so companies are busy coming up with new options yearly.
- Personalization: Lead by millennials, consumers are increasingly demanding more personalization in their options, especially for group health insurance plans. With the understanding that one size does not fit all, Insurtech companies are using AI and big data to offer personalized options.
- Payment Flexibility: Paying for your insurance in a lump sum is not an option for many, more so when you consider the different types of insurances needed. Customers want more control over how they pay their premiums. From EMIs to quarterly payments and even monthly subscriptions, Insurtech companies have introduced new flexible payment methods.
- Data Security: Modern insurance products need to be mobile-first. Companies are now rapidly investing in digital solutions for a robust back-end, to help provide seamless assistance while preserving customer privacy and security. For many customers, data security is vital and could be the deciding factor when picking an insurance product.
We firmly believe in the power of digital technology. Together with the current focus of India’s regulator on digital insurance, these solutions will revolutionise insurance in India.