The last decade has been kind to the insurance sector in India. Overall, insurance penetration in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001. Gross premiums written in India reached Rs 5,78,000 crore ($82.8 billion) in FY19, with , Rs 4,08,000 crore ($58.5 billion) from life insurance and Rs 1,69,000 crore ($24.3 billion) from non-life insurance. Enabling policy reforms, increasing adoption of technology, positive demographics changes and education have contributed to this growth. Going forward, the Indian insurance industry is expected to continue growing at a strong clip, reaching a market size of Rs 19,56,920 crore ($280 billion) by FY2020. The insurance industry is critical to the economic development and growth of a country. It boosts risk taking while at the same time securing growth. Additionally, since the assets under management of insurance companies represent long-term capital, they also act as a pool in which to invest in long-term projects such as infrastructure development.
As the shape of the Indian insurance industry changes and business models get reimagined, there are a few imperatives that insurers need to be aware of as we step into 2020.
The customer at the centre of the industry – customer journeys and an increasing focus on customer experiences is now emerging as a key imperative for the insurance sector. The era of lengthy paper-based forms and multiple signatures is now behind us. Customers now demand a transparent and seamless experience enabled by technology that provides quick information/feedback. Customers are now setting new standards of ease, convenience and value, expecting 24-hour access along with customised products at competitive prices. We have now moved into an era of personalised high-touch service, something that insurers will need to provide as a hygiene factor in the near future. High-quality interactions are known to inspire loyalty – something that insurers need to put at the centre of their customer strategy.
Technology will become a key enabler – digital technology has proved to be a game changer in almost all industries and the insurance industry is no exception. Increasing Internet penetration (with the number of users in India expected to rise from 429 million in 2017 to 829 million by 2021 at the rate of 17.9 per cent) will continue to influence the insurance business as well as other industries. Insurers need to invest in the digitisation of their businesses and better leverage technology in order to offer their customers innovative and relevant products at a reasonable cost and in an efficient manner. Going forward, insurers will need to harness technology to enhance their product offerings to create behaviour and need based personalised offerings. The future will also see insurers leverage data and analytics to generate better risk insights that will help them optimise underwriting and pricing.
Changing business models – traditionally, insurers have adopted a product centric approach driven by marketing and advisors. However, the current landscape of the industry makes it imperative for insurers to keep customer experience at the core of their strategy. At the same time, the business model also needs to adopt a “tech-forward” attitude leveraging technology and digital channels to meet the customers’ expectations. As per PwC India’s Insurance Technology Adoption Survey 2019, 55% of the respondents mentioned that they continue to prefer buying insurance from agents and brokers. Moreover, the conversion rate from online modes stands at a mere 4%. Despite the continued preference for agents and brokers, the findings do reveal that emerging technology (such as chatbots) has already started picking up as the customer’s first point of contact. Also, 67% of customers prefer to leverage aggregators/online platforms which enable them to make calculated and informed decisions by comparing products. A hybrid model where the insurance advisor is equipped with the right training and technology can be the way forward for the industry.
Multi product offerings – another trend that we can see gaining currency in 2020 is that of multi product offerings. Offering non-insurance products and services that are a natural extension to the core product portfolio, health monitoring and financial planning, could be a good way for insurers to become more visible and inspire loyalty.
The Indian insurance sector is at the cusp of exponential growth. For insurers to participate and contribute to this growth, it is imperative that they are not only aware of emerging trends, but also that they embrace these trends holistically.
The author is the Co-Founder, Turtlemint T