The insurance industry in India is well on track towards significant growth on the back of an aspiring middle class population and increased digital insurance penetration in the next few years, a recent report by Redseer Consulting has revealed.
According to the report, innovations in digital technology has led to enhanced customer experience in the Indian insurance industry. That said, the digital insurance penetration in India is a mere 2 per cent when compared to China (6 per cent) and US (14 per cent), the report noted.
The report mentioned that the overall insurance market in India stands at $131 billion as of FY22, and by FY26, it will reach approximately $222 billion. The report also analysed the total addressable market (TAM) of different insurance categories in India.
It was found that life insurance contributed roughly three quarters of the market at $66.5 billion. Motor insurance came in second at $10 billion total addressable market (TAM), followed by retail health insurance at $4.7 billion.
“Stringent motor regulations and a policy shift towards making India a digital economy have boosted motor digital insurance gross premiums in India,” the report said.
New Rising B2C Model In India’s Insurance Sector
The report also mentioned about the rising B2C model in India’s insurance sector and the factors responsible for its growth. They are:
Considerable Advantage: According to the report, this is an interesting segment, and lately it has witnessed considerable advantage. This is because this segment has substantially lower claim risk due to direct customer interaction than possible in other models. These aside, the persistent ratio for this segment is also higher due to better customer awareness in the B2C model of insurance.
“B2C brokers utilise online marketing and asset-light models to derive better margins. The experiences that these new-age InsurTech models offer for customers are not merely digital, they are delightful,” says Mrigank Gutgutia, partner, Redseer.
Leveraging Technology: The report said that some of the B2C models offered end-to-end digital experience through technology-enabled applications, app-based insurance claims assistance, proactive conversions using call centres, and visibility to multiple quotes, among others, which have helped customers with a great insurance experience.
Higher Margin: In addition, B2C insurance brokers had significantly higher margins on insurance sold than other B2B2C insurance brokers. This was because while B2B2C insurance scaled faster due to high uberisation of its agents, it had relatively lower unit economics due to high agent payouts.