The two decades of privatisation has shaped the life insurance industry for the better. This period witnessed a non-linear growth. Following a pause after the financial crisis, momentum picked up from 2014 aided by increased overall savings. The industry experienced growth in premiums, profitability and value creation. A slew of changes including regulatory guidelines, product innovations, new distribution channels, technological developments and a vastly improved customer proposition helped the industry become more customer-centric.
India, however, still lags in insurance penetration. It is not just behind developed countries but also many Asian economies. Indian insurance players are aware of this opportunity and have aligned their strategies to tap this potential. In this quest, there are a few areas which insurers are likely to focus on in 2021-22.
Awareness and increased share of protection: The single most disruptive event impacting the sector, after product regulations in 2011, has been the COVID-19 pandemic and the ensuing lockdown. Its key outcome has been heightened awareness of the importance of life and health insurance covers. During 2020-21, this was reflected in a seven per cent growth in total sum assured, indicating increased sales, despite a 6% fall in individual weighted premium during the first nine months of the year. This increased demand for insurance would continue next year, and insurers would take steps to capture growth share.
Accelerating digitisation: Traditionally, face-to-face interactions have been the norm between an insurer, its distributors and customers. The pandemic has, however, shaken this well-established norm making customers and distributors more open to technology. With digital advancements taking priority, customers may expect further ease of policy purchase and servicing. Insurers capitalising on digital tools would streamline business operations and control costs in the medium to long term. The conventional selling model would expand into a new dimension, especially for advisors, where digital tools for virtual meetings will save time and physical effort. This would unlock significant opportunity for agents, especially women, to realise their full potential.
Revival of the Economy: The economy has been getting back on its feet, and 2021-22 is expected to be the year of growth. Insurance is closely linked to increased retail savings, which depends on household incomes. This likely growth in Gross Domestic Product (GDP) is expected to provide tailwinds for the sector.
Increasing focus on customers: Over the past few years, customers’ service expectations have been moulded by their exposure to numerous tech-based service-providers. Today’s customers are used to availing services on-the-go. Hence, digital devices & platforms have taken centre stage. Similarly, insurers would have to make the digital purchase of a life insurance policy simple and hassle-free. This demand would compel the industry to become further customer-centric. Companies would invest in-house to create benchmark customer journeys and user experiences.
Regulatory enablers: Insurance Regulatory Development Authority of India (IRDAI) has been proactive in laying down guidelines for enabling the insurance sector. The standard life insurance product mandated by IRDAI is a step towards increasing insurance penetration and reducing mortality protection gap. IRDAI has also encouraged innovation in the sector through its participative ‘Sandbox’ initiative. This is expected to further help the regulator come up with additional enabling guidelines for the industry.
Efficiency: Maintaining financial health in 2020-21 was a challenge for insurers. They proactively responded by tweaking their operating models, reducing wastage and creating efficiency. These are expected to make them more competent.
The life insurance industry is presented with an opportunity to improve penetration levels and introduce offering to new customer segments. In 2020-21 we can undoubtedly expect double-digit growth.
The author is MD & CEO of Exide Life Insurance