The
insurance industry in India has existed for nearly a decade now but only
recently it underwent the phase of liberalization and deregulation. Despite
over 100s of insurance companies operating across health, life and general
sectors, not many citizens realized the importance of non-life insurances until
recently. Investing in safety packages for auto, health & travel was
treated as expenditure rather than a way out to navigate through various risk
scenarios.
Over time, the increased
disposable income and improved general awareness have played a crucial role in
amplified general & health insurance subscriptions. Having been
nationalized in 1972, the industry has come a long way. Consumers have started
to realize the value of non-life insurance products. With the upsurge of the
start-up ecosystem in India, a significant boost of technology integration into
insurance services has been noted, leading to increased adoption of such
products.
Entrepreneur
India talked to some leading names in the health & general insurance space
to assess the market scenario.
Technology
– The Game Changer
The penetration of the
internet across the Indian borders has brought along endless opportunities for
business aspirants. The insurance sector is reshaping with the entrance of new
players in the market, by merging product thinking, data and technology with
the existing bone structure of the industry. There are about 450 million
digitally active consumers today, using more than 8 GB of data per month.
65 per cent of the Indian
population is below the age of 35, representing the largest cohort in human
history stated Rohan Kumar, the CEO and
Co-founder of Toffee Insurance, adding, “With new technologies rapidly
emerging, consumers now want insurers to deliver superior, personalized and
seamless services across all channels.”
The
new-age consumers are supremely active online and are looking to adopt a safer
lifestyle. To fit within this scope, insurers need to be relevant to the end
user and technology can help accelerate the process. However, for real-time
results, conventional mediums need to be sidelined. Kumar suggested three areas
to challenge traditional enterprise structures:
·
Blockchain technology can be
used to drive smart insurance contracts in Policy Issuance & Claim
Servicing. This will also allow for real-time claim processing.
·
AI & ML and advanced data
mining techniques can help in assessing real-time risk scenarios to provide
variable/dynamic pricing. This will help fuel the on-demand personalized
insurance structure.
·
Insurers can integrate with
various IOT devices to drive data loops and personalised insurance plans.
In the global insurance
space, emerging technologies are changing the business landscape. While in
India, technology adoptions for both company and individuals are still in the
budding phase which will continue to affect insurance penetration, provided Atul Deshpande, the Head of Operations, Strategy
& PMO at SBI General Insurance.
He further added, “The use of
web-based technologies as an Insurance service delivery medium has added new
elements to service dissemination. The escalation in self-service technologies
has provided customers with multiple choice for using services offered by
insurers. The online service attributes of ‘convenience’ and ‘ease of use’ are
being given priority by customers for designing web-based solutions.”
A Hotbed for Startups
Private
players have gained momentum in the insurance space with their flexible
approach towards providing such services as they are more open to tailoring
their products to the specific needs of the customer. Currently, there are
around 30 Private General Insurers operating in India offering a variety of
products. According to Neeraj Prakash,
Managing Director, Shriram General Insurance, Insurance Awareness Program
has played a crucial role in the growth of general Insurance market in the
country.
More so, people have started
understanding that paying premiums of general insurance is like depositing the
amount in a savings account. Giving a context, Prakash said, “Valuable
possessions in our life, such as home, business and vehicle are also very
important as our life. Some of the recent disasters Like Mumbai Floods, J&
K Floods, Uttrakhand tragedy and Chennai Floods also prompted this revolution.
Most of the Property, which was damaged under these catastrophes, were
uninsured.”
Buying insurance online has
become a fad in recent years. While the share of premium received through
online sales is still small in India but the medium holds great potential. The
unconventional method provides convenience, quick execution of services and
most of all, clarity about the product. A number of start-ups in the insurance
space have jumped the field to address the pain points of customers through
their unique identification.
One such organization is
Digit Insurance. The startup has witnessed the insurance industry evolving over
the years. “The industry is coming up with insurance solutions that cater to
the changing lifestyles and life products of people,” Vijay
Kumar, CEO & Principal Officer Go Digit General Insurance Ltd, adding,
“Customized products are the way forward to increase penetration of insurance
products.”
Further providing testimony
to the increased consumption of online insurance services, Kumar claimed,
“Digital claims give customers speed and ease, so it’s a win-win situation.”
The insurance industry is undergoing a major shift. Major European insurers
have set up innovation divisions or labs and have set up huge investment funds
to invest in Insurtechs, verified Pallav
Singh, Co-founder & CEO, Kruzr.
He further suggested that we
see this trend even in some Indian insurers, which makes us quite bullish about
the InsurTech domain in India. Recently, online startup Acko General Insurance
Co. Ltd raised $65 million in a Series C round of funding led by Flipkart
co-founder Binny Bansal, recommending an increased interest of investors in the
insurance space. Taking a glance at other deals, we see a string of online
insurance platforms raising funds.
In
January, Turtlemint raised $25 million in a fresh funding round led by the
Indian arm of global venture capital firm Sequoia Capital whereas the parent
company of insurance startup Digit Insurance Go Digit Infoworks Services Pvt.
Ltd raised $45 million from existing investor Fairfax Holdings in July last
year.
Corporate-Government
Connect
Post the economic
liberalisation, tonnes of opportunities were available for private players to
explore and the government was there to handhold. With reference to health
insurance policies, the Insurance Regulatory and Development Authority (IRDA)
of India has lineated certain regulations to further support the insurers.
“Portability options opened by IRDA in health insurance category is now
providing a valuable boost to this category,” provided Anand Shrikhande, the CEO of Quickinsure.
Insurance is a complex and
high involvement product. People have started considering Health and Motor
insurance policies as a compulsory part of their financial portfolio. According
to Dhirendra Mahyavanshi, the Co-Founder of
Turtlemint protecting vehicles against damages has become a priority
for customers and the digital intervention has made the claims way easier to
apply and track.
“For health insurance
awareness of insurance has gone up way higher. Corporates, as well as the
Government, have enrolled in health schemes, making the concept even more popular.
With the ever-rising healthcare costs, insurance comes as salvage as paying the
entire expenses out-of-pocket cost a lot,” he stated.
Shrikhande highlighted the
role of government in pushing such schemes by stating, “New add-on attachment
to existing products, a government mandate on crop insurance and increasing
awareness of the need of health insurance are some more triggers for this
revolution.” Talking about future trends, Mahyavanshi sees a good future when
it comes to offering health wellness solutions like regular health check-ups,
fitness bands etc.
Even
motor insurance has become a compulsory deal for new vehicle buyers. IRDA has
mandated multi-year policy to increase two-wheeler insurance penetration.
However, only 80 per cent has been witnessed yet due to two-wheeler riders
dodging the compulsion to save a few bucks, inviting high risk in case of
mishaps. Nonetheless, India's auto sales are growing healthy at 10 per cent,
which makes motor insurance a growing sector in India.
“With the Government aided
and funded schemes for Crop, Health, and other insurance covers reaching out to
the length and breadth of the country, there will be increased awareness over
the next few years. It is critical that this awareness is leveraged to ensure
that the uninsured, as well as the underinsured population of the country, is
covered adequately for risks,” Deshpande said.
Move
from Traditional to Innovative
The insurance industry has
embarked on a radical transformation spurred by a series of digital innovations.
We are experiencing spur in small ticket products in all segments of general
insurance. Startups are coming up with innovative and affordable solutions to
fit the bill for millennial by offering non-conventional services like
insurance for fitness, daily commute etc.
Traditionally, these kinds of
OTC products were treated as luxury and not many would invest in the services
but with time and increased awareness, customers are more willing to spend on
something of relevance. Explaining the inclusion of motor insurance cover as a
necessary service, Shrikhande said, “Customers do their research online and
also want to engage in communication before buying (these) products.”
Besides Health and Motor
insurance, other services are still at a nascent stage of growth in India. “We
observed customer’s preference on small ticket size policy purchase via an
online media such as retail health and motor policies. In the case of large
ticket size products, the customer does seek traditional purchasing channels
where human interactions are present,” Deshpande expressed.
With the recent cases of data
leak becoming the highlight, enterprises are getting concerned about their
cybersecurity. This threat to online documentation has led to the increased
demand for innovative insurance products like Cyber insurance to prevent the
breach or loss of data and identity theft.
The increased usage of
smartphones has raised the need to get mobile screens insured too. “With the
explosion of smartphones and travelling Indians, both domestically and
internationally, insurance products like mobile and travel have been both
beneficial and attractive,” Kumar further provided.
