As the Indian insurance industry is in the midst of a transformation with changing customer preferences and growing digital adoption, it’s imperative now for all key stakeholders — insurers, Insurtechs and regulators — to work together to ensure the best experience for the end customers and thereby ensure success for the industry, says a report of Boston Consulting Group and India Insurtech Association.
The Indian Insurance industry has seen significant progress with life and non-life insurance growing at 17 per cent and 14 per cent CAGR respectively, in the past five years. The total number of lives covered almost doubled from 12 crore to 23 crore during this period and the non-life segment saw six new entrants, taking the total number of players to 34.
However, there is still scope for growth. The insurance market in India remains under-penetrated compared to global leaders. In the US, more than 90 per cent of lives are covered by life and health insurance, while in India the corresponding figures are only 28 per cent and 34 per cent, respectively. Other segments, including property and crop insurance, also have scope for more penetration.
The rapid adoption of digital in insurance and the changing customer behaviour along with the influx of new technologies have led to key shifts in the industry in terms of product innovations, emergence of ecosystems and data, and technology-driven innovations across the value chain.
Insurers have recognised these shifts and have effected rapid interventions to adapt. The companies that have invested in such change are already seeing impact on key metrics like profitability, productivity, NPS and turnaround time.
The fundamental shifts in consumer preferences have also accelerated innovation and the growth of Insurtechs. The Indian Insurtech landscape was dominated by multi-insurance players such as Policybazaar, Coverfox, and Renewbuy during 2014 to 2017. Since 2018, general insurance saw a higher share of funding due to the emergence of strong players like Acko and Digit Insurance. Funding to General Insurance focused Insurtechs has increased from a negligible share in 2014-16 to almost 75 per cent of the overall funding in 2020, it pointed out.
Insurtechs, both globally and in India, are driving innovation in the insurance industry, primarily by ushering new ideas, which the rest of the industry then builds on. A sizeable number of Insurtechs have been accelerating transformation across critical dimensions. In the current transformation phase, it is immaterial to ask, “Is the insurance industry about insurers leveraging technology or about tech companies offering insurance?” The answer should be coming together of insurers, Insurtechs and the regulator for the benefit of end consumers and industry growth.
Insurers on their part could identify right collaborative models and push for customer-centric innovations, while insuretechs could ensure a continuous pipeline of ideas and build scale with a digital-first mindset, leveraging data and analytics in addition to collaboration with insurers.
Regulators could facilitate collaboration between the two, allow insurers to buy some stake in start-ups, streamline product approval process and encourage the use of new data resources, said the report.