The insurance industry in India has 57 insurance companies out of which 24 are in the life insurance business while 33 are non Life Insurers with six public life insurers in the non-life insurer’s segment. As per a study conducted by the IBEF(Indian Brand Equity Foundation), in India, the overall market size of the Insurance sector is expected to be 280 billion dollars. The gross premium collected by the life insurance companies in India increased from rupees 2.56 trillion in the fiscal year 2012 to Rs 7.31 trillion in the fiscal year 2020.
With the global economy crashing due to the covid-19 pandemic, multiple sectors took a major financial blow, the insurance industry being one of them. India is among the 15 most covid-19 affected economies, PWC states in one of its reports that the two productive months for the insurance industry – March for life insurance and in April for non-life, corporate renewals have been helped by around 15% and 30% respectively. While the insurance industry like every other industry has taken a major hit during the pandemic, the future of the industry seems to look promising. The insurance industry got affected last year due to uncertain economic conditions, however, it soon started to turn around fast in the last few months of the year 2020 expecting good growth during the current fiscal.
In this #DigitalSuccessDialogue, we talked about the changing landscape of the Insurance sector along with the evolution of digital. We were privileged to have Mr. Amit Roy, Executive Director at PwC and a business leader with 27+ years of experience across three distinct sectors consulting, insurance, and the department of revenue for the Government of India along with Dr. Rakesh Agarwal, Editor of The Insurance Times, he has authored more than 30 books and is an esteemed industry veteran.
The industry was unable to use digital growth over the years due to low acceptance levels from the customers and intermediaries but this covid-19 has removed those barriers and forced people to adopt technology and get used to it fast. However, with technology, there will be some challenges also in terms of scalability and all regulatory challenges. India has an underpenetrated market and without technology, it will be quite impossible to reach out to the masses, that being said, the reason technology needs to be leveraged and distribution costs need to be minimized so that consumers are the ultimate gainer.
Amit stressed how the Indian insurance market is going to change, the best of the insurers of the world has come to India in the past, and more of them would come because they understand this is a vast country where the GDP is on the rise, the education, the quality of life and everything is gradually improving. So this is catching the interest of the other markets and everyone is optimistic about it.
When we talk about AI and the other emerging techs, if they come together and create the right kind of experience we are looking at a tipping point where suddenly the penetration for health insurance can grow many folds. The insurance industry has had to face a lot of challenges. Fraud in health insurance has been a big hindrance along with motor insurance. If we see the personal lines of products like home Insurance the premium has been extremely low and insurance companies have not been reaching out to the public to create awareness.
Amit focused on the need of the hour, that the insurance industry should invest in two things that are driving research and driving awareness. If we draw a parallel with the pharma industry, they make a profit because a significant amount of their time, effort, and money go into research and driving awareness. New markets need to be created rather than fighting in the existing market for customers, new products, new ideas, new concepts should be introduced only then can the insurance industry flourish in the existing market. If you give your customers the customized treatment, a possibility is created where the customers are willing to share their unstructured data.
To sum up, the insurance sector did take a major hit during the pandemic and the recession, but the post-pandemic status looks interesting as the Insurance Industry is expected to be one of the most booming industries. The existing companies like LIC, MAX, HDFC, ICICI, Tata AIA, Bharti AXA, Bajaj Allianz, etc can capitalize on the situation by assessing the market and understanding the preferences of the customers, and addressing those needs.