As of FY18, India is the world’s 11th largest insurance market. However, it has low penetration and density. According to the FY21 Economic Survey report, the country’s insurance penetration increased from 3.30 percent in FY15 to 3.76 percent in FY20, but it remained considerably behind the global average of 7.23 percent. In FY21, India’s total gross premiums underwritten totaled US$100 billion.
India presents a massive market opportunity for life and non-life insurance companies, with a population of 1.3 billion people, 46.9% of whom are under the age of 25 (as per the Registrar General and Census Commissioner of India’s Sample Registration System 2018); rising per capita income and an expanding middle-class population; and >250 million registered vehicles, with 21.5 million new vehicles added each year.
Emerging technologies with the potential to bring innovation and affect regulatory procedures in the insurance business are referred to as insurtech. Insurtech has arisen as a category that can help incumbents and the insurance market enhance distribution, insurance literacy, and affordability, increasing penetration.
According to India Insurtech Association’s Dynamic Insurtech Map and Digital Insurer, India has around 111 insurance companies.
Insurance Companies use some methods and tools to one way the policy process, reduce the costs, and upgrade the customer experience. This all is known as Insurtech. It uses a variety of cutting-edge technologies, including Big Data, Blockchain, artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT), to collect data on consumer behavior, managing brokers, and deliver customized products. In addition, Chatbots, interactive dashboards, and smartphone apps are all used by insurtech to respond to real-time questions, detect fraud, process claims, and assess risk.
A claim settlement in car insurance, for example, can be automated and digitized by uploading images of the accident and essential documentation to validate the claim, as well as online processing and approval. In addition, the insurance firm employs Blockchain technology to collaborate and exchange data and transactions with other insurers to prevent customer fraud (such as repeating claims).
INSURTECH MARKET LANDSCAPE
- Policy Management– Users can utilize these companies’ internet tools to search, compare, and locate reasonable premiums from numerous providers. Users may also manage insurance and pay dividends from a single platform with the help of these providers.
- Online-first Insurance- Through their internet channels, these insurance providers market their insurance products such as life, property, and casualty (P&C) and health premiums.
- Internet of Things (IoT) – Connected device (IoT) technologies, such as sensors and wearables, are used by businesses to discover and analyze consumer risk. This technology is currently widely utilized in the car insurance sector as part of the usage-based or telematics insurance program, allowing insurance firms to track and record driving-related data. In addition, companies provide specialized insurance solutions for house and life insurance.
- White Label/ Application Programming Interface (APIs)- These businesses provide software to insurance companies and brokerage firms. Risk assessment, underwriting, fraud detection, regulation, policy administration, marketing, sales, chatbots, and customer relationship management (CRM) tools are among the services they offer.
INSURANCE INDUSTRY KEY TECHNOLOGIES
INSURTECH UNICORNS IN INDIA
India stands neck to neck with China as both have two insurtech unicorns but lags behind the US as it has six insurtech unicorns. Two of India’s are:
- Policy Bazaar- The Company, founded in 2008, was designated as a unicorn in 2018. It announced plans for an initial public offering (IPO) in 2021, with a target valuation of US$ 3.5 billion and a goal of raising $500 million.
- Digit Insurance- With a valuation of US$ 1.9 billion, the company became India’s first unicorn in 2021.
In the Union Budget 2021, the government increased the FDI limit in Insurance from 49% to 74%.
The Insurance Regulatory and Development Authority (IRDAI) has made the following announcements to boost industry innovation.
With changing client tastes and the increasing relevance of digital services, the insurance industry is undergoing a transition. Digital insurance companies can provide higher client satisfaction with a minimal workforce thanks to automation, smartphone apps, and enhanced analytics, artificial intelligence, and IoT solutions. These are the types of lean businesses that have broader insurance coverage which helps them gain insurance prominence in the future.
Big IT companies are vying to become digital insurance middlemen. AmazonPay, for example, has started distributing insurance goods in India, while Google and Apple are both interested in the industry. Furthermore, start-ups that can help incumbents and significant companies make the digital transition are likely to succeed.