The insurance industry in India is one of the premium areas that is expanding. The insurance sector's metamorphosis can be due to rising salaries and increased industry awareness. In the world's emerging insurance markets, India is the fifth largest life insurance market, growing at a rate of 32-34 percent per year. In recent years, the industry has seen severe competition among its peers, which has resulted in new and inventive goods, probably due to the emerging technologies in insurance. Foreign Direct Investment (FDI) in the industry is permitted under the automatic approach up to 26 percent, and the industry is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).

Insurance has historically relied on traditional business models that rely heavily on human operations. Though the model has shown to be relatively stable, the insurance sector is reinventing itself to new heights, undergoing significant change and transformation mostly driven by technological improvements aimed at improving the client experience at each touchpoint. Insurance businesses are leveraging their industry experience and the new era of inventive breakthroughs to give more personalized and customizable product solutions and related services to their consumers.

CEO Insights recently interacted with Jasleen Kohli, MD & CEO, Digit Insurance, and she says, “Many new-age insurers now offer user-friendly online portals and mobile apps that allow customers to purchase policies, manage their accounts, and file claims with ease. For example, at Digit, we use many of these tech solutions that we have built in-house.”

Technological Advances Reshaping the Insurance Industry

Technological advancements have taken the world by storm and emerged as a potent tool that is transforming the insurance sector. Insurance has always been a conversational transaction, but with digitization, it has shifted to a hybrid approach known as the 'phygital' model.

Standard and critical insurance operations, such as policy issuance, claim settlement, and pre-medical check-ups, which were previously paper-based, are now being reinforced with digital integration to offer a seamless client experience and expedite processes. It has been a game changer in the insurance industry in terms of revamping the client experience. Machine learning, artificial intelligence, automation, and data analytics have all played important roles in digitizing insurance procedures.

Insurance companies are instantly giving personalized client support with AI-powered chatbots and virtual assistance, particularly in claim administration, the renewal process, and even consumer complaints. AI algorithms mixed with machine learning models are being used to improve the efficiency and accuracy of underwriting, a critical procedure in the insurance sector, allowing insurers to customize products based on the customer's risk profile.

Process automation addresses manual procedures, including policy issuance, claim processing, and inquiry resolutions on the go, providing clients with a hassle-free experience while enhancing productivity and operational efficiency. From a strategic standpoint, advanced analytics and AI have aided in data-driven decision-making and product creation, which has resulted in greater customer-centricity.

Collaborative Environment: Initiatives for Accessibility

To reach every home, the government, the regulator, insurance companies, insurtech/fintech companies, and external agencies must work together, aided by technology. In response to the digital revolution, governing and regulatory organizations are speeding up their efforts to bring insurance products to every corner of the country. Initiatives such as Bima Sugam and ABHA are a step towards making insurance and related services available to all and assuring proper coverage. ABHA (Ayushman Bharat Health Account) is a technology-driven program that aims to bring health insurance to every corner of the country.

The ABHA paves the way for the implementation of the health claim exchange, which will integrate the entire healthcare ecosystem, i.e. hospitals, insurers, healthcare service providers, and TPAs, into a single platform to ensure a seamless exchange of information and data and thus help reduce the TAT of the claim process, eliminate or lower fraud, and bring uniformity, making the entire process digitized and hassle-free.

Similarly, extensive engagement has already occurred with the IIB (Insurance Information Bureau), a data repository and analytics agency for the Indian insurance sector, which could possibly address issues such as under-penetration, NCB leakages, and fraudulent claims, among others. IRDAI is also working on new ways to improve the consumer experience, such as implementing 100 percent cashless claim settlement through common empanelment and interoperability with hospitals. This would also help the insurance business and the country increase insurance penetration by leaps and bounds.

Using new technologies in conjunction with stakeholder collaboration will aid in the detection and prevention of abnormalities, trends, and suspicious actions. It will also pave the way for comprehensive risk assessment models that will help better understand risk and thus accurately underwrite risk, fostering product innovation and customization, pricing optimization, and centralized information-sharing, thus improving accuracy and efficiency.

 

Making Insurance Inclusive: Bridging the Insurance Gap

When many people think of the insurance business 2.0, they think of technology to improve the consumer experience. Insurance sector 2.0 goes beyond technical developments to include, make available, and accessible insurance to every home in the country. Historically, insurance availability has been mostly limited to larger towns and cities, with a lesser impact in tier 2/tier 3 locales. Historically, insurance availability has been mostly limited to larger towns and cities, with a lesser impact in tier 2/tier 3 cities.

This is because of a lack of awareness, a limited distribution network, and inadequate infrastructure to service claims. It is an underlying truth in India that insurance penetration is low, and not everyone is adequately insured. India has less than one percent non-life insurance penetration, which is much lower than the industry average of approximately four percent, and insurance providers must address this massive protection gap. Bridging this gap is not difficult, thanks to enhanced digital infrastructure and increased mobile connectivity, which will help raise insurance knowledge; hence, the correct product, service, and effective distribution strategy will allow us to tap the untapped. Initiatives such as Bima Sugam, a centralized online marketplace that will simplify insurance policy sales, service, and claim handling under a single platform, would assist in delivering customer-friendly goods and increase convenience for policyholders.