By Aftab Chaz, Associate Director and Business head at Elephant.in, Alliance Insurance Brokers
The insurance sector in India is expanding despite the challenges faced. The country’s current estimated insurance penetration rate is 4.2%, however, this number is expanding swiftly.
Primary insurance sectors of Health and Life insurance are both growing steadily. The demand for and growth in these two categories are primarily observed in smaller towns and cities. Additionally, post-COVID-19 pandemic, the Motor insurance sector too is now seeing significant growth.
There has been a sharp increase in insurance density in India. While life insurance density went up from US$ 9.1 in 2001-02 to US$ 69 in 2021-22, non-life insurance density has gone up from US$ 2.4 to US$ 22, in the same period. The country is poised to emerge as one of the top six insurance markets in the world by 2032, ahead of Germany, Italy, Canada and many others.
The growing penetration of insurance in India, is highly attributed to the new advancements in technology. Like many other sectors, technology has been a game changer in insurance, especially in the last two years. Post pandemic, it has been the key channel to help insurance penetrate into tier 2 and tier 3 cities. Below are some technological advancements which are fast-tracking the penetration of insurance.
Applied AI: As AI has become more prevalent, algorithm creation has become more
commoditised and insurance companies are fundamentally re-engineering core processes, to be more predictive. Consumers are always looking for personalised experiences, especially when they are purchasing something as important as insurance. AI is offering consumers the ability to create unique experiences, meeting the high-speed demands of modern consumers.
Additionally, with AI, insurers can improve claim turnaround cycles and fundamentally change the underwriting process. AI also enables insurers to access data faster, leading to more accurate reporting in shorter periods of time.
Making insurance personalised: Insurance companies are using consumer data available, to create personalised experiences, based on an individual’s behavior and habits. Customers have started preferring self-service customer care, and omnichannel experience for seamless insurance processes. The companies are providing services in phygital model to have better and easy access for customers to approach insurance companies for better and right insurance products.
Predictive Analytics – Predictive analytics is used by multiple insurers to collect a variety of data and help them understand and predict consumer behavior. This behavior pattern is further studied to reach out to consumers, with the right kind of insurance products, as per their buying behavior, income, family history, etc. Predictive analysis is being used for pricing and risk selection, identifying consumers at risk of cancellation, identifying risk of fraud, settling claims, identifying outlier claims, and identifying anticipating trends.
Chatbots: Utilising AI and machine learning, chatbots can interact with consumers seamlessly, saving time, money, and operational costs for organisations. A bot can walk a customer through a policy application or claims process, reserving human intervention for more complex cases. With advanced technology, chatbots are becoming more and more efficient with consumer interaction, helping them buy the insurance and even resolve consumer issues.
While some technological innovations have been listed above, upscale is a never-ending
process for customer experience and better product reach. With time, it will keep on
advancing, new developments will keep taking place, innovations will happen and insurance penetration will keep increasing, owing to the technical advancements in a country that needs this transformation, to reach at the grass-root level to the millions.