By Casparus Kromhout – MD & CEO, Shriram Life Insurance
With a modest insurance penetration, insurers in India have a valuable opportunity to achieve the vision of Insuring all by 2047 by leveraging AI and digital tools. In terms of the value of premiums, India, in 2022, was ranked as the tenth largest insurance market in the world. In 2023, India had a total insurance penetration of 4%, which was lower than the global average of 6.8%, and life insurance penetration in India stood at 3%, a drop from the previous year’s 3.2%. However, total life insurance premium grew by 13% for the year.
The figures indicate that there is an increase in the demand for growth in insurance; however, the proportion of the population covered by life insurance is not keeping pace. This hints towards some significant disparities in insurance coverage. The need is to expand the reach of insurance to all customer segments irrespective of geography and be able to provide solutions for all segments of the society. This is where AI and technology have the ability to bridge the barriers, enabling insurers to more effectively reach and serve India’s underinsured and uninsured populations.
Tech solutions make a big difference
The internet penetration rate in India has increased from 13.5% in 2014 to 52.45% in 2024. The Government’s ‘Digital India’ initiative has helped boost the ease of doing business using digital tools. Further, people have started trusting these tools and are using them more frequently in their daily lives. When it comes to insurance, a 2023 study says that 20-25% of Indian customers are increasingly accessing digital tools or channels to look for insurance options. However, selling life insurance requires a lot of personal face-to-face interaction. At the same time, technology solutions are very critical — they make a big difference. With the growing comfort with digital technology in India, the stage is set for insurers to deploy advanced tools, including Artificial Intelligence (AI).
This shift underscores the clear necessity for widespread technology implementation, given that technological disruption is a significant factor in the Indian market. Globally, customers are increasingly interacting with brands via multiple channels, with many insurance customers seamlessly experiencing online and offline interactions, finds a 2023 BCG report. Personal channels that include agents or independent intermediaries are still the most popular, adds the report. On the other hand, technology is enhancing customer experience, with chatbots and websites providing 24/7 assistance. These AI-led interventions help users navigate policies and address queries with just a click on the screen.
The next phase could see these tools becoming more intuitive by providing individuals with varying levels of digital comfort — a critical step in a country where digital literacy is still evolving. Another key area where AI can transform the insurance industry is claims settlement. With the help of tech, now claims can be settled within a couple of days. This could be improved to a few hours as well. And faster claim settlement builds customer trust and insurance awareness.
AI reduces cost
AI can also help reduce cost. Take for instance, it can revolutionise the process of underwriting solutions. This process includes assessing risk and deciding premiums. AI helps insurers analyse vast amounts of data, including medical records and financial information, and this can provide an accurate assessment of an applicant’s risk profile. This can lead to potentially lower premiums for policyholders. For instance, if a person leads a healthy lifestyle — which could be assessed from their medical records — they could pay a lesser premium.
Tech tools can be used to assess risks, and therefore, help reduce costs. That means insurers could pass on those savings to customers with lower policy premiums. This could make life insurance more affordable and accessible to a much wider group of people.
Offering convenience at a click
Technology has not only made people’s lives easier but also increased their need for convenience. For instance, more than 80% of GenZ and 74% of millennials shop and discover products on social media, says a report. This indicates they value convenience, and technology offers that at just a click. Insurers have understood this need and are responding by offering a range of online tools, such as calculators that show how their lifestyle choices like smoking and other medical inputs like body mass index, can impact their premiums.
Using these tools, users can get personalised recommendations to choose investment options. Technology has moved from being a supplementary tool to become a driving force reshaping the insurance industry. By harnessing these tools, we can build a more inclusive and accessible insurance market for all.