Insurance Industry in India & its Future
India has a long tradition of pooling resources together for rainy days. Writings from ancient times such as the Manusmrithi and the Arthasastra mention insurance like activities very clearly. So when the first insurance company was established in...
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Insurance Industry in India & its Future
India has a long tradition of pooling resources together for rainy days. Writings from ancient times such as the Manusmrithi and the Arthasastra mention insurance like activities very clearly. So when the first insurance company was established in 1818, the Oriental Life Insurance Company in present-day Kolkata, the general population were extremely receptive to the concept.
Today, 200 years later, the industry has become a behemoth. At present, there are 57 insurance companies in India, among which 24 deal with life insurance, while 34 deal with non-life insurance. In 2021, the number of new customers increased by 22.2%, which was 2.9% in 2020, and the overall market size is expected to grow at 5.8% in the first half of 2022's financial year, compared to 0.8% in the previous period.
What do these numbers mean for the general public or those interested in the insurance industry? The first implication is that there will be increased interest in the industry, both from private and public players. In the 2021-22 budget, the Central government pushed FDI limits upwards in the sector from 49% to 74%. New policy norms and regulations for the welfare of all stakeholders are also predicted to be introduced. Schemes by IRDAI have also been planned where model villages are set up to increase the penetration of insurance habits in rural India.
The second result of this increased interest is that the sector will witness a new wave of digitization. Automation of legacy processes like claims management, application, and renewals can expect more customer focussed digitization. For those working in the industry, it also means better ease of doing business and a more satisfying workflow.
Digital Transformation---A Game Changer
All modern industries and service sectors are focused on reducing touch points while increasing the quality of user experience. By using predictive analytics and IoT concepts in the workflow, digital transformation has helped the insurance industry achieve its targets. LIC's virtual assistant LIC Mitra, New India Assurance's BIMA bot, and United India Insurance's UNI Help are prime examples of the focus on digitization of process flows. The increase in the number of people using digital tools has also accelerated the adoption of new technology in an otherwise traditional industry.
Machine learning and artificial intelligence are also technology that looks to increase customer experience and employer profitability. Claims processing, often a dreaded procedure because of its long-winded documentation process, is an area that is being focussed on by these developing technologies. For example, files that are uploaded on the cloud can be analyzed through algorithms that are designed to give results with improved accuracy.
Life insurance and general insurance policy providers in India can see an increased interest in them in the coming years. The country has a large working population who are working, mainly in the unorganised sector. Increased awareness with regards to the benefits of having an insurance safety net is predicted to be a strong nudge to get themselves and their family insured. The pandemic was a big wake-up call for those that did not have proper health and life insurance. During the first and second waves, many struggled to fulfil their liabilities. While it was a lesson learned the hard way, it has underlined the importance of being insured.
In countries like the United States, getting insured is a mandatory requirement by the law. Health covers for any duration of hospitalisation, employee benefits that cover gaps between jobs and better premium facilities are also perks that developed countries enjoy. As India moves towards becoming a bigger economy, these advantages will definitely be implemented in the country.
The onus falls with both parties---the insurance service provider and the public. Insurers need to move swiftly and embrace new technologies that will make policies more accessible and lucrative. Simultaneously, the public needs to evaluate their aspirations and choose insurance providers that can help them achieve their goals.
Reaching PrishaPoilcy is your first step to finding an insurance policy that works for you. Contact us today.
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