Emerging Trends in General Insurance – India 2019

A strong growth has been seen in India’s non-life insurance segment over the last few years. The market share of private companies is also increasing, reaching 50.40% from 13.12% in 15 years. Furthermore, rising internet penetration has improved awareness and accessibility, thereby accelerating demand for insurance products. Leading insurance companies have been going for an initial public offering (IPO), signifying a step towards improving disclosure standards and periodicity by making the companies answerable to investors and the society in general.

Certain key trends have emerged amidst the changing landscape. These trends are as follows:

Deeper Integration of Evolving Technology into Insurance Processes

Evolving domains such as Advanced Analytics, Machine Learning (ML), Artificial Intelligence (AI) and Big Data are empowering providers with diagnostic, descriptive, predictive, and prescriptive models. This is enabling them to access customers on multiple parameters, automate processes such as complex underwriting, fraudulent high-risk claims detection, performing accurate & consistent claims settlement. Blockchain, a Distributed Ledger Technology, is also gaining traction, despite its applications and uses not being crystal clear. Improving efficiency, lowering operational costs, enhancing privacy and security in the long term through these technologies will continue to be key areas of innovation in the coming years. The industry will also be heavily investing in data science, with increasing ease in the collection of consumer data and development of technique to leverage it towards building potential clients. The regulator is also promoting the experiential sandbox approach.

Customized Product Offerings and Transformed Customer Relations

The rise of connected devices, Internet of Things (IoT), and sensor-based technologies is resulting in a massive inflow of real-time data. The insurance sector is likely to harness this effectively to provide customizable offering and determine premiums. Insurers are being able to develop a much stronger understanding of the overall insurance landscape and create products accordingly. As IoT and AI transform customer relations, innovations such as digital agents and chatbots can handle many common customer service issues. The horizons of what can be done in terms of service delivery, customer relations, pricing, offerings, underwriting, and loss control are likely be redefined with the number of connected devices reaching 50 billion by 2020.

Gaining Momentum from Regulatory Changes and Government Initiatives

Health, Motor and Crop Insurance have emerged among top non-life insurance segments. While the three have been witnessing a steady growth, they have also gained momentum from regulatory changes and government initiatives in the last year.

Health Insurance has seen a rise in the customer base, as government initiatives such as Ayushman Bharat provide cover of upto Rs 5 lacs to more than 100 million vulnerable Indian families. Increasing penetration of health insurance to almost 50% of our population, will lay the foundation for health insurance at the bottom of the pyramid.

Similarly, opportunities have also emerged in the domain of Crop insurance, as the government provided cover to over 50 million farmers in 2017 - 18 from 55.3 million in 2016-17 under the Pradhan Mantri Fasal Bima Yojana. Providers can leverage this opportunity and help bridge the gap as 70% of the farmers are yet to be covered in the scheme. Motor insurance also saw regulatory changes as long-term third-party insurance was made compulsory for new cars for 3 years and new two-wheelers for 5 years. This will significantly augment the insured vehicle number which is stagnating around 50% at present.

To conclude, 2018 proved to be an interesting year for the insurance industry with various developments. With technology seeping deeper into operations and processes, a shift towards ‘digital first’ business models has been predominant. Collaboration between traditional insurance companies and newer Insurtech firms is also being seen. In 2019, progress on these tangents will continue making way for innovative ways of doing things as well as create new revenue streams with higher profitability.