With the onset of Insurtech, the entire insurance buying experience in India has become completely dynamic
The technology advancements have also found their application across different aspects of the insurance business including sales, claims, underwriting, as well as customer service.
Here's looking at four key opportunities in Insurtech for 2021.
The Indian insurance industry has transformed from a seller’s market to a buyer’s market over the last two decades. The insurance sector made its debut in the digital space in the year 2005, just 15 years back and today it is expected to clock a turnover of US$ 280 billion by the end of 2020, according to IBEF’s recent Indian Insurance Industry Analysis Report. This figure quite prominently reflects the positive disruption caused by the digitalisation of the Indian insurance industry.
With the onset of Insurtech, the entire insurance buying experience in India has become completely dynamic and covers end-to-end customer journeys with highly customised and relevant services. Today, insurance interactions have become “phygital” – a mix of physical and digital, although increasingly bending more towards the digital side. Insurance companies are exploring options beyond the traditional banking institutions for their insurance requirements and banks are partnering with fintech companies to provide services faster and at a lower cost. This new way of servicing is benefiting insurers as well as banks as they are retaining clientele while consumers are getting better customer services from the fintech companies.
The technology advancements have also found their application across different aspects of the insurance business including sales, claims, underwriting, as well as customer service. With the help of artificial intelligence and machine learning, insurance providers are today able to offer simplified insurance plans to end consumers, thereby developing higher trust levels with them. Also, data-backed underwriting services have enabled insurance companies and insurance web aggregators to offer personalised premium quotes to their consumers. Another way, in which technology has positively impacted the insurance sector is the automation of claim services which has made the claim processing faster and easier for consumers.
According to data from InsureDekho, by 2025 insurance is expected to grow to 5% penetration with 10% CAGR while the industry is expected to be worth $196 Bn. This is a great opportunity for startups to drive innovation in the sector. Here are four key opportunities that can be explored in 2021.
Digitally-Enabled Insurance Selling
Insurance penetration in India today is below 4%, very low as compared to other parts of the world. This is despite a large population, rising incomes and rapid urbanisation of the country which makes it quite conducive for insurance. This makes it an attractive segment for upcoming startups to launch Insurtech services targeted towards setting up a wide distribution channel across the country through a phygital model. This digital set up can be operated with remote offices across the country, empowering agents to sell insurance through digital means but at the same time maintaining human interface.
Right Plan For The Right Person
Insurance is a highly personalised product. With the use of dynamic algorithms and customer profiling, Insurtech startups can identify the insurance products that fit perfectly to different customers. The process of personalised offering can be aided with the use of Natural Language Processing (NLP) based chat modules to discuss customer requirements and insurance plan benefits.
AI/ML Based Claim Settlement Process
Artificial Intelligence and Machine Learning have made analytics processes more accurate than before. With artificial Intelligence (AI)/ Machine Learning (ML), Insurtech startups can assess the damage and estimate repair costs to analyze and define settlement claims in an automated, efficient and faster manner. For instance, AI algorithms which can automate the entire claim validation process and assess the exterior of a vehicle and share recommendations on the next course of action, can help save hundreds of man-hours and millions of dollars which go as claim servicing costs. Such processes are expected to emerge as game-changers of the Indian Insurtech industry.
During the pandemic, Insurtech has integrated with mobile applications/wearable devices that analyze the health and lifestyle reading of potential customers. By analyzing an end user’s driving behavior, heartbeat, fitness habits, insurtech can provide a better and accurate score and help in increasing underwriting precision and thus reducing the premium for the consumers.
Beyond Insurance Industry
The Indian insurance industry provides Insurtech startups with enough expansion opportunities. However, there are opportunities beyond the insurance industry that Insurtech startups can explore, ultimately offering better services to customers. Several innovative insurance products have already been tapped into. For example, micro insurance products such as hotel stays, train journeys and cab rides are securing passengers against ride cancellation. However, there are multiple opportunities where insurtech startups can tie up with other startups to add value to the ecosystem.
The Road Ahead
The insurtech industry in India is poised for transformation and to support similar business operations. It has the potential to play a catalytic role in bridging the insurance gap in India across consumers and businesses and make an impact on the entire ecosystem. Even, during today’s tough times when the pandemic-declared Covid-19 has brought the world to a standstill, technology-friendly insurance services have made it possible for everyone, even for the people in the remotest corners of the world, to continue to avail insurance services completely online, from the ease of their homes. And it is expected to further ease and make the insurance buying process in India an even more delightful experience.