The Opportunity That Lies in Non-life Insurance Space
Is India realizing the importance of general and health insurances?
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The insurance industry in India has existed for nearly a decade now but only recently it underwent the phase of liberalization and deregulation. Despite over 100s of insurance companies operating across health, life and general sectors, not many citizens realized the importance of non-life insurances until recently. Investing in safety packages for auto, health & travel was treated as expenditure rather than a way out to navigate through various risk scenarios.
Over time, the increased disposable income and improved general awareness have played a crucial role in amplified general & health insurance subscriptions. Having been nationalized in 1972, the industry has come a long way. Consumers have started to realize the value of non-life insurance products. With the upsurge of the start-up ecosystem in India, a significant boost of technology integration into insurance services has been noted, leading to increased adoption of such products.
Entrepreneur India talked to some leading names in the health & general insurance space to assess the market scenario.
Technology – The Game Changer
The penetration of the internet across the Indian borders has brought along endless opportunities for business aspirants. The insurance sector is reshaping with the entrance of new players in the market, by merging product thinking, data and technology with the existing bone structure of the industry. There are about 450 million digitally active consumers today, using more than 8 GB of data per month.
65 per cent of the Indian population is below the age of 35, representing the largest cohort in human history stated Rohan Kumar, the CEO and Co-founder of Toffee Insurance, adding, "With new technologies rapidly emerging, consumers now want insurers to deliver superior, personalized and seamless services across all channels."
The new-age consumers are supremely active online and are looking to adopt a safer lifestyle. To fit within this scope, insurers need to be relevant to the end user and technology can help accelerate the process. However, for real-time results, conventional mediums need to be sidelined. Kumar suggested three areas to challenge traditional enterprise structures:
· Blockchain technology can be used to drive smart insurance contracts in Policy Issuance & Claim Servicing. This will also allow for real-time claim processing.
· AI & ML and advanced data mining techniques can help in assessing real-time risk scenarios to provide variable/dynamic pricing. This will help fuel the on-demand personalized insurance structure.
· Insurers can integrate with various IOT devices to drive data loops and personalised insurance plans.
In the global insurance space, emerging technologies are changing the business landscape. While in India, technology adoptions for both company and individuals are still in the budding phase which will continue to affect insurance penetration, provided Atul Deshpande, the Head of Operations, Strategy & PMO at SBI General Insurance.
He further added, "The use of web-based technologies as an Insurance service delivery medium has added new elements to service dissemination. The escalation in self-service technologies has provided customers with multiple choice for using services offered by insurers. The online service attributes of "convenience' and "ease of use' are being given priority by customers for designing web-based solutions."
A Hotbed for Startups
Private players have gained momentum in the insurance space with their flexible approach towards providing such services as they are more open to tailoring their products to the specific needs of the customer. Currently, there are around 30 Private General Insurers operating in India offering a variety of products. According to Neeraj Prakash, Managing Director, Shriram General Insurance, Insurance Awareness Program has played a crucial role in the growth of general Insurance market in the country.
More so, people have started understanding that paying premiums of general insurance is like depositing the amount in a savings account. Giving a context, Prakash said, "Valuable possessions in our life, such as home, business and vehicle are also very important as our life. Some of the recent disasters Like Mumbai Floods, J& K Floods, Uttrakhand tragedy and Chennai Floods also prompted this revolution. Most of the Property, which was damaged under these catastrophes, were uninsured."
Buying insurance online has become a fad in recent years. While the share of premium received through online sales is still small in India but the medium holds great potential. The unconventional method provides convenience, quick execution of services and most of all, clarity about the product. A number of start-ups in the insurance space have jumped the field to address the pain points of customers through their unique identification.
One such organization is Digit Insurance. The startup has witnessed the insurance industry evolving over the years. "The industry is coming up with insurance solutions that cater to the changing lifestyles and life products of people," Vijay Kumar, CEO & Principal Officer Go Digit General Insurance Ltd, adding, "Customized products are the way forward to increase penetration of insurance products."
Further providing testimony to the increased consumption of online insurance services, Kumar claimed, "Digital claims give customers speed and ease, so it's a win-win situation." The insurance industry is undergoing a major shift. Major European insurers have set up innovation divisions or labs and have set up huge investment funds to invest in Insurtechs, verified Pallav Singh, Co-founder & CEO, Kruzr.
He further suggested that we see this trend even in some Indian insurers, which makes us quite bullish about the InsurTech domain in India. Recently, online startup Acko General Insurance Co. Ltd raised $65 million in a Series C round of funding led by Flipkart co-founder Binny Bansal, recommending an increased interest of investors in the insurance space. Taking a glance at other deals, we see a string of online insurance platforms raising funds.
In January, Turtlemint raised $25 million in a fresh funding round led by the Indian arm of global venture capital firm Sequoia Capital whereas the parent company of insurance startup Digit Insurance Go Digit Infoworks Services Pvt. Ltd raised $45 million from existing investor Fairfax Holdings in July last year.
Post the economic liberalisation, tonnes of opportunities were available for private players to explore and the government was there to handhold. With reference to health insurance policies, the Insurance Regulatory and Development Authority (IRDA) of India has lineated certain regulations to further support the insurers. "Portability options opened by IRDA in health insurance category is now providing a valuable boost to this category," provided Anand Shrikhande, the CEO of Quickinsure.
Insurance is a complex and high involvement product. People have started considering Health and Motor insurance policies as a compulsory part of their financial portfolio. According to Dhirendra Mahyavanshi, the Co-Founder of Turtlemint protecting vehicles against damages has become a priority for customers and the digital intervention has made the claims way easier to apply and track.
"For health insurance awareness of insurance has gone up way higher. Corporates, as well as the Government, have enrolled in health schemes, making the concept even more popular. With the ever-rising healthcare costs, insurance comes as salvage as paying the entire expenses out-of-pocket cost a lot," he stated.
Shrikhande highlighted the role of government in pushing such schemes by stating, "New add-on attachment to existing products, a government mandate on crop insurance and increasing awareness of the need of health insurance are some more triggers for this revolution." Talking about future trends, Mahyavanshi sees a good future when it comes to offering health wellness solutions like regular health check-ups, fitness bands etc.
Even motor insurance has become a compulsory deal for new vehicle buyers. IRDA has mandated multi-year policy to increase two-wheeler insurance penetration. However, only 80 per cent has been witnessed yet due to two-wheeler riders dodging the compulsion to save a few bucks, inviting high risk in case of mishaps. Nonetheless, India's auto sales are growing healthy at 10 per cent, which makes motor insurance a growing sector in India.
"With the Government aided and funded schemes for Crop, Health, and other insurance covers reaching out to the length and breadth of the country, there will be increased awareness over the next few years. It is critical that this awareness is leveraged to ensure that the uninsured, as well as the underinsured population of the country, is covered adequately for risks," Deshpande said.
Move from Traditional to Innovative
The insurance industry has embarked on a radical transformation spurred by a series of digital innovations. We are experiencing spur in small ticket products in all segments of general insurance. Startups are coming up with innovative and affordable solutions to fit the bill for millennial by offering non-conventional services like insurance for fitness, daily commute etc.
Traditionally, these kinds of OTC products were treated as luxury and not many would invest in the services but with time and increased awareness, customers are more willing to spend on something of relevance. Explaining the inclusion of motor insurance cover as a necessary service, Shrikhande said, "Customers do their research online and also want to engage in communication before buying (these) products."
Besides Health and Motor insurance, other services are still at a nascent stage of growth in India. "We observed customer's preference on small ticket size policy purchase via an online media such as retail health and motor policies. In the case of large ticket size products, the customer does seek traditional purchasing channels where human interactions are present," Deshpande expressed.
With the recent cases of data leak becoming the highlight, enterprises are getting concerned about their cybersecurity. This threat to online documentation has led to the increased demand for innovative insurance products like Cyber insurance to prevent the breach or loss of data and identity theft.
The increased usage of smartphones has raised the need to get mobile screens insured too. "With the explosion of smartphones and travelling Indians, both domestically and internationally, insurance products like mobile and travel have been both beneficial and attractive," Kumar further provided.