This year has been eventful for the Indian life insurance industry having seen multiple changes which will shape the future of the industry. It saw the passing of the much awaited insurance Bill that allowed foreign equity investment limit to be increased to 49% and other changes giving greater regulatory powers to the Insurance Regulatory and Development Authority of India (IRDAI). After a lean period of three years which saw a decline in new business premium, the industry witnessed polarised growth with a few private companies leading the growth, but others including LIC witnessed a sustained downward trend.

The industry witnessed several important changes including some successful experiments resulting in new learnings. The success of the Pradhan Mantri Jeevan Jyoti Bima Yojana highlighted the success of a simple product backed by a easy technology led process. A significant development on distribution front was providing corporate agents the option of tying up with multiple insurers in each line of business. This may possibly change the third-party distribution landscape in the industry. New formats of distribution such as insurance marketing Firms may provide new business models.

A key focus for both, regulators and life insurers, has been improving customer centricity resulting in vastly improved 13th month persistency levels for the industry of 69% in 2015 from a low of 60% in 2012 with some market leaders even nearing 80%. However, a lot more needs to be done to pull India out of its dubious position at near bottom in this area. Low customer retention results in sub-optimal outcomes for all stakeholders which negatively impacts the customers’ trust in life insurance. Going forward, life insurers should focus their energies majorly on rebuilding trust with consumers.

Thus, in 2016, we expect to see simplification and transparency in product design with an emphasis on responsiveness relating to ‘customer mindfulness’ and ‘customer engagement’. Focus on sales practices, adequate disclosures, seller accountability, grievance management and claims settlement are likely to occupy the industry’s attention as well in the coming year. Regulation related to no rejection of death claims after three years, will require the life insurers to increase underwriting efforts at the time of policy issuance.

An important catalyst to growth in the industry is the rapid deployment of digital technology in India. This has been aided by deeper penetration of mobile connectivity resulting in the number of connected devices increasing significantly. According to a report by IAMAI and IMRB, by December 2015, the number of Internet users in India are expected to reach 40.2 crore and about 30.6 crore of these will access it using mobile devices. This has led to social networking sites becoming more popular with Indians than ever leading to large volumes of data being generated. In 2016, this will present a huge opportunity for life insurers to tap into this large volume of data and turn conversations into connections.

Digitalisation also encourages the industry to have the digital touch throughout the customer journey. E-commerce will continue to strengthen as a channel for new acquisition but at the same time internet penetration will support the Research Online Purchase Offline phenomenon in life insurance. Digital service solutions and social CRM for on the move service support in the environs where customers are already present are expected to gain more traction over the next few years.

The private sector life insurance industry in India is 15 years old and has reached a level of maturity. While 2016 will come with its own set of opportunities and challenges, the India growth story and revival of interest in financial savings will give much needed tailwinds to the industry. Life insurers are ready to invest in customer education and retention and long-term value creation for all its stakeholders.

By Rajesh Sud

The writer is CEO and managing director, Max Life Insurance