With a demographic shift, rising disposable incomes, and a government actively pushing financial inclusion, the Indian insurance sector stands on the cusp of another promising year in 2024. Life, health and motor will witness more growth with evolving consumer needs. Statistics reveal a burgeoning middle class, which with its increasing purchasing power, is expected to comprise 47% of the population by 2030. Rising income will invariably lead to more awareness and affordability towards insurance in the times to come.
The landscape of motor insurance in India is undergoing a transformative shift, evolving from a reactive to proactive approach. Beyond the traditional considerations of premiums, this paradigm change is evident through the introduction of pioneering solutions such as Electric Vehicle (EV) insurance and ‘Pay as You Drive’ plans, strategically designed to address the contemporary market challenges. This shift not only signifies a technological leap within the industry but also reflects a fundamental change in the perception and approach towards motor insurance, aligning it more closely with the evolving needs and preferences of today’s consumers. Usage-based motor insurance plans are expected to catch more eyeballs this year – as customers who drive less can get higher discount benefits on the insurance premiums.
In the health insurance category, there has to be more even distribution of health insurance plans. The public healthcare system is facing issues with insufficient and inadequate funding, and hence, private insurance players need to fasten their distribution and outreach. Approximately 514 million people across India were covered under health insurance schemes in 2021, which merely covered 37% of the people in the country. Nearly 400 million individuals hardly have access to health insurance. Thus, this year, insurance companies need to accelerate the technology pace and reach out to those 40 crore people who need insurance.
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Despite a modest slowdown in 2023, the life insurance sector remains primed for a growth spurt in 2024. With new business premiums surging by 27% to a staggering Rs 33,560 crore in January 2024 alone, the trend is expected to remain positive in the coming years. However, challenges like the urban-rural divide and high distribution costs persist, which is leading to slow growth in life insurance. The rural-urban gap is one of the key reasons for the inconsistent growth in the life insurance segment. Government and private players need to together work and push the distribution of life insurance into the smaller pockets of the country.
Corporate insurance/ group insurance will witness more doubling down on digital capabilities, connectivity, and supplementary offerings. Projections indicate that the growth trajectory for group insurers in the coming years will closely mirror economic trends, employment rates, and wage patterns. As the awareness for long-term care is growing, consumers are looking to their insurance benefits as a part of their additional employee perks. Notably, the year ahead is poised to witness a notable expansion, with more companies extending corporate insurance benefits to gig workers. The buzz surrounding insurance protection for gig workers is gaining momentum, exemplified by initiatives from companies like Ola and Dunzo. Furthermore, the proactive involvement of state governments, such as Karnataka, in providing insurance coverage for gig workers adds a significant dimension to this evolving corporate insurance landscape.
To conclude, the future of the Indian insurance industry hinges on a collaborative approach involving all stakeholders – the insurers to continuously innovate products and services; the regulators make insurance accessible for everyone; and tech players, to provide cutting edge solutions that upscale efficiency. By capitalizing on its growth drivers, addressing existing challenges, and adopting a collaborative approach, the Indian insurance industry is well-positioned to unlock its full potential in 2024 and beyond, ultimately contributing to a financially secure and resilient future for the nation.
(By Aftab Chaz, Associate Director and Business Head at Elephant.in (Alliance Insurance Brokers). Views are personal)