The insurance industry has undergone numerous transformations in terms of new developments, modified regulations, proposals for amendments and growth in 2022. These developments have opened new avenues of growth for the industry while ensuring that insurers stay relevant with changing times and the latest digital disruptions. The IRDAI is vigilant and progressive and is determined to achieve its mission of ‘Insurance for all by 2047’, with aggressive plans to address the industry’s challenges.
In the global space, the Insurance sector is embracing cutting-edge technologies such as machine learning in the automation of claim management, personalized insurance pricing with the Internet of Things, and Telematics for car insurance. While in the case of India, according to the India Fintech Report 2022, Artificial Intelligence (AI) /Internet of Things (IoT)/ Machine Learning (ML), automated claims, web aggregations, e-commerce insurance marketplaces, Software/White Label/Application Programming Interface (APIs) and embedded insurance are being offered by various insurtech players in the market, given the on-going digital boost in the sector. The IRDAI’s expectations from the sector hint at its aim to push technological advancements and innovation in the industry.
Here’s a quick recap of the 2022 key trends and developments that can potentially change the face of the Indian Insurance and Insurtech segment.
- Permission for insurance companies to invest up to 30% of assets in BFSI sector: With this reform in place, insurers can optimize their investment strategy, thereby giving potentially higher investment income in their profit and loss statement. The domino effect may be seen in more eased-out claim settlement policies, eventually translating into a better claim reimbursement experience for the end customers.
- Proposal to reduce the INR 100cr. Minimum entry cap for insurers: Easing capital requirements will help create a specialized or mono line for segments like motor and properties. Policyholders will be offered a wider array of competitively priced and technologically innovative products, and the insurance sector will witness greater competition, job creation and transparency. This can also give birth to micro- or specialised- insurance companies in the fields of agri, SME, travel, consumer electronics etc.
- Extension of the “Use & File” procedure by the IRDAI: This norm carries the much-needed promise for the insurance sector, as it offers more scope for product innovation and customization, faster go-to-market speed, facilitates conducting a pilot in smaller groups and study the adoption, thus overall influencing the penetration rate positively.
- Proposal for the launch of the Bima Bharosa Platform: The platform will be crucial from the customer’s point of view, considering it will act as a single source of information for them. It will enable tracking an existing complaint and filing a new one, which will build trust between customers and insurers and increase data authenticity.
- Pay as you drive amendment for motor insurance: This reform allows customers to enjoy reduced car insurance premiums, along with the installation of a free telematics device to measure kilometres and report one’s car’s health. It also offers much-needed flexibility and customization options for the plan as per customers’ preferences.
- Proposal to launch Bima Sugam: The proposed regulator-supervised platform will introduce standardization across the industry, bringing more transparency and helping reduce mis-selling and fraud risk instances. On the agent and insurer side, it will bolster their credibility and support early startups while testing the waters with innovative covers like OPD covers.
- IRDAI’s proposal to launch a composite insurance license: The proposed composite Insurance license will bring numerous benefits to the industry, including permission for portfolio profitability – long-term sustainability of programs, better product creation, with a mix of health and life covers, better return on investments on tech and more.
- Tie-up limit for intermediaries increases by 3x: From now on, The potential and current policyholders can have access to a much broader choice while shortlisting the perfect policy for themselves. The new tie-up limit for CA is nine insurers, and IMF is six for each line of business of life, general and health insurance leading to not just huge variety but also more competitive price offerings for the end audience.
- A testing environment for the Insurance companies: Small-scale experiments will now be a possibility for a regulated sector like Insurance. As per the new guideline, The Regulatory sandbox will enable the testing of innovative products, technologies, etc., in a controlled regulatory setting with a maximum experimentation length of 36 months. The mid-way approval process will also enable a faster go-live of new innovative products in smaller batches rather than awaiting the final big release. The customer experience is undoubtedly on an upward move basis the mentioned.
In 2023, the insurance industry will need to continue the momentum with impactful transformations. Technology-enabled customization and transparency are expected to boost the need for insurance in India’s tier 2 and tier 3 cities in the upcoming years. Distribution of policies through bundling also has the potential to become a major source for acknowledging customers’ needs and boosting the sale of policies. According to various industry reports, cloud computing, data and analytics, automation of claims via telematics technology, and applied Artificial Intelligence are some of the key technological disruptions that are bound to impact the insurance industry in the near future significantly.
(By Mayank Gupta, Co-Founder and COO, Zopper. Views expressed above are personal)