By Chetan Vasudeva
Since the past three years, the insurance sector has been showcasing a consistent year-on-year growth. In 2023, the sector showcased an impressive growth rate over the last two decades; this was driven by more private sector participation, improvement in distribution capabilities, insurers improving their operational efficiencies and relaxation of norms by the Insurance Regulatory and Development Authority of India (IRDAI).
Life insurance has remained the centre of focus this year, with modernization, innovation and use of digitization. Though the category did not witness remarkable growth so far, insurers are focusing on this segment and trying to take it to the masses across the country. Health insurance demand has prominently grown this year, where consumers have been more inclined towards the use of digital in health insurance. Health insurance grew by 24.4% in the first half of 2023-24 (H1FY24), driving the growth of the overall non-life insurance industry; the surge in the price of group health premiums acted as a key contributing factor to the growth of health insurance. Motor insurance too has performed positively this year. With rising disposable income, people have invested more in two and four wheelers, leading to increase in motor insurance by around 17% in FY 23-24 (till date).
The insurance industry is embracing digital to improve consumer experience, enabling insurers to compete with digital native entrants and improving cost effectiveness, along with scalability. Products have been simplified, so that consumers need not depend on paper work for the end-to-end process of insurance. Whereas, the insurance agents have been helping consumers with choosing the right kind policies, most suited for their requirements. The phygital model of insurance has helped in the increasing the insurance penetration by 8-10% this year.
IRDAI has been extremely innovative and supportive in introducing new policies and relaxing multiple norms, which have shown significant improvement in insurance in a short span. Encouraging insurance companies for customization has helped insurers introduce newer products in the market this year, which have been more specific to the changing consumer needs. Initiatives like permitting insurers to conduct video-based KYC, launching standardized insurance products, allowing insurers to offer rewards for low-risk behavior, working on transition to a risk-based solvency regime, have been helpful in fast-tracking the insurance processes. IRDAI has also allowed PE funds to directly invest in insurers, which will further boost the investment scenario in the sector.
In 2024, the insurance sector will continue its growth trajectory, with digitization diversification and enhanced focus on addressing the emerging risks in the market. Evolving consumer needs will lead to more innovations in the coming year and insurers will be more accurate in underwriting, efficient claims processing and giving personalized customer experiences. Enhancing data collection and management of data will become a key focus in the coming year, where insurance companies will collect data to create for customized insurance products. Indian market offers huge potential to the sector, considering the insurance penetration is still low at 4.2% as compared to global average. The insurance companies are sentient over the fact and will definitely reach out to maximum Indians, to achieve growth for the sector contributing to overall GDP of the country.
(The author is Chetan Vasudeva, Senior Vice President, Business Development, Elephant.in (Alliance Insurance Brokers), and the views expressed in this article are his own)
