Insurance penetration in India remains low at 4.2 percent, a nominal increase from 2.7 percent in 2001, while other Asian countries such as China, Malaysia, and Thailand were at 4.3 percent, 4.72 percent, and 4.99 percent in 2019 (these countries reached India’s existing penetration rate three years earlier), and penetration in these countries is increasing rapidly. In FY 21, our insurance density had only increased to $78 from $11.5 in 2001, with life insurance accounting for $58 and non-life insurance accounting for $19. For the comparison period, global values for the life and non-life divisions were $379 and $439, respectively.
Experts attribute the country’s low insurance coverage to a lack of knowledge, the conventional branch-led approach, and massive volumes of paperwork. However, if we address the lack of knowledge and improve the outreach approach, India can undoubtedly enhance insurance coverage in the nation. The digital insurance model has grown dramatically in the previous two years, easing the procedures for insurance producers, distributors, and end-users. We’ve seen how digital has succeeded in making the insurance life cycle smooth from beginning to finish. As a result, digital will be the only way ahead in the future.
5 digital integrations which are changing the equations in the Insurance space
Internet of Things (IoT): IoT has proven beneficial in automating all data exchange from its inception, by merging IoT devices with smart homes and/or wearable gadgets. This raw data is also being mined in the insurance industry in order to get better, more accurate rates, limit risks, and hence avoid losses. IoT is altering the insurance market by making it loss-proof by providing real-time client data, which according to some estimates may reduce yearly claim settlements by 40-60%.
Artificial Intelligence (AI): The amount of AI accessible today is already benefiting the insurance industry in claim processing by reducing human interaction and turnaround time. This results in clients receiving speedy, personalized services and experiences, particularly throughout the purchasing process. Not only can insurers complete short claim turnaround cycles, but claim settlements are now more accurate and error-free. Customers are pleased with the personalized experience and faster settlement procedures, as well as the ability to verify their claims history and remain up to current on the payment schedule.
Blockchain: When implemented appropriately, Blockchain has enormous potential in insurance, particularly in the tough areas of risk prevention, fraud detection, and safe cross-border payments. It is estimated that 5-10% of overall insurance claims in the United States are fraudulent, costing health insurers over $40 billion each year, which Blockchain might assist avoid. Though comparable numbers are not presently available in India, estimates of fraudulent claims in India are estimated to be in the 5-10% range.
Data analytics for personalization: The immediate advantages of data analytics are felt by consumers. Insurers are increasingly using micro-targeting to reach out to customers and provide insurance plans that are tailored to their specific requirements. They benefit from personalized insurance products and services, which were not previously accessible. Consumers are seeing process turnarounds—whether it’s a purchase, a claim, or a payout—become quicker and easier, with considerably fewer mistakes. Most crucially, most procedures are available to customers from the comfort of their own homes, through a simple, efficient dashboard, with no need for them to visit an office.
Application Programming Interface (API): It aids in smart claims management by integrating patient eligibility and data, digital claims management, and so on into the fabric of the insurance claims process. Insurance businesses integrate APIs while keeping legal and compliance standards, as well as business goals, in mind.
Even in the twenty-first century, more than 30 percent of Indian residents lack health insurance. As a result, there is a significant opportunity for low-cost, straightforward health and other insurance solutions to assist us in our pursuit of optimal universal coverage. Strategic alliances amongst InsurTech businesses may help to brighten the industry’s future in such a situation.