How technology can catapult India ahead of Canada and Germany as an insurance market

Events since the pandemic have veered the Indian insurance industry to new heights. The relative economic stability, steadily increasing disposable income, improving financial literacy, and a strong policy push to increase insurance penetration herald exciting changes. For one, today, India is among the fastest-growing insurance markets in the world. Reports suggest a 9% annual premium growth over the next decade, more robust than the 7.5% yearly average of 2015-2021. If predictions hold, India will emerge as the world’s 6th largest insurance market by 2032, ahead of Germany and Canada.

Technology inroads led by Indian InsurTechs will continue to drive this momentum. The increase in investment in Indian InsurTech, from $10 million in 2016 to $800 million in 2021, proves the point. Technology is no longer a differentiation for insurers; it is now table stakes.

Here’s how entrenched insurers can leverage emerging technologies to stay atop India’s booming insurance landscape:

• Generative AI: Although in its nascent stage in terms of enterprise adoption, Generative AI has shown promising results in driving several levers from customer experience to decision-making. Insurers must customize the underlying large language models with use cases and insurance-specific data to train the model. Once done, it can supercharge customer interactions and decisions related to policy eligibility, coverage, claims processing, and underwriting with little human intervention. Generative AI can also help distributors expand outreach to prospects and policyholders with handy information or content that keeps them engaged and helps gain trust. It can also free up agent bandwidth for more value-added tasks, such as nurturing client relationships and personalizing policy plans per individual needs, especially for the traditionally unserved or underserved segments. Projections indicate 70% of consumers of insurance policies will come from tie-2 cities. Generative AI can help insurers and distributors pivot away from standardized policy plans to curate customized ones for a robust business outlook.
• ?Predictive Analytics: Insurers have traditionally operated with legacy systems that did not allow for collaboration or data sharing among stakeholders. InsurTechs disrupted this model by plugging in alternative data with interoperable systems to predict premiums, underwrite customers, and assess risks. With machine learning, insurers can unearth patterns from the data at their disposal to factor in risks and glean actionable insights. This can help them reach a wider customer segment by identifying and then pricing in risks. For instance, if an insurer has rolled out property insurance plans in a particular geographic area, it helps to know if the site is prone to calamities such as floods or earthquakes to factor this risk into premiums. Similarly, telematics can help insurers monitor a customer’s driving habits and on-road behavior to assess if it is detrimental to the health of the insured car. Accordingly, they can adjust premiums on a case-by-case basis.
• Embedded Insurance: With the ubiquity of the app economy, the lines between different industries are blurring. Insurance must transition from a monolithic, standalone service to an embedded, point-of-sale product, offered as a bundled deal with third-party offerings based on customer purchase preferences. Per a 2021 survey, over 93% of Indians would be interested in insurance plans offered based on their transaction history. For instance, ride-hailing apps such as Ola and Uber offer users emergency insurance at the time of ride booking. The cost is factored into the total fare, saving the consumer decision fatigue required in the traditional insurance purchase journey, and thus leading to better conversion. This also helps entrenched players to service a broader customer segment that had been traditionally out of their reach. Embedded in the purchases customers make on a regular basis, this will tremendously help boost consumer spending on health insurance, which currently stands at 2% of the overall monthly healthcare spending of Indian households.
• Intelligent Automation: The government plans to insure all Indians by 2047. Serving a customer base as large as India’s entire population will need streamlined, friction-free, intelligently automated processes. Insurers that want to take advantage of the upcoming industry surge must reevaluate their operating systems and procedures and try to digitize them end-to-end to accelerate time to value. The focus should be on elevating the customer experience, with minimal contact document handling, verification, and claims processing, while ensuring the entire journey from policy purchase to claim disbursement takes minimal time.
• Cloud, IoT, and Telematics: These technologies converge to make insurance delivery smarter, faster, and more accessible from anywhere, anytime. Insurers can leverage these to dynamically factor in risks as they evolve and adjust premiums per each policyholder’s risk profile culled from behavioral traits, financial discipline, and usage. This can incentivize policyholders to follow good practices, such as a healthy lifestyle, responsible driving, or predictive maintenance, to be rewarded with lower premiums. On the other hand, using alternative data fetched from connected devices (smart cars, smart watches) can help insurers quickly underwrite thin-file customer segments that have been fence-sitters, such as millennials.

We are in an era where software is not just a business enabler anymore; rather, it is the business. Insurers jolted into digitization due to the pandemic must continue investing in digital capabilities to out-innovate peers and level the playing field with digitally native InsurTechs. While software engineering may not be their stronghold, it will soon be the winning edge.

At Persistent, we help insurers navigate such shifts with our technical expertise and domain knowledge. With our curated insurance-focused solutions, we delivered compelling business results in far more challenging settings. Insurance in India is at an inflection point; technology will help it surpass developed markets such as Canada and Germany, known for their people-centric insurance policies.

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Insurance Specialty Services | Persistent Systems