What’s driving India’s insurance industry?

Welcome to Finance Wrap India, a simplified fortnightly guide to everything finance, told through the voice of experts on LinkedIn and put together by LinkedIn News India editor Preethi Ramamoorthy .

In this edition, we delve into:

?? What trends will shape India's insurance sector in the year ahead

?? Top conversations among finance professionals in India

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India’s insurance industry has been scaling new heights in the last year.?

Sample this: The average ticket size of retail health insurance in India has increased by nearly 48% over the last five years. Non-life insurance companies grew by 13% in FY24, with premiums touching around 2.89 trillion.

In fact, India’s insurance market is poised to record the fastest growth among the G20 countries, says a recent report by Swiss Re.

Sarbvir Singh , Joint Group CEO at Policy Bazaar Fintech credits the rapid growth of the Indian insurance industry to a confluence of factors. “Economic expansion and the burgeoning middle class have spurred demand for insurance products, as Indians seek to safeguard their financial futures. India being a young country is another factor at play here. With a growing workforce and increasing life expectancy, there is a rising demand for insurance products,” he says.

In the dynamic landscape of the insurance industry, a transformative shift is underway. There is increased focus on providing tailored financial protection for the next generation. Government impetus is pushing companies to think deeper about ‘Insurance for all by 2047. ’

In such a scenario, what trends will reshape the industry in the years to come? And how can professionals ensure career growth? Here’s what experts said.

Insurance, but make it simple

In 2023, the Insurance Regulatory and Development Authority of India (IRDAI) set up a panel to explore how insurance policy wordings can be simplified. The decision was made due to the IRDAI’s observation that policyholders often find it difficult to understand the terms and conditions in insurance policy contracts due to the complex language, stopping them from making informed decisions while purchasing an insurance policy.

And insurers are following suit. “To address the complexity barrier and enhance awareness, companies have started simplifying insurance products and plans while launching targeted awareness campaigns,” says Tarun Chugh , MD & CEO at Bajaj Allianz Life Insurance. “We find that 70% of consumers are more likely to purchase insurance if the products are easy to understand, emphasising the importance of simplification in driving adoption.”

Read Tarun Chugh's full post here.

If simplification is here, customisation can’t be far behind. Eight out of 10 consumers want customised insurance policies, reports say . The IRDAI too has allowed companies to offer personalised insurance to match customer needs. “Leveraging data analytics will help companies personalise coverage and facilitate product innovation,” Singh says.

As part of the focus on providing insurance for all of India’s citizens by 2047, experts also predict a spurt of low-cost insurance policies . “Industry will explore ways to make insurance more affordable and accessible. In fact, affordable plans are already gaining momentum in smaller cities in terms of purchase and renewals,” Singh says. “This also involves offering flexible payment options, online discounts and usage-based insurance models where premiums are based on actual usage or behaviour.”

Automation is the new boss

Technological advancements are transforming every industry, and the insurance ecosystem is not left untouched. Digital integration into processes such as policy issuance, claim management, and renewals, has streamlined things, ensuring a seamless customer experience. IRDAI is urging insurers to adopt digital tools for cost containment. It has suggested reinventing shopper portals, exploring new-age distribution channels and automating lead capture.

“Automation holds immense potential for streamlining insurance processes and reducing costs. Companies that invest in digital transformation can achieve a significant increase in customer satisfaction and reduction in operating costs, highlighting the tangible benefits of digitalization,” Chugh says.

Artificial intelligence will continue to reshape the industry, reports say . AI-powered chatbots are helping companies provide instant personalised customer service. AI algorithms, combined with machine learning models, are being used to make underwriting, an essential process in the insurance industry, more efficient and accurate. “By deploying AI algorithms in underwriting processes, we can analyse vast datasets to assess risk profiles and determine appropriate coverage options for policyholders,” Singh says.

How can insurance professionals stay ahead

Despite the advancements in tech, insurance advisors play a pivotal role in the growth of the industry. Insurance advisors, whose work is regulated by the IRDAI, help individuals and companies navigate the complex world of insurance. The Indian insurance sector consists of about 35 lakh advisors, reports estimate .

“The professionals in this industry should, first and foremost, be ahead of the curve by investing in continuous learning and development,” Singh says. “Staying updated with industry trends, regulations, and advancements is crucial. Pursuing certifications, attending workshops, and participating in training programs can enhance knowledge and skills, making professionals more competitive and adaptable,” he says.

Here's what finance professionals are talking about on LinkedIn:

What does the future hold for non-banking financial companies? Rajiv Sabharwal , Managing Director & CEO at Tata Capital, says the outlook appears optimistic. Read his full post below to know more:

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