As 2022 is about to end, let's delve into major trends of insurance industry in the year. The sector gained in confidence as Indians woke up to the need for insurance post the pandemic mayhem. Read on to know about how each sector shaped up and the major announcements from the government.
The year 2022 has perhaps been one of the most important ones for the insurance industry as it gained decent growth momentum. While the COVID-19 pandemic was a significant blow to the global economy, it led to a deeper realisation of the need for insurance among consumers. In the last two years, the insurance sector has witnessed consistent growth, especially in the health and life insurance segments. Also, there has been acceleration in the digital journey of the insurance industry.
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Let's look at specific insurance sectors and significant developments in the industry:
According to Aftab Chaz, Associate Director and Business Head at Elephant.in, there has been an increased integration of artificial intelligence (AI) and the internet of things (IoT) in health insurance recently.
“Different kinds of applications are being developed to digitise the claim settlement processes and policy management, pushing the demand-supply chain in the health insurance category. The growing adoption of cloud-based services and the rising penetration of high-speed internet connectivity have further enabled real-time insurance product selling and delivery, with experienced industry experts who can help provide insightful recommendations to users,” Chaz told CNBC-TV18.com.
Additionally, the Insurance Regulatory and Development Authority of India (IRDAI) has brought several new regulations in the health insurance category to increase insurance penetration. The industry is also focusing on innovative products to cater to the customers' varied demands.
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Moreover, the need for comprehensive health insurance policies became extremely vital in 2022.
“Health insurance companies now recognise that people are more aware of investing in a suitable health insurance policy. Therefore, they have launched many new health insurance policies according to their customers' needs and requirements,” Chaz added.
As per reports, the gross first-year premium of life insurers increased by 6.94 percent in 2021-22. Until January 31, 2022, this was Rs. 2,27,188 crore.
This shows that there has been significant increase in awareness about the importance of life insurance as financial protection from life’s uncertainties.
However, Vighnesh Shahane, MD and CEO at Ageas Federal Life Insurance points out that there is more to be done in terms of awareness creation and insurance penetration. “India continues to have one of the lowest penetration rates for insurance in terms of GDP among developing countries and there is a huge protection gap,” he said.
Corporate insurance also witnessed a growth trajectory in 2022, where more and more corporate houses joined the group insurance movement by bringing in insurance partners, which can not only guide employees for good insurance products but also offer them better premiums than other players.
"Companies have also realised the importance of protecting their employees and what could be better financial protection than insurance. There has also been a changing pattern in how corporates are providing flexi-benefits to their employees," Chaz told CNBC-TV18.com.
Now, let’s look at the key announcements by IRDAI in 2022:
During the year, there was a number of announcements by the regulator aimed at further driving insurance penetration, enhancing customer centricity and leveraging the growing digitalisation of the industry. Some of the key ones are mentioned here:
Dematerialisation of insurance policies
The regulator urged insurance companies to open e-insurance accounts (eIA) for their customers which would act as the first step towards dematerialisation of insurance policies. IRDAI asked firms to dematerialise new insurance policies by December 2022 and existing/old policies by December 2023.
Dematerialisation means converting physical policy document into a modifiable online object. It means that a person will no longer need to indulge in paperwork at the time of renewing the policy. It is aimed at reducing transaction costs and also ensuring swift modifications in policies.
Setting up of Bima Sugam
The regulator proposed the setting up of Bima Sugam, a digital portal which will integrate the entire insurance ecosystem — insurance repositories, companies, intermediaries, customers and broker associations — on one platform. “Customers would be able to purchase life, health and motor policies directly from the platform as well as raise service requests and make claims,” Shahane told CNBC-TV18.com.
Composite licence for insurers
In a recent announcement, the regulator proposed several amendments aimed at opening up the sector, driving penetration and enabling greater customer convenience. One of the proposed amendments is a composite licence for insurers, which would allow a life insurance company to sell non-life products and vice versa.
“Aimed at increasing insurance penetration in the country, the move could also lead to product innovation with consolidated insurers customising and combining products to meet the needs of various sub-categories of customers. It would also offer a one-stop shop for customers as they could buy all their various insurance products from one consolidated insurance company,” Shahane said.
The other proposed amendments include permitting the agents of an insurance company to offer other financial products to customers, removing the minimum capital requirement for setting up a new insurer in the country and allowing a life insurer to sell indemnity health products.
How are customers reacting to the insurance policies now?
As per Sahahane, customers are showing an increased interest in protection products after the devastation caused by the pandemic.
"Also, with the falling interest rate regime and uncertain global economic scenario, customers are showing greater demand for guaranteed plans. We have also seen a lot of new inflows and renewals of ULIP plans due to the buoyant stock markets. This year, the regulator extended the ‘use-and-file’ framework to life insurance companies which allows them to launch certain categories of products without prior approval. This move is aimed at adding agility and flexibility to life insurers’ product design and launch processes," he added.
Outlook for 2023
The insurance industry has been moving at lightning speed this year, with many new companies and startups developing innovative ideas and models. The sector needs more innovations, products, startups, and reinsurers to fill up the insurance gap that the country is facing even today.
As we move into 2023, digital transformation, product customisations and innovations, and service enhancements are likely to continue as the industry looks to further build upon the momentum achieved this year.
According to Tarun Mathur, Chief Business Officer, General Insurance, at Policybazaar.com, technology ecosystems will keep expanding, reshaping the insurance value chain and service patterns in the process. "Humanisation and empathy will likely be a core area of focus in the insurance industry in 2023. It is not just enough to stay ahead of competitors and technologies, but also to empathise and humanise with the insured, so that customer loyalty and retention continue," Mathur said.
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