Insurance firms are not often seen as technical trailblazers. An insurance company’s connection with its customers has always been occasional, transitory, transactional, and pecuniary. Thus, they have never felt the need of being at the forefront of technology. Today, in the age of smartphone and cloud services, insurance companies continue to be among the most avid consumers of mainframe technology. However, things are changing now! This blog will provide insights on the role played by InsureTech in Life and General Insurance businesses.
Technology, like it is in several other industries, is generating seismic shifts. Insurance firms recognize the need of becoming much more consumer-focused, and attentive to client demands and standards. They actively seek more information in order to make smarter decisions. This represents the risk while bringing costs as low as possible. A new generation of InsureTech giants is bringing knowledge, engagements, and quality services to bridge the gap between insurance firms and their private and business clients.
Let’s begin with InsureTech in Life and General Insurance.
Growth of InsureTech in India
Insurtech is a huge breakthrough in the finance business due to dynamic client requirements and simple accessibility to insurance solutions. Insurance companies went through a phase of severe planning and changing their traditional business plans during 2020. It has become obvious that humankind will remain trapped in the thick of COVID-19 for some time now. Even consumer behavior has greatly changed. It has become clear that more people were getting increasingly nervous and concerned about their health. Thus, insurance companies are now obliged to change their coverage and pricing structures, and also adjust their business procedures. This is where InsureTech enters the picture.
Insuretech sales worldwide amounted to 5.48 billion USD in 2019. There is a projection for the same to hit 10.14 billion USD by 2025, rising at a steady 10.80% CAGR. According to a study conducted by S&P Global Market Intelligence, India ranks second in leading Insuretech markets in the Asia-Pacific area, accounting for more than 35% of the area’s 3.66 billion USD fund investments. One reason for this huge growth of InsureTech in India is the recent digitalization of the country. In India, there are over 829 million active Internet users; this large customer pool, combined with sufficient infrastructure, has increased the potential for insurance companies in the nation. India is an appealing place for Insuretech businesses due to the following reasons:
- Its conventional administrative structure,
- Creative and technologically sophisticated product divisions, and
- Relatively unexplored marketplace.
Business Practices followed in India
The maximum technological advancements in the InsureTech industry are initiated by insurance brokers and aggregators.
In India, insurance business models may be classified as follows:
- Direct insurance companies like Acko and Digit provide customized, dynamic, and cost-effective solutions with reduced coverage and prices.
- Claims Settlement alternatives such as SureClaim, Mobinsure, Vitraya, and VahanCheck focus on the easy monitoring and management of all insurance plans. It supports claim settlement as well.
- Software/infrastructure companies such as Stickynote, CogniSure, Pentation Analytics, and InsureHub, who offer advanced technology and software foundations. This helps to coordinate all aspects of the insurance service chain system.
- Online distributors like SecureNow. SecureNow leverages online reach and technology to reach segments such as small businesses that are difficult to reach in any other way, cost-efficiently. SecureNow also develops products that can be issued remotely in a quick, efficient manner.
Impact of InsureTech in Health and General Insurance Industry
Insurance plans may be complicated. But not all customers are aware of all the costs, levels of coverage, and add-ons contained in their plan. A Morgan Stanley/BCG consumer study shows about 50% of customers contact their insurance companies a maximum of once each year. It also shows that less than 60% of customers are happy with the insurer experience. InsureTech helps address this problem and increase the interconnectedness between insurance companies and customers’ lives.
Many InsureTech startups have emerged in recent years to investigate the relationship between tech and the insurance industry. Their goal is to provide an improved consumer experience while maintaining the requirement to increase revenues and minimize risk. And as a result, this dormant industry is reviving itself.
Worldwide Scenario
Worldwide InsureTech funding has more than quadrupled in the previous four years, rising from around 2 billion USD in 2016 to 6 billion USD in 2020. During the same time period, financing for Indian InsureTech startups increased 26 times; from 11 million USD to around 287 million USD. Increasing regulatory actions, as well as the existence of a digital market, have allowed insurance companies to raise a better understanding of their products and provide distinct services to various segments of society.
India Scenario
Even though the COVID epidemic erased a considerable part of the profits made by India’s struggling USD 280 billion USD insurance industry, it also bolstered life insurance while opening up fresh development opportunities. Today, around 75% of InsureTech consumers are retail customers. However, the corporate sector is mostly non-InsureTech enterprises. The combined strategy of InsureTech Companies with financial firms and NBFCs has offered them a clear path to the retail market.
Today, there are approximately 140 InsureTech firms in India at various stages of development. Aggregator sites, digital platforms with multiple insurance services that let customers compare pricing, terms, and coverage, such as Turtlemint, Policybazaar, and Coverfox, have seen a recent boom in the number of financial policies sold. The increase of general insurance plans issued was approximately 25% more than in 2019.
India in 2020-21
India issued approximately 241 million insurance plans and approximately 9.2 million medical insurance plans in the financial year 2020-21. With the help of 200 million USD received as investment from IIFL and Sequoia Capital, Digit Insurance has more than doubled its valuation as a startup from last year to 3.5 billion USD. Acko is pursuing a comparable round of investment from FinTLV Ventures to join the billionaire group. In July 2020, Paytm, a giant in the finance industry purchased insurance provider Raheja QBE for 76 million USD, marking its foray into the InsureTech market.
Conclusion:
Thanks to modern advancements such as artificial intelligence and data processing, the fundamental competency of the Indian insurance industry is poised for a significant jump. Whether you need to digitize a full business, cut a slice of an established firm, or launch a new unique product, InsureTech can assist in providing everything required for data transfer or product designing. However, there are also emerging concerns about this.
Read: Buy A Group Health Insurance
Investors should assess what steps companies are taking to mitigate risks in InsureTech. Firms that focus on the digital revolution might overlook the need for quick after-sales support. In the pursuit of client recruitment and insurance revenue collection, fundamental insurance procedures like customer support, claim management, assessment, and valuation might be overlooked. Insurance aggregators have enabled simple and quick evaluation and transfer of insurance companies for consumers.
The presence of different InsureTech firms providing novel solutions has highlighted the requirement of organizations focusing on the full value cycle. It began with plan documents and ended with claim settlement and management. However, with proper planning and efficient mechanisms in place to prioritize after-sales customer support, InsureTech has the potential to dramatically alter the landscape of the Indian insurance industry.
About The Author
Mayank Sharma
MBA Finance
He is a professional who brings extensive knowledge and expertise to the field of group health insurance. He has dedicated 7years to helping individuals and businesses navigate the complexities of insurance. Having worked closely with numerous clients and insurance providers, he deeply understands the nuances of group health insurance policies. With a reputation for providing insightful and informative content, he leverages his industry experience to educate readers about the importance of group health insurance and its benefits. Through their articles, Mayank Sharma aims to empower individuals and businesses to make informed decisions about their healthcare coverage, ultimately promoting healthier and more secure communities.
