India being one of the world’s fastest-growing economies, has emerged as one of the fastest-growing FinTech hotspots in recent years. Pandemic has given a huge boost to adoption of technology and has further fuelled the growth of the sector.
This growth and expansion of the FinTech have been aided by many factors, including the growing availability of smartphones, increased internet access, increased awareness, and significant Government push for adoption of technology.
The Insurance Sector is not far behind to catch up with this fintech revolution. Currently the Insurtech segment is growing very fast with CAGR of 57% and will continue to grow at a fast pace as the Indian Insurance market has a huge penetration gap. The protection gap in India currently stands at 83%. The current penetration level in India stands at 4.2% with life insurance penetration at 3.2% and non-life insurance penetration at 1.0%. 43% of population lacks health insurance coverage and 50% of vehicles remains uninsured.
Insurtech can help in big way to plug this gap with innovation in products, services and technology.
Off late we have seen a lot of innovations in product offering with the embedded and customised product according to the needs of the consumer. We need to understand the pulse of the market and study the mind-set of customers. A consumer may not feel the pinch to pay small premium along with goods and services they purchase. But when the premium is high they straight way begin to have cost benefit analysis.
Innovations in Underwriting and claims is another area where insurtech needs to focus. Insurance market in India has suffered due to complicated underwriting procedures. We need to simplify the underwriting process and make it hassle free and simple. The policy should come to one-page documents with important Do’s and Don’t instead of complicated jargons. Claim settlement again needs to be made customer friendly with the aim of helping the customer at the time of distress rather than investigating and doubting his intention. In this age of technology the companies should have inbuilt measures to identify and red flag suspicious events to prevent insurance frauds.
Insurance Industry has a poor image in terms of Claims settlement. This mind-set of customers needs to be refined with better services and faster claim settlement.
IRDAI is also planning to launch Bima Sugam, A one stop shop for Consumers to purchase insurance. It is a very good initiative but the only challenge would be to bring the customer to the platform. Still only a section of consumer who are tech savvy use online services voluntarily. We need to put lot of efforts in education and awareness all over the country so that conducive environment for insurance is built and we reach out to the remotest part of the country.
According to a report the Insurtech market is estimated to be around $339 bn. With currently 300+ active insurtech companies in India the insurance market is poised for exciting times ahead.