For non-life insurers, year 2020 is going to be year of digital

It has been an exciting 2019 for the general insurance sector in India. Our country, being one of the most under-penetrated markets globally (at 0.97 percent in FY19 as per Swiss Re sigma report), presents a massive opportunity for the general insurance industry. We estimate an average 15-18 percent growth year-on-year for the next decade or two. This year we saw a major regulatory push to ease access and strengthen innovation.

Health Insurance will be the area of focus

Focus on Health Insurance: The pandemic is the biggest healthcare crisis this world has seen in the last 100 years or so. As per IRDAI, only ~4.2 crore individuals have a retail health policy. India's health spends are under 4 percent of its GDP compared to global average of ~10 percent. At the same time, our out-of-pocket spends are ~65 percent vis-a-vis global average of ~18 percent. Given mounting medical and healthcare costs and extremely low penetration for retail health in India, it is expected to result in improved demand for health coverage in India. Covid-19 crisis provides a significant opportunity for insurers to focus on building distribution strategies. This will not only strive to offer health insurance to the masses but also to spread awareness about its importance.

Regulatory Sandbox: IRDAI’s regulatory Sandbox is one of the most significant steps towards innovation and maturity for the industry. A secured test environment to execute new ideas will lead to improved coverage, eased accessibility, faster processing and lesser rejection of claims for consumers.

Natural calamities: Climate change did and will continue to affect India with unpredictable natural calamities. In light of the rise of floods incidents in several states, home and property insurance can offer robust financial protection and resilience for the masses. General awareness however, remains low as evidenced by the Kerala floods, where out of 70,000 impacted homes, only 5 percent were insured.

New age risks: Persistent cyber threats continue to rise in India. The growth of digitization will create new forms of security risks to critical infrastructure.

Conversational commerce: By 2020, every three in four policy purchases is estimated to be influenced by digital channels. This has led to a paradigm shift for insurers who are now addressing the needs of the tech-savvy generation with 24X7 AI-chatbots.

Emergence of New Age products: The year saw a slew of innovative products in the form of bite-sized insurance policies also called as Sachet products with low premiums. This new model will continue to see innovations in pricing flexibility, value for money, convenience and awareness for customers in the long run.

Focus on Digitalization: The core of the insurance industry is to service its customers in times of distress. Innovations and digital transformations therefore become more critical to offer that extra mile support to overcome the situation. With digital infrastructure and innovative & new age product, we see a promising future for General Insurance Industry.

With all eyes towards 2021, the future of General Insurance industry looks extremely promising aided with favorable regulatory framework, deeper personalization of products and growing digital customer-centricity.

By Rakesh Jain
ED & CEO of Reliance General Insurance