With the pandemic, the insurance industry has witnessed a lot of change in the entire paradigm. Due to the extreme stress situation created by the Covid-19 pandemic, it is the first time that demand has come upto pace with the supply side of the insurance industry. Digitalization has been instrumental in expediting the experience to reduce the turnaround time and prioritize the overall efficiency of the system.
There has been a significant dip in the initial half-year of the pandemic with people unable to pay premiums and continue their coverage. However, since then, the industry has actually turned around and is on a strong rebound now. The Indian life insurance industry has seen a 39% (Source: Economic Times) rise in new premiums in Q2 with a focus on digital transformation.
Thus, the need for insurers in India to spread their wings across distribution channels has increased in order to improve the overall insurance penetration and coverage and play a key role in the new digital environment by co-creating and adapting their offerings.
Insurance Insurtech landscape and Trends
The insurance business in India is undergoing changes that are driving key paradigm shifts. These include seamless integration of information, analytics, and technology to improve customer experience, as well as a shift from traditional distribution channels to newer digital channels. But what are the industry's main developments and how insurers are adjusting to these changes?
India's Rapid Digitalization The seamless digital transition of the internet has helped many industries in India. One such industry that's benefitting is insurance, with a threefold increase in online banking and an almost 15% increase in online shopping since 2016. From 330 million in 2016 to 650 million in 2020, the number of Indian internet users more than doubled. A recent study by Google showed that the number of people who are using online banking has increased threefold since 2016, while online shopping saw a 15 % increase in the same time frame. This growth is driven by maturing digital behaviour which includes an almost doubling of internet penetration from 330 million in 2016 to 650 million in 2020, according to KPMG. In a world where seamless integration of digital and physical is the norm, insurance has been slow to catch up. But in India, it's catching on fast! In 2019 BCG-FICCI findings showed that 65% of customers had a digital footprint in the purchase journey for general insurance and 30% were influenced during their journey. According to the report, 88% of buyers are eager to buy through digital means. Google search statistics reveal that auto, health, and travel insurance searches have grown sixfold, threefold, and fourfold, respectively, in the last few years! (Source: BCG Report) The insurance industry in India has traditionally been a slow-moving, risk-averse sector. However, the scale of disruption in the market is changing that. Customers are spending more and more time on digital platforms and getting accustomed to a highly personalized seamless experience. They now expect similar personalized experiences across insurance products, pricing claims, and services. These changes are making customers more open to trying new ‘one size fits all’ product constructs such as Embedded Insurance.
Global Funding The integration of Insurtech into the mainstream insurance industry is happening at a rapid pace. This integration has led to an increase in funding for the sector, which has grown three times from 2016 to 2020. The Asia region emerged as the fastest-growing geography with a growth rate of 170%. From 2016 to 2020, India saw an astounding 26-fold increase! While the pandemic caused some delays, indications of recovery may already be seen in the later part of 2019 with funding surpassing the $149 million mark from July to October 2020, up from $92 million from January to June 2020, and the number of rounds growing from 5 to 7. The seamless integration of B2B and B2C segments has been a hot topic in the insurance industry. It is becoming more common for companies to offer startups that provide both services, as well as help with risk assessment, underwriting, etc. This hybrid category represents just 5% of the global investment pool in 2020, but its strong 58% CAGR over the following five years shows a rising avenue of relevance.
Insurtech drive Innovation The integration of insurance and technology has been an important trend in the industry for some time. But, over the last year or so, it’s become clear that this integration is accelerating at a faster rate than ever before. This integration can be seen in many different forms - from integration with telemetries to data analytics algorithms - but one form that stands out is Insurtechs. Insurtechs are companies that use new technologies to create innovative solutions to solve problems in the insurance industry by either disrupting existing processes or creating entirely new products altogether. There are many types of Insurtechs globally and India's startup ecosystem has also started developing its own type of Insurtech company. A sizeable proportion of Insurtechs have been speeding transition in the four essential aspects listed below:
Product development to satisfy specialized groups, situational, and changing needs Innovative insurance models consist of bite-sized products, parametric insurance, and other constructs that showcase innovation. These models not only protect your company's assets but also provide risk prevention assistance to keep you safe and secure!
Solutions and services that go beyond coverage, as well as assisting in the creation of ecosystems Customers are more demanding than ever, and they are looking for a holistic experience. They want to be able to get anything they need from one company, which is why companies have realized that it’s not just about marketing or sales anymore; it's the overall experience that matters more. Ease of transaction and claim with well defined and process-oriented user experience with seamless digital integration takes the cake!
Information innovation at all levels of the value chain The data-driven economy is here and it's only going to grow. Data analysis has become a critical tool for decision making, as well as the backbone of the Innovative insurance model. Companies that are able to take advantage of these insights will be those who best understand how their data can drive competitive advantages in the marketplace.
Utilization of technology to improve the consumer, business associate, and staff satisfaction Customer and channel partner onboarding, customer servicing, claims, renewals, etc. are all processes with a huge impact on the bottom line of your company. The way in which they are executed can have a dramatic effect on both customer experience and business efficiency.
Insurer-Insurtech Partnership The insurance industry is undergoing a dramatic transformation with the integration of Insurtechs and traditional insurers. The integration has been spurred on by the emergence of new technologies that are changing the way people interact with insurance companies, as well as by global economic trends such as lower interest rates and uncertainty in the capital markets. With this integration, there is an opportunity to leverage both their strengths for mutual benefit. Insuretechs have been emerging in recent years, and they are shaking up the industry by providing innovative insurance products to consumers that insurers can't offer. Insurtech startups have a huge advantage over traditional insurers because they don't need to spend time and resources building infrastructure from scratch. They also have access to new technologies that allow them to get closer than ever before with their customers, which is one of the main reasons for their success. Insurance companies can take advantage of this trend by collaborating with Insurtechs in order to reach more customers and increase efficiency.
TurtleFin’s One API
With the changing requirements of the audience and the developments in the industry, it is only natural to expect a change in frameworks for big insurance businesses. TurtleFin stands ahead of this curve by being digital-ready from day one; making it the largest insurtech company that pioneered the offline-online model in India. This API meets all the requirements of its digital outreach and helps to create a benchmark with the optimal usage of the right digital tools.
The TurtleFin API is a simple plug-and-play solution integrated with technology powered with accurate data to help you audit and keep track of your MIS. If you also wish to stay ahead of the curve in this fast-paced industry, then contact us about our insurance solutions.