India! We are on the strategic radar of many multi-national, national and Greenfield insurers not only for the sheer strength of a 1.2 billion population but also because of the enormous market potential due to the growth of the economy. What makes India really unique is that over 65% of the population is under 35 years old, making it one of the most dynamic markets in which to achieve decades-long growth by following the life journeys of this large consumer group.
At the same time, India’s foundation in technology is powering a revolution in the insurance industry. This is represented by the competitive pressure on insurance carriers to provide digital customer experiences across the value chain. Fueling this further, the government is pushing its Digital India agenda through steps such as Direct Benefit Transfer, Demonetisation, UPI, and Bhim App.
The result … insurers are investing heavily in new products, new business models and new technologies to enable their digital transformation.
The years between 1956 and 2014 can be best defined as the Insurance 1.0 era, spanning the years of public sector monopolies, followed by the post year 2000 era of high growth and competition, driven by the actions by the Insurance Regulatory and Development Authority of India (IRDA) to open the sector to private players. While the year 2000 was a new beginning, insurers continued to follow the business practices, assumptions and models that existed during the monopoly years.
Enter the digital age and the introduction of a wide array of new technologies that are or have disrupted every industry, including insurance. New customer expectations, demand for digital experiences, new products and services and new technologies are shifting India's insurance sector into a new era of Digital Insurance 2.0, creating opportunities for growth and innovation for insurers and enabling them to embrace the Digital India agenda more aggressively.
The Change Agents
Analysing the sector's evolution from Insurance 1.0 to Digital Insurance 2.0, reveals three macro market forces—People, Market Boundaries, and Technology—that are creating new customer expectations, new innovations and new competition, as highlighted in Majesco’s thought leadership, Digital Insurance 2.0: Reshaping India’s Insurance Sector.
- People: From the shifts in demographic patterns to the rising dominance of Gen-X, Gen-Y and Gen-Z consumers, the People factor embodies the rising expectations of customers—internal and external.
- Market Boundaries: The emergence of InsurTechs, changing regulations and the disruptive role played by the government define the market boundaries that carriers need to adapt to in order to stay relevant and grow.
- Technology: A double-edged sword, technology not only empowers insurance carriers with many new capabilities but also poses fresh challenges by giving birth to new business practices and creating new business models.
Digital Insurance 2.0 Powers Growth and Innovation
As the industry shifts to Digital Insurance 2.0, insurance companies are increasing investments into modern core systems and a range of digital technologies with an overall strategy as the foundation for their digital business transformation. The strategy includes more than just sporadic, individual projects, as seen in the past in areas such as mobile apps for BYOD or agency automation. Instead, the strategy is wide-reaching across the business, transforming not just legacy technology but also legacy business models and processes. The adoption of technologies such as IoT, robotic process automation (RPA), advanced analytics, artificial intelligence, drones, wearables, blockchain, and more, are beginning to reshape the business models of existing insurance companies and launch new startup insurance companies (think InsurTech) in India.
As a result, the industry is experiencing a new era of growth amidst an equally strong (and growing) array of competition. As a point of reference, India’s life insurance industry is estimated to have garnered ₹ 1.51 trillion revenues in FY2017 while the non-life segment's premiums stood at ₹ 1.28 trillion, approximately, according to data published by IBEF.org.
A Combined Effect
To succeed in the era of Digital Insurance 2.0, an insurer’s strategy must focus on a range of value drivers. These include customer experience, engagement and ownership, business innovation, technological leadership, and more. That’s where India’s top insurance companies can be seen committing serious investments toward digital transformation.
For instance, the leading health insurance carrier, Aditya Birla Health Insurance uses internet of things (IoT) technology to create and launch new products that are subsequently improving the customer experience. Similarly, the leading life insurance player, HDFC Standard Life, has eliminated the need for cash transactions and data entry hassles by fully automating its customer-facing business processes.
While many other business examples are highlighted in the thought leadership report, the report also cautions against insurers who are taking a wait and see or fast follower approach. They may not be prepared for the new disruptive shift to Digital Insurance 3.0.
The evolution of the India insurance sector is exciting and holds great promise for both our customers and the entities who operate within the industry. However, change is not slow … it is gaining speed. The pace of disruption and dramatic changes will continue to unfold, whether we are ready or not.
If an insurer hasn’t yet wrestled with the necessity for change, this is a Darwinian moment for them to understand the shifting market, adapt and swiftly take action. Opportunities abound for incumbent insurers who move quickly and decisively to Digital Insurance 2.0. But those who do not act, or those who take a “wait and see” view will likely find themselves challenged to remain competitive and relevant. For more information on the shift to Digital Insurance 2.0 download Digital Insurance 2.0: Reshaping India’s Insurance Sector.
 Demonetisation: https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38520