The global insurance industry is undergoing turbulent times with the continuing low interest rate environment, a challenging equity market and tighter regulatory regimes. These changes, along with other technology developments and the race to go digital, are tectonic shifts forcing insurers to adjust their business models. Despite lingering concerns about COVID-19 variants, most insurers expect an accelerating economic recovery and additional digital technology investments in 2022. 

2020 saw some really significant changes dominating the insurance industry, and 2021 followed suit, especially in the health insurance segment. Apart from focusing on the overall welfare and protection of the insured, these regulations also factored in the technological and digital advancement in the policies.  

COVID-19 brought along an era of social distancing and limited mobility in order to minimize the risk of exposure. This hailed telemedicine or online consultation as a trusted alternative to hospital visits, at least for the first line of defense. The Indian government and insurance companies have devised new plans to ensure health and life cover reach to the masses through digitization. 

Shaping the future of insurance sector 

This year, the Indian insurance industry is mostly expected to search for growth through new service-based models, innovative products and better focus on prevention. Here are the five trends that will shape the future of the insurance sector:  

Digitalization and IoT: During the ongoing COVID-19 pandemic, the digital shift toward selling insurance policies has gained significant traction and is sure to continue in the years to come. Buying insurance through digital channels eases the buying process and gives consumers a plethora of options to select the right insurance product as per their choice and requirement. 

Another prominent technology that will play an important role in shaping the online insurance industry in the coming years is Internet of Things (IoT). The technique will help the insurers — especially the auto insurance industry — to cut their overall costs while enabling clients to automatically initiate the damage repair and claim process. 

New insurance products: Since the onset of pandemic, insurance companies have realized that demand for newer insurance products would rise in the time to come, and they came up with significant covers ranging from protection against a pandemic to protection against seasonal illnesses such as dengue. With the availability of such products digitally as well, these will rightly cater to the digitally-savvy generation of people. 

Rise in demand for standardized products: A majority of people in India are not covered under any insurance products and these standard products will give first-time buyers a boost of confidence. The standard features of these products will make them the first choice of buyers who cannot afford a comprehensive insurance policy. 

On-demand insurance: Another category of insurance products that will be in high demand in the year 2022 is Switch-on and Switch-off insurance. Today’s consumer looks for products that offer adequate coverage only when they need it. An excellent example of one such product is usage-based car insurance. For all those looking for a car insurance policy that’s priced based on how much you actually drive, pay-as-you-use insurance may be the answer.  

Wellness products: Over the years, insurers are expected to come up with a variety of exciting benefits to offer to policyholders. Some benefits include discounted outpatient department treatment (OPD) consultations or treatments, health check-ups and diagnostics, redeemable vouchers to obtain health supplements, memberships in yoga centers, sports clubs and many more.  

Challenges and opportunities  

The insurance sector in India faces various challenges such as low insurance penetration and density rates. Rural participation of insurers remains deficient, and life insurers, especially private ones, gravitate towards the urban population. 

In order to increase the penetration rates and density, uninsured rural areas and the urban poor must be brought under the ambit of insurance coverage. Insurance companies in India will have to show long-term commitment to the rural sector as well, and will have to design products which are suitable for rural masses. They need to think about their distribution mechanism to work effectively in rural markets.  

The focus of the insurance sector is steadily shifting toward increasing access of low-cost, simple insurance products, including those that can be sold through online channels. Simultaneously, a complementary thrust to spread awareness and improve financial literacy, particularly the concept of insurance and its importance, can help. In this context, government insurance schemes such as Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jeevan Jyoti Bima Yojana are notable contributors in expanding insurance coverage among the population. 

Contact: MDRTeditorial@teamlewis.com