4 ways InsurTechs are disrupting the insurance industry

By Joy Dumasia

“The insurance industry in India has witnessed rapid growth in both life and non-life segments, with 12% and 17% CAGR respectively over 2015-2020. However, the overall insurance penetration in India remains low compared to the global average (3.8% in India v. 7.2% global average2) as of 2020. This is a result of supply-side challenges, including limited distribution reach (especially in semi-urban and rural areas) and insufficient data availability for accurate underwriting, further worsened by demand-side challenges due to low customer awareness on the need for protection products.

The industry is increasingly turning to digital to help overcome some of these challenges and drive disruptive growth, and InsurTechs are playing a pivotal role in this digital transformation. India has seen an explosion in the number of InsurTechs over the past few years, with 100+ active players and an annual average funding of over $300 million going into this segment,” shared Monish Shah, Partner, Deloitte India and Lakshmisha SK, Director, Deloitte India.

Shah went on to add, “InsurTechs are leveraging extensive internet/smartphone penetration and strong artificial intelligence (A.I.) and analytics capabilities to transform the insurance landscape, helping address both supply-side and demand-side challenges through a four-pronged approach.”

Below is the four-pronged approach he suggests InsurTechs use:

• Simplify access

InsurTechs have helped augment reach and awareness for insurance offerings, tapping into new markets and segments. Digital marketing, remote customer applications, and digital onboarding and servicing are helping overcome legacy geography constraints and the need for physical presence. This offers significant potential to enhance insurance coverage, especially in semi-urban and rural areas.

• Customize

The rise of digital commerce and the emergence of the new-age customer has led to a significant shift in customers’ insurance needs. InsurTech enables innovative offerings like bite-sized insurance, Internet of Things, telematics, usage-based insurance, and embedded insurance to target this. This is in line with global trends, where InsurTechs are helping insurers move from a traditional insurance play to a one-stop shop for all customers’ financial needs.

• De-risk

In addition to enhancing the reach and underlying offering, InsurTechs are also driving robust decisioning through enhanced data capture and analytics. Advanced analytics and A.I. models are revolutionizing the entire value chain, enhancing underwriting and fraud detection capabilities, enabling more targeted marketing and cross-selling, and facilitating efficient claim management, among others. This has allowed insurers to effectively serve a wider range of customer segments.

• Deliver lasting experiences

Creating “e-tail”-like customer experiences is increasingly becoming a key differentiator in the insurance industry. InsurTech players are helping build immersive experiences through the completely digital application, onboarding, claim management, and A.I./machine learning-enabled chatbots. At the same time, they are also helping reduce TAT for key journeys like onboarding and claims processing from days/weeks to minutes. In addition to customers, they also enhance the experience for channel partners like agents and banks through comprehensive apps and seamless integration with insurance companies’ systems.

In summary, InsurTech is leading the way in addressing some of the key structural issues in increasing insurance penetration. COVID-19 and its aftermath have accelerated this shift through increased customer awareness for insurance products and preference for digital channels. Given this, the India insurance market is well-positioned for rapid growth and greater maturity in the coming years, with an increased focus on enhancing customer value.

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