Vladimir Lenin was supposed to have said that “There are decades when nothing happens; and there are weeks when decades happen.” The events in the last one year would seem to justify its implication for life insurance industry in India. Since the start of the pandemic, we have seen numerous steps taken by the insurers the way insurance is bought in India, while regulators also announced series of new insurance products to further improve the penetration of insurance in India.
In a way, the platform has been set-up for the life insurance industry to deliver higher growth in the next decade. Since the cases of Covid-19 started surging in India—the country went into complete lock-down. The first relief came from the regulators as Insurance Regulatory and Development Authority of India (Irdai) came out and said that death due to COVID-19 will be treated as a general death and the claim will be admissible if the coronavirus was diagnosed post-policy issuance.
When there was hardly any activity on ground in the first quarter of current financial year, insurers started issuing policies through tele-medical in place of a mandatory physical medical. This move ensured that while people followed lock-down rules and stayed at home, they still had access to the life insurance coverage. There was immense rush to buy term plans in those days as fear of pandemic was on the peak.
Later, Irdai allowed insurers to take approval of customers through e-KYC and video KYC to issue them a policy in place of submitting physical documents, which was not possible during the various phases of lockdown. Regulator has also announced that insurers should come out with Saral Jeevan Bima a standard term insurance plan. The plan will offer coverage to the policyholders without any restrictions on age, gender, income, occupation, and geographical location.
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However, the question remains on what should be done to further improve the penetration of life insurance and path forward for life insurance companies in the next 10 years. The focus should be on using technology in life insurance industry like artificial intelligence, blockchain and IoT.
The ability to access customers behavioral data using IoT without intervention by traditional agents is a practice that is followed by global insurance companies. As the adoption of technology by insurers and customers increases, data generation through millions of devices connected to the Internet will surge and the role of IoT will grow accordingly. While using artificial intelligence insurers are already leveraging advanced analytics to explore structured data, and AI now makes it possible to analyse unstructured data like images and videos.
But there are some challenges to the adoption of such technologies in India. First there is lack of an electronic health record repository across the country makes the risk assessment process challenging. Secondly, acceptance of insurance related technology will be a challenge due to the higher cost on the policyholders.
Finally, emerging technologies uses policyholder’s data which insurance companies uses to get behavioral patterns. But increasing regulations related to policyholder’s personal data across the globe and in India will continue to pose added challenges.
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There is a clear shift of life insurance companies towards getting the right product portfolio like simple and easy products to understand among other issues. There is also a concern how insurers cope up with low persistency ratio across the industry and how they can attract new set of investors. Apart from designing innovative strategies for products and customer service, life insurance companies may need to revisit their operating model to tackle increased competition.
Life insurers are faced with a tough situation and need to act quickly to remain competitive in the market. In order to grow in such environment life insurance companies will need innovation and agility in the years to come.
Views expressed in the article are the personal opinion of Rakesh Goyal , Director, Probus Insurance, Insurtech Broking Company.
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