The insurance industry in India is one of the premium areas that is expanding. The insurance business’s rise can be due to rising salaries and increased industry awareness. In the world’s rising insurance markets, India is the fifth largest life insurance market, growing at a rate of 32-34 per cent per year. In recent years, the industry has seen severe competition among its peers, which has resulted in new and inventive goods. Foreign Direct Investment (FDI) in the industry is permitted under the automatic approach up to 26 per cent, and industry licensing is overseen by the insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI).
According to IBEF, there are 57 insurance companies in India, 24 of which are life insurers and 34 of which are non-life insurers. Life Insurance Corporation (LIC) is the sole public sector company among life insurers. In the non-life insurance segment, there are six public sector insurers. In addition, there is only one national re-insurer, the General Insurance Corporation of India (GIC Re). Agents (individual and corporate), brokers, surveyors, and third-party administrators who handle health insurance claims are among the other stakeholders in the Indian insurance sector.
New, tech-savvy players are entering the insurance industry, bringing with them the full force of their innovative, disruptive, opportunity-laden strength. They will alter the playing field on which incumbents compete, bringing about changes similar to those experienced in banking with the rise of financial technology businesses (“fintechs”).
The importance of insurance technology
Insurtech is playing a key role in changing how coverage is applied and paid for in variety of ways:
Insurtech improves client satisfaction: Customers are more active in selecting their coverage, understanding their needs, and receiving tailored services as a result of the use of technology. Instead of having to visit a branch or speak with a professional, the future of insurtech is shifting toward self-service, online transactions where clients may choose their preferred engagement channel.
Insurtech increases efficiency: Policyholders and policy seekers can frequently use the internet and applications to investigate and explore ideas. Many insurtech companies enable users to immediately get the information they require without having to wait for business hours or an available agent.
Insurtech emphasises individuality: Many new technologies (described below) are now accessible to better comprehend each individual’s genuine needs due to the creative nature of information gathering and data processing. Based on previous data, this not only improves cost but also provides more reliable, constant coverage.
Insurtech innovations driving change
There is a growing and increasing spectrum of technologies employed in insurtech that is changing the way insurance is performed. The following are the most notable technologies that are being used.
Machine Learning & Artificial Intelligence: Certain jobs that formerly required human involvement can now be performed entirely by technology thanks to artificial intelligence functions. Customers, for example, would historically have to connect with representatives to get queries addressed; now, interactive conversations with chatbots may allow a client to receive assistance without speaking with a human.
Automation: Change in the insurance industry is dependent on efficiency. This means that when insurance customers fill out a form online, the information is automatically saved in a data warehouse or used to generate a policy ready for signature. When technical instruments can carry out a process on their own, automation tools are used to avoid manual human interaction.
Big Data: The term “big data” refers to the collecting of huge amounts of data. This comprises a wide range of data, real-time data collecting in real time, and a diversity of data sets. Big data gathering techniques enable insurers to acquire a bigger variety of data that can be used to analyse a customer’s risk profile and better understand their traits and habits. Furthermore, this data can be collected for millions of users and put into the previously described prediction models.
Also Read | Insurtech brings significant acceleration in insurance space
Blockchain: Though most commonly associated with cryptocurrency, the fundamental foundation of blockchain technology is immutable, distributed legers. This enables unchangeable record-keeping to maintain information security and reliability. It also enables smart contract execution to take place on a blockchain, remaining inactive until particular criteria are met in order to release insurance proceeds or validate an insurance client.
The Internet of Things (IoT): The Internet of Things is another insurtech innovation that is based on physical innovation (IoT). Despite being a digital notion, IoT is based on the interplay of physical items and software. For example, auto insurers now frequently offer devices that measure vehicle speed, handling, and driving habits and can be used to reward or penalise good driving practises. Insurance firms can now base rates on the slightest of details, which was never possible before.
Quote from Abhishek Poddar, Co-founder & CEO, Plum
Overview on the insurtech industry
The insurance industry in India is increasingly adopting a tech-first approach, with over 140 insurtech companies currently operating in the country. These companies have played a crucial role in increasing insurance penetration and are now moving beyond a supporting role. The insurtech sector in India offers a market opportunity of $339 billion, which has been recognised by private equity and venture capital firms. This shift towards technology-driven solutions is helping to deepen insurance adoption and make it more accessible to people across the country.
Inclusion took a center-stage
In 2022, Insurtechs have made significant strides in promoting accessibility and inclusion in health insurance, particularly for the “missing middle” of the population. Companies like Plum have emphasised the importance of “inclusion in insurance,” raising awareness among corporations and partnering with insurance providers to offer necessary coverage, such as higher limits on maternity costs and coverage for mental health, IVF, and sex reassignment surgery for LGBTQ employees. These efforts have helped to make health insurance more accessible and inclusive for all.
Emerging industry demands
The insurtech industry is constantly evolving, and 2023 promises to bring even more exciting developments and trends. One emerging trend is the increased use of artificial intelligence and machine learning to improve the efficiency and accuracy of insurance processes, from underwriting and risk assessment to claims handling and user education. Thanks to the launch of OpenAI that has fast tracked this development. The rise of digital health technologies is also transforming the healthcare insurance landscape, making it more accessible and personalised for customers. Overall, the insurtech industry is poised for continued growth and innovation in 2023.
Regulatory and partners’ support
In 2022, we saw some positive developments by the insurance regulator IRDAI, such as the inclusion of mental health coverage under all health insurance products and the removal of limitations for corporate agents. This allows for greater choice and flexibility for customers and agents alike. IRDAI’s efforts to promote inclusivity and accessibility in the insurance industry are a welcome step forward.
Quote from Saurabh Arora, Co-founder and CTO, Plum
“The insurtech landscape in India is rapidly evolving and has seen significant growth in recent years. Insurtech refers to the use of technology to innovate and disrupt the traditional insurance industry, often through digital platforms and data analytics.
In India, insurtech start-ups have emerged in various sectors, including health insurance, life insurance, and property and casualty insurance. These companies use technology to improve the insurance customer experience, streamline processes, and offer more customised and accessible products, all while aiming to increase efficiency and reduce costs.
The Indian government has also played a role in supporting the growth of the insurtech industry with initiatives such as creating a regulatory sandbox to allow companies to test new products and technologies.
Overall, the insurtech landscape in India is dynamic and rapidly changing, and it is likely to continue to evolve and grow in the coming years
Some of the industry-level advancements we are especially excited about include:
Embedded insurance
Embedded insurance products, also known as “insurance-as-a-service,” refer to insurance coverage bundled with another product or service. This can take the form of insurance coverage included as part of a larger package or the purchase of insurance coverage as an add-on to a primary product or service. Embedded insurance products have become increasingly popular in recent years, as they offer a convenient and seamless way for consumers to purchase insurance coverage and for companies to offer insurance as part of their product or service offerings.
Some examples of industries where embedded insurance products are commonly offered include automotive, travel and health. For instance, health insurance coverage is included as part of a gym membership: Some gyms might offer discounted rates on health insurance policies to their members or include coverage as part of the membership fee.
Overall, embedded insurance products offer the potential for insurers to reach new customers and companies to offer insurance as a value-added service to their customers.
National health ID and claims exchange
The National Health Authority (NHA) Health Claims Exchange in India is a digital platform that aims to streamline and standardise the process of submitting and processing insurance claims.
Also Read | Embedded insurance is empowering insurtech innovation
One key aspect of the NHA Health Claims Exchange is the use of a unified health ID, which is a unique identification number assigned to each individual. The unified health ID is linked to an individual’s health records and insurance coverage, and it is used to track and manage claims on the NHA Health Claims Exchange.
The unified health ID has several benefits. For patients, it can make it easier to access and manage their health insurance coverage and claims, as all of their information is stored in a single, centralised location. For healthcare providers, the unified health ID can streamline the claims process, reduce administrative burdens, as it allows them to easily access, and verify a patient’s insurance coverage. For insurance companies, the unified health ID can help to reduce fraud and improve the efficiency of the claims process.
Overall, the use of a unified health ID is an important aspect of the NHA Health Claims Exchange and has the potential to significantly improve the efficiency and transparency of the healthcare system in India.
Streamlining the claims experience with AI
The use of machine learning, and image processing technologies such as OCR (optical character recognition), can significantly improve the claims experience for both insurance companies and customers.
Machine learning and data analytics can be used to analyse claims data and identify patterns that may indicate fraudulent activity, helping insurance companies to more effectively detect and prevent fraud. In addition, machine learning algorithms can be used to automate certain parts of the claims process, such as the initial assessment of a claim, which can speed up the overall process and reduce the workload for claims adjusters.
Image processing technologies can be used to analyse and extract information from images and documents submitted as part of a claim. For example, OCR technology can be used to automatically extract text from scanned documents, making it easier to process and verify the information contained in the documents. In this way, the insurtech accelerates the underwriting, claims, and disbursement processes in minutes. Before this, a doctor used to analyse and approve these documents.
Exciting roadmap for Plum
At Plum, we have an exciting roadmap of new features to announce. Over the next few months, we’ll be rolling out a series of updates that will bring even more convenience, efficiency, and value to our customers. From AI-powered chatbots to streamline the claims process to advanced data analytics to help you make more informed insurance decisions, we’re constantly working to improve and innovate.
Primary, Urgent and Telehealth at your fingertips: Plum members can now take control of their health with virtual primary care, accessible 24/7 for urgent and preventive needs. Plus, connect with a doctor for consultations and start storing your medical history in the convenient Plum health wallet.
Digitising claims journey by eliminating painful claim forms: We’re simplifying the claims journey by digitising the process and eliminating painful claim forms. Using advanced machine learning techniques, we’re automating the form filling process, making it faster and easier for our customers to file a claim. No more wasting time and energy on tedious paperwork – our technology streamlines the process and allows you to focus on what matters most: getting the coverage our members need.
Easier insurance with simple policy documents and multiple language options: Plum is making insurance easier to understand and access through simplified policy documents and multiple language options. Our goal is to ensure that everyone has the opportunity to protect themselves and their loved ones, regardless of language barriers or understanding of industry terminology. To achieve this, we’re working on simplifying our policy documents through the expertise of our team of doctors. By breaking down complex concepts and language into plain, easy-to-understand language, we hope to make insurance more accessible and understandable for our customers. By offering insurance information in multiple languages, we hope to make insurance more accessible and understandable for people who may not be fluent in English or who prefer to read and understand the information in their native language.”
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