Insurance penetration in India is expected to grow rapidly, driven by a growing middle class population, increasing digital penetration, and a poised market size close to $222 billion by 2025
At the start of 2022, it was official! The embedded fintech revolution had finally caught up with insurance, with nearly eight new Indian startups targeting the segment.
People today access their insurance needs from their smart devices. Phone apps, auto-monitoring devices, and wearable technology all form a part of the tracking tools for the insurtech industry, helping people get insurance in a matter of minutes.
A sudden work travel plan for a Founder-CEO may require insurance immediately, and the last thing any company’s HR or Finance team wants is to wade through a pile of policy documents to check if they’re company-owner can be insured. People managers desire accessible mobile options that quickly summarise coverage, liabilities, and premium information.
Similarly, start-ups may require insurance coverage for a workforce of three people, or even for just a month. And only Insurtech companies like Nova Benefits, can help you do that!
Insurtech has helped insurance companies become more efficient in underwriting, processing claims, and managing assets. Additionally, these new and rising models are not just making insurance great for customers, they are also empowering insurers with the power of technology: No more of agents chasing companies with messy, manual paperwork. Instead, portals and iOs and Android-compatible Apps that can handhold people through the entire insurance experience from anywhere – digitally!
What is Insurtech?
Insurtech refers to technological innovations that are created and implemented to improve the efficiency of the insurance industry. Insurtech powers the creation, distribution, and administration of the insurance business.
In the last few years, technology has proved its prowess in the insurance category. The last two years especially, have witnessed a massive growth in the digital insurance model, which eventually eased out the processes for insurance manufacturers, distributors and end consumers. We have seen how digital platforms have been successful in making the end-to-end insurance life cycle seamless.
Business-to-business or B2B models include Insurtech startups like Nova Benefits selling Group Health Insurance (GHI) and Group Term Life Insurance (GTL) to small and mid-market-size businesses. Interestingly, thanks to more aware customers, the lapse rate is typically low for thriving B2B Insurtech models.
A policy lapse is a situation where you can no longer avail the benefits and coverage provided under a policy. Since GHI policies are managed by People & Culture teams who monitor employee happiness closely and track retention based on employee benefits, the lapse rate for GHI policies is low.
The World Insurtech Report defines the competencies of Inventive Insurers as follows:
- Capable of making business processes more intelligent, efficient, and effective using AI, automation, and analytics
- Creating new scalable products with shorter development cycles
- Enabling seamless integration with new data sources and distribution models
- Offering value-added services to the customers
What is the scope for Insurtech in India?
Health insurance is highly under-penetrated in India, despite the extensive need for health protection across the country. In the two years of the global pandemic, people have realised the importance of health insurance, but there is a huge demand-supply gap within health insurance penetration.
Read More: The Rise of Insurtech in India
While there is a need for awareness, most people managers face challenges with the accessibility of the best insurance policies and insurers. As a direct impact, more than half the working population lives without the security of health coverage.
Around 50% of people are covered under government-sponsored schemes, under which consumers cannot afford the best medical care.
Many people in India are covered under group health insurance coverage, and this number surpasses individual health coverage. While the government, insurance manufacturers, and distributors are working extensively toward increasing health insurance penetration, there is an increasing need for technological interventions to make insurance more accessible to consumers across the country.
Insurance penetration in India is poised to grow rapidly, driven by the growing middle class and increasing digital penetration, which will help the insurance market reach a size close to $222 billion by FY26, according to a report released by consultancy firm, Redseer.
New online distribution models such as B2B and B2B2C are key drivers of growth, gaining significant opportunities.
Artificial Intelligence and Machine Learning have paved the path to seamless claims processing for the insurance sector
Processing claims through submission of documents online, claim settlement across all categories, intimation of claim incidents through WhatsApp, have changed insurance for consumers
- By decreasing human intervention and turnaround time, insurtech startups offer quick, customised services and experiences to consumers
- Insurers can now execute quick claims turnaround cycles with claim settlements being more accurate and error-free
- Consumers too face lesser hassles due to the customised experience and quicker settlement processes, added with the fact that they can check their claims history and stay up-to-date on the payment schedules.
- Tech based channels have made insurance a personalised experience, much like the e-commerce virtual platforms
- Through big data analytics, tech has helped companies understand personalised consumer behaviour and their family needs and helped them reach out with more accurate need-based insurance solutions. For example, an insurance broker like Nova Benefits presents companies with tailored recommendations for GHI plans based on policy audit reports, competitor analyses and an overview of the health and wellness of a company’s people base.
- Such customisations have helped companies choose the right kind of policy, catering to their HR team's specific needs.
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Insurtech companies garner the complete support of the IRDAI
India’s Insurance Regulatory body IRDAI has introduced new policies to make the overall health insurance process more flexible and accessible to everybody.
The regulator has been flexible in allowing Insurtech companies to experiment with tech-based insurance products to increase insurance penetration in the country. Nova Benefits is an IRDAI-certified insurance broker and is playing a critical role in improving the awareness and utilisation of GHI, GTL (Group Term Life Insurance) plans, and thus, spearheading this movement.