Insurtech’s Role in India’s Race Towards ‘Insurance for All’ by 2047
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Since November 2022, when the Insurance Regulatory and Development Authority of India (IRDAI) announced its ambitious national vision to provide ‘Insurance for All’ by 2047, the government body has taken aggressive steps to ease regulatory, capital, and social barriers to consumer adoption of life and health insurance services. Some notable changes include:
Repeal of ~70 outdated regulations.
Removal of ~1000 circulars (making the regulations less complex by reducing official communications).
Simplifying financial, operational, and compliance reporting requirements.
Considering that the population of India is projected to reach 1.7 billion by 2047, the challenges of policy distribution across the country – especially in rural regions – will be monumental in the coming two decades. Insurers’ capacity to automate and scale underwriting processes will be mission-critical.
ICICI Bank notes that life insurance has traditionally been a low priority for Indian consumers who had limited understanding of its benefits, did not understand the risk of insufficient coverage and believed it to be too expensive.
However, risk awareness grew during the COVID-19 pandemic, and younger and more digitally savvy consumers with a growing preference for purchasing goods and services online have contributed to significant increases in life insurance interest, literacy, and adoption.
Mayank Gupta, chief operations officer at insurtech platform, Zopper explained in The Economic Times, “Since the pandemic made the contactless system a necessity, customers became increasingly comfortable with purchasing things digitally, including complicated financial assets and even insurance plans. Understandably, new and more tech-savvy customers will naturally be drawn to those with the finest digital offering".
According to Boston Consulting Group’s (BCG) September 2023 white paper India Insurtech Landscape and Trends − Driving Towards Insurance for All, core themes that will drive the Indian initiative are:
Awareness − product simplification, targeted customer communication and last mile activation.
Product offering and affordability − innovative constructs, simplification.
Strengthened distribution − last-mile reach, improved productivity, new channels.
Enhanced customer experience and trust − seamless journeys, personalisation, transparency.
Regulatory enablers.
With the IRDAI removing barriers, insurers and insurtech have an unprecedented opportunity in the Indian market to partner on highly scalable insurance delivery systems and methodology, delivering on the goal of Insurance for All.
According to IRDAI Chairperson Debasish Panda, “Technology adoption is changing the insurance landscape in the country. The use of big data, AI (artificial intelligence), ML (machine learning) are impacting the sector in more ways than one. IRDAI is encouraging insurtech, regtech, and fintech to provide ease of [access to] insurance”.
Additionally, the vast reliance on and proliferation of mobile phone usage in India, now driven by lower-cost 5G adoption (especially in rural areas), will accelerate insurance penetration across India. According to International Data Corporation India, 5G smartphone share increased to 47% in Q2 2023, up from 31% in Q2 2022.
Risk Awareness
The Indian market has seen a sharp increase in insurance fraud. Tobias Frenz, CEO Munich Re Singapore, observes, “Fraud comes in many shapes, from producing forged documents, manipulating pre-policy health check-up records, non-disclosure of critical information, buying of policies in the name of a deceased person or a person with a terminal illness, stating false reasons for claims, staged accidents, etc. Fraud is certainly not unique to India but has been more pronounced there in the recent past".
Deloitte’s Insurance Fraud Survey 2023 found that, “60 percent of survey respondents felt there was significant rise in fraud, while a further 10 per cent reported a slight increase. Insurers consider mitigating fraud as a priority. Key factors given for the rise include increased digitisation (34 per cent), remote working (22 per cent) post pandemic and weakened controls (22 per cent)”.
Across the industry, insurers are facing challenges including data quality, data protection and privacy, and lack of analytical tools to assess and mitigate risks.
Customer Focus
Without careful response to consumer needs – among them personalisation, automation and accessibility of both information and processes, insurers risk alienating Indian consumers.
According to BFSI from The Economic Times, “To unlock [the] higher potential of the insurance sector, the industry needs to leverage technology within the organisation and customer interactions…align with dynamic changes in customer behaviour and preferences and manage perceptions by showcasing fiduciary responsibility, like offering quick personalised products…over mass-product offerings to give customers more flexibility.
“There's an urgent need to optimise usage of data and analytics across functions for maximum efficiency, especially in the case of underwriting and claims”.
BCG’s India Insurtech Landscape and Trends analysis includes these factors and themes as critical to penetration and distribution in the India market:
Increasing importance of customer experience.
Data and analytics emerging as a core capability to drive operational efficiencies and enhance pricing proposition.
Emergence of the National Health Stack.
Build vs Buy
Many insurers have already tried to build internal digitalisation systems, only to find they are too cumbersome for underwriters and back-of-house teams to use correctly or effectively. Lack of internal usability is a chief factor in the failure of in-house digitalisation solutions.
Some insurers are at an inflection point of determining whether to build or buy. Yet the internal resources required to replace or improve legacy systems can hinder businesses forging a path toward digitalisation.
In addition to internal change management and alignment, and training of existing and incoming talent, replacement or augmentation of legacy systems requires investment in technology infrastructure and continuous maintenance and optimisation. Partnering with vendors who specialise in insurance industry digitalisation provides the tools required to accelerate digitalisation. Download the ebook below to learn more.
If you are interested in accelerating your race towards insurance for all, expand the sections below to discover how we can work together to digitally transform your business.
ALLFINANZ automated underwriting solutions
To succeed in the race towards Insurance for All by 2047, insurers can partner with digital solutions providers to deliver secure, scalable, flexible technology and risk management while enhancing customer experience. Our cloud-based, end-to-end automated underwriting and advanced analytics solutions empower insurers to increase straight-through processing (STP), mitigate risk, and leverage new data sources and insights to optimise insurance underwriting processes.
From point of sale to decisioning, our robust platform facilitates all aspects of your underwriting – whether your system is automated or manual – and is equipped with a pre-configured starter rulebook to accelerate your time to market. Additionally, our easy-to-use Rulebook Designer enables you to customise the solution to your specific underwriting philosophy and evolving business strategies, with the ability to integrate third-party data through data exchange – turning expertise into process.
The platform features:
Flexible, user-controlled configuration and integration, supporting multiple products, languages, and sales channels.
Easy-to-use tools to underwrite multiple risks at once.
Superior analytics capabilities.
We manage ongoing hosting, configuration, and deployment, reducing the resources needed to maintain your platform, and provide tailored underwriting, technology and analytical consultancy to streamline and accelerate business operations.
Dynamic Risk Calculator
Predictive analytics can help insurers reduce the incidence of fraud, early claims, and adverse selection while still offering ease of issuance and frictionless customer experience. To pre-assess life insurance applicants, Munich Re India has developed a predictive risk scoring tool, Dynamic Risk Calculator (DRC), which is based on life insurers' past underwriting and claims data.
DRC, which can be used in conjunction with ALLFINANZ digital solutions, predicts a risk profile for an application based on multiple profile parameters, and subjects applications with poorer risk profiles to stringent evaluation. The DRC tool:
Suggests risk checks and underwriting requirements dynamically, as appropriate for the risk profile.
Works on API-based technology.
Ensures a smooth on-boarding experience.
DRC is purely a recommendation engine and the final underwriting decision rests with the insurer.
Delight customers
Building consumer trust, providing personalisation, and ensuring accessibility will be critical enhancements for insurers seeking to scale towards Insurance for All by 2047. With ALLFINANZ, you can provide dynamic interview experiences, empowering you to sell in new ways to new markets with round-the-clock access – exceeding customer expectations and accelerating coverage. Build customer confidence and ensure service consistency with:
Seamless end-to-end experience.
Fully mobile-enabled solutions.
Offline interview capability.
Immediate underwriting decisions.
Additionally, you can create a custom interview experience with robust APIs to integrate with your existing back office, and ‘out-of-the-box', flexible screens enable you to jump start your development process for both single and two-stage interview processes.
Predictive analytical capability
We’ve used our industry-leading understanding of how modern insurers are harnessing technology to transform insurance operations and services through predictive analytics. We help data science teams accelerate the discovery and retraining process, providing structured underwriting data and domain support.
Additionally, we can streamline model deployment and management in our secure cloud solution, ensuring you get the availability, performance and security you need, and simplify the process of integrating predictive models with your production system without the need for any code integration.
Finally, our predictive solutions enable you to monitor the impact and performance of deployed models on your business with dedicated dashboards and easy-to-access reports.
Evolution, not revolution
Despite India’s push towards Insurance for All by 2047, change cannot, and indeed should not, happen overnight. Insurers who digitalise too early or late, or in the wrong way, run risks which could negatively impact their profitability, data security, brand and reputation.
Munich Re Automation Solutions offers a plethora of ‘building block’ modular solutions to drive digital transformation in the Indian insurance space. In fact, for over 30 years, we have been transforming insurance organisations with next generation digital insurance solutions; we are currently trusted by more than 140 global insurers.
We possess the business expertise, risk knowledge and subject matter experts you need to accelerate adoption of next generation underwriting models. We provide scalable automation and digitalisation solutions, robust regulatory oversight, analysis tools, the latest technologies, and the highest quality compliance and security landscape of any digital solutions provider.
You can put this digitalisation power to work for your business at every stage of the value chain. Munich Re Automation Solutions is here to support your end-to-end digital transformation, and act as a trusted partner and champion of India’s Insurance for All initiative.