Over the last two years, investments in the global InsurTech market have crossed $2.3 billion and the sector has continued to grow at an astounding rate of 3-4%. EY estimated the net income growth rate to cross 23% as opposed to 14% in 2017, all of this only point towards one thing: the immense possibilities for the future. With more than 24 life insurance companies and 33 non-life insurance companies, the market is booming in India today. This is mind blowing, but one of the biggest challenges that the insurance sector faces, is the way it is perceived. People no longer want to think of it as boring paperwork, long calls with agents and multiple forms to file for one claim. Consumers, especially millennials are looking for specific policies with small premiums and maximized benefits that they can purchase conveniently, preferably online. Here’s where a combination of insurance and intelligent technology comes into play. InsurTech led by disruptive tech like AI sure has been more than a buzzword in the last few years!
InsurTech in 2018
The Insurance sector in India has seen many improvements in the past year, both in terms of innovation and premium growth. While digital innovations successfully disrupt the traditional ways of functioning, the government is taking more steps towards financial inclusion and a better-connected India. The income of the Indian middle class is also rising steadily, and this means that insurance companies are better suited to plan their premium offerings. Life Insurance premiums have been growing at a CAGR of 12.49%, and Non-life premium at a CAGR of 11.05%. More and more Point of Sale people are becoming part of this industry, and thus, consumers are becoming more and more comfortable with the idea of buying insurance online. This landmark decision by the IRDAI will surely increase business potential quite drastically. Broking Agencies like PolicyBazaar, QuickInsure and TurtleMint have seen investments of more than $250 million in 2018. There’s so much more to come!
Disrupting InsurTech with AI and IoT
With more than 337 million smartphones and millennials who form almost half of India’s population, IoT is also booming. This means only one thing: more consumer data. Data is the backbone of artificial intelligence, and going ahead, AI coupled with predictive analytics will pave the way towards mapping trends and consumer behavior better, in turn, helping insurance companies make informed policy decisions. As IoT devices becomes cheaper and better integrated in our daily life cycle, AI will use this data for real-time risk evaluation and ensure the right premiums for every customer! Paperwork? Forms? Manual intervention. All gone! Policy issuance will become so much simpler, faster and more efficient. IoT will play a major role in the future with real-time metrics being a major factor to issue better premiums. Imagine if you get a drive-score to build your driving profile that can get you a reduced premium, and if you ever need to claim the insurance, you don’t even have to stand in line because it gets credited to your account through the click of a button. Sounds awesome, right? AI is all set to disrupt traditional claims, distribution, underwriting, and pricing, and this solution is closer than you think!
Predictions for 2019: Customized Insurance Plans, Cryptocurrency and more
While all insurance companies want to make their premiums as affordable as possible, that will always depend on the customer’s profile. However, in the near future, you could get customised insurance products, negotiated on the terms and benefits of a policy Vs the premium, and this would all be automated for each customer separately. Customers want solutions, not services, and if you can give them that, you’ve won the race already. The emergence of online third party platforms that build an entire insurance ecosystem online for consumers to choose solutions from is going to be a key trend this year. India will also see microinsurance coming up, in line with the government’s goals of financial inclusion mentioned earlier. McKinsey states that item insurance, or the concept of ‘insurance as a service’ will escalate and allow people to insure items only when they are being used. Gamification, chatbots and mobile tools to ensure constant user engagement cannot be missed out. After all, it is the ‘connected generation’ that insurers have to target.
Adopting newer tech to gain an edge over competitors by improving operational efficiency is the mantra we all need to follow. BigData, AI, and IoT are here to make their mark, and the in near future, crypto-currencies may disrupt the InsurTech sector as well. Here’s to a year full of tech innovations that matter!