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September, 2022

Dematerialization of Insurance Policies in India

September, 2022

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Table of Contents
01 Dematerialization of Insurance Policies in India
02 The Insurance Monthly Roundup
03 Are Insurtechs driving healthcare access in India? 
04 State of Insurance in India 10 years ahead: Swiss Re Report
05 Retaining Insurance Customers through Hyper-personalization

Dematerialization of Insurance Policies in India

The Insurance Regulatory and Development Authority of India (IRDAI) has been modifying industry laws and regulations over the past several months to make it easier for insurance companies to conduct business and offer convenience to India’s humongous customer base. And now, the latest move is the dematerialization of insurance policies. 

Dematerialization means physical policy paper will be “dematerialized,” or converted into an editable digital entity. This implies that the documentation involved in renewing insurance will no longer be necessary. Similar to the dematerialization of shares, the policyholder would be able to maintain insurance coverage in Demat form. The policyholder will not be permitted to trade, purchase or sell the policies, unlike in the case of shares. The regulatory authority has mandated the dematerialization of new insurance policies by December 2022. The insurance regulator has further asked insurers to dematerialize the existing and previous policies by December 2023.  

IRDAI is promoting the dematerialization of insurance policies to assure a reliable electronic form of policy solicitation, service, and storage. A dematerialized policy will be easier to assign and more flexible. The policyholder’s rights won’t alter in any way. Both the insurer and the insured would benefit from it. It aims to lower transaction costs while simultaneously assuring quick policy changes. Additionally, it will help insurance businesses to be more effective in offering better customer service. To make the experience of policyholders more convenient, it will simply digitize current records and provide a single online portal to get information on the numerous policies they are subscribing to.

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The Insurance Monthly Roundup

A quick roundup of the month’s insurance and insurtech news.

(India)

  1. MetaMorphoSys has acquired $ 3 million in the latest funding round which will be used to upgrade the SaaS-based digital insurance platform, extend the product and sales team to other markets and streamline the entire value chain.
  2. The global insurtech service market is expected to touch $29.75 billion in 2026 at a CAGR of 30% according to research and market.
  3. GroMo, headquartered in Gurugram, has secured $11 million recently. The firm intends to utilize this new funding to double its workforce and widen its reach.

(Global)

  1. Fairmatic has garnered $42 million to innovate commercial auto insurance The company is introducing an alternative to the previous commercial auto insurance model and plans to establish an R&D facility in Israel in the future.
  2. Missouri-based iCover has secured $5 million. The business intends to invest money to increase its workforce and support research and development for its private blockchain network and AI underwriting platform.
  3. At-Bay has acquired Relay. Through this acquisition, Relay intends to increase its capabilities and value-added services for its partners and its integration will assist At-Bay’s ongoing digital distribution strategy.
  4. In collaboration with Nexus Alpha USA, Previsico has announced the opening of its live flood forecasting alert service in the US. The objective is to minimize surface water flood losses for US insurance companies and their clients.

Open Finance: Reality or Hype?

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Are Insurtechs driving healthcare access in India? 

Demand for health insurance has jumped by more than 300% since the pandemic, reveals the latest study by Justdial Consumer insights. 

According to the World Health Organization report, over 55 million people in India are still living in poverty as a result of household out-of-pocket (OOP) costs for health services. Over 18% of households experience catastrophic levels of annual health expenditures.

There are some of the pressing challenges that the country faces when it comes to accessing healthcare in India: lack of proper infrastructure, lack of trained healthcare staff and quality care services, etc. However, one of the major concerns for insurance seekers is the financial burden they face as most patients are paying their health expenses out of their own pocket. This indicates that a significant chunk of the population is yet to be insured pointing out a demand and supply gap in health insurance. At this point, insurtechs are setting new benchmarks in the industry on one hand when it comes to delivering superior customer experience; at the same time, they are driving healthcare access in India by creating digital touchpoints for the customers. Here’s how they are improving healthcare access in India:

  1. Insurtechs integrate telemedicine within their own platforms, thus improving the accessibility in remote locations of the country. The cost of telemedicine is low compared to offline visits, thus creating affordable healthcare for the patients.
  2. Insurtechs are focussing on creating innovative solutions by bundling OPD covers and other services into health subscription plans. Byte Sized insurance products for the underserved market is also increasing insurance penetration in India and reducing out-of-pocket expenses for the people by insuring them for the future.
  3. Promoting wellness and a healthier lifestyle by rewarding the policyholders with a range of services that are simply a value-addition to the health insurance coverage at no additional cost.

AI and the Gen Z Experience

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State of Insurance in India 10 years ahead: Swiss Re Report

Swiss Re Institute has released its latest report -Global Economic and Insurance Outlook. Here are some of the key highlights from the research outlining the growth of the Indian insurance market during the next 10 years:

Overall Insurance Growth: 

By 2032, India’s total insurance premiums is predicted to grow by an average of 14% CAGR, placing the country as the 6th largest insurance market globally in terms of volume.

Life Insurance: 

The report suggests that India will become the 5th largest life insurance market by 2032. The life insurance industry will grow at 6.6% (in 2022) and 7.1% (in 2023). According to the anticipated growth rate, life insurance premiums in the nation would reach $100 billion for the first time in 2022.

Non-life Insurance: 

Due to rising inflation, the non-life insurance market in India is likely to witness a fall in 2022 touching 4.5%. However, by 2032, the non-life insurance market is predicted to grow at a CAGR of 8%.

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Retaining Insurance Customers through Hyper-personalization

Customer retention has always been a challenge for the insurance industry and the cost of acquiring new customers is comparatively higher than the cost of retaining. For insurance firms, it becomes imperative to find out ‘what else can be insured?’ to increase the wallet share of the existing consumers who are searching for innovative and personalized insurance solutions to buy. Episodic (on-demand) insurance solutions and usage-based plans according to customer needs would generate cross-sell and up-sell opportunities for insurers. For example, Bajaj Finserv India offers episodic Insurance solutions such as adventure sports insurance coverage to the customers. AIA Life offers a usage-based modular insurance product that has a choice of 32 coverage combinations. The company follows a dynamic pricing option where customers are given discounts on the basis of their engagement level with AIA’s life health program. 

State of CX In Insurance

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