India’s insurance market has undergone numerous changes and is one of the fastest-growing markets today. The pandemic has sped up the industry’s rapid digitalization, reflected a rise in its demand, necessitated the development of new products, and more. Furthermore, the prospects show there have been disruptions owing to the extraneous factors that have led to the evolution of the industry itself. According to IRDAI, the sector has witnessed growth between 12 and 15 percent over a five- to six-year horizon of Insurance in India. 

Evolution of the insurance industry

The history of insurance in India is deeply rooted, and the journey extends over 200 years. Business-wise, life insurance was introduced in 1818 when the Oriental Life Insurance Company launched in Calcutta. However, during this era, the market was dominated by foreign insurance offices. Then, in 1912, the Indian Life Assurance Companies Act emerged as the first statutory body to regulate life insurance in India. The nationalisation of the insurance sector happened in January 1956 with the emergence of LIC (Life Insurance Corporation), which subsequently absorbed a total of 245 Indian and foreign insurers. Until the 1990s, the LIC had a monopoly in the market until the insurance sector reopened for the private sector and the changes started to show up.

With the recommendations of the Malhotra Committee, IRDA (the Insurance Regulatory and Development Authority) was incorporated in early 2000 as a statutory body to regulate the insurance industry, and it changed the landscape of the industry irrevocably. Over the past two decades, the insurance market in India has experienced impressive growth, thanks to increased private sector involvement, better distribution capabilities, and significant increases in operational efficiency. The insurance sector has never looked back since the sector underwent liberalisation, and it is now one of India’s most competitive and developing industries. Today, there are 34 general insurance companies and 24 life insurance companies, according to IRDAI. Furthermore, the total addressable market (TAM) in FY 22 was $66.5 billion, according to Redseer Consulting, and it is anticipated to reach $222 billion by FY 26. Despite the stunning numbers, India is underinsured as a country.

Three separate milestone events:

• Nationalisation of General Insurance Companies during 1972, where in 107 insurers were grouped and amalgamated into four Companies – National Insurance Co. Ltd., The New India Assurance Co. Ltd., The Oriental Insurance Co. Ltd. and United India Insurance Co. Ltd 
• IRDAI opened the market for private insurance companies in the year 2000, that helped boost insurance penetration in the country 
• Introduction & licensing of standalone health insurance companies by IRDA in the year 2006

 Have resulted in more focus & penetration of insurance in the Country

Challenges and opportunities

The insurance industry in India faces challenges that need to be addressed in order to ensure elevated growth. There is significantly more population living in rural areas than in urban areas. According to the estimates of the World Bank, roughly 65% of the population lives in these areas. The issues arise because there are relatively few buyers as well as sellers of insurance in rural areas. Some of the main reasons for its low penetration in India include inadequate insurance awareness, gaps in product understanding, and the value of the return on investment of the insurance purchased. Another significant challenge is getting insurance distribution to every area within the last mile. However, not everything is doom and gloom.

The Covid dramatically increased public awareness of health insurance, resulting in a surge in policy purchases. The other insurance products, however, still experience slow growth. Insurance penetration in India during 2021–22 was 4.2 percent, which remained the same as in 2020–21, according to the Annual Report of IRDAI. However, in India, a number of regulatory changes are being implemented to boost the penetration of insurance, boost capital inflow, boost valuation, and ease the entry of small, specialised, and niche players. The increase of the FDI, the General Insurance Business Amendment Bill (August 2021), the introduction of the National Health Stack, and disbursing huge amounts of capital for the development of the industry are some of the key examples. As a result, today, with the entry of private players who are targeting the underinsured market and the rising use of the new distribution, the long-term expansion of the industry has been facilitated by the use of new distribution methods and technological advancements.

Rise of tech-based insurance

India’s insurance industry has embraced technology’s advancement. Today, it uses Blockchain, machine learning (ML) to automate claim management, the Internet of Things (IoT) to personalise insurance pricing, and telematics for auto insurance. According to the India Fintech Report 2022, a number of insurance businesses have emerged that have enhanced their core offerings by implementing various technologies like AI, IoT, ML, and various other software. Additionally, in the years following Covid, the sector has become more digital. Insurance companies have also improved their digital platforms by replacing outdated systems and adding virtual assistants. The customers are also using more portals and apps, per the National Investment Promotion & Facilitation Agency’s data. They are preferring digital insurance options; for GI (General Insurance) and HI (Health Insurance) products, 73% and 62% of customers, respectively, preferred the online mode. As technology becomes more prevalent in the industry, more people will have access to insurance and will connect with the insurance industry. The data clearly points towards a trend that though the consumers are using the online tools to compare and research the various insurance products, they however, prefer offline support to understand the intricacies and ultimately making the final purchase. 

Despite the technological advancements, there is still a requirement for the human touch in the insurance industry. As the products are complex, the customers may not understand the technicalities or the jargon of the industry. Rural residents tend to be less tech-savvy, so there is a clear need for knowledgeable agents who can guide clients through the complexities of their policies and make sure they are adequately covered. Additionally, they can offer advice on the different kinds of policies that are available and assist clients in selecting the one that is most appropriate for their requirements. Therefore, the growth of the industry will be assured with the amalgamation of technology with the human touch. 

Way forward 

The future of the insurance industry in India looks promising owing to several changes in the regulatory framework, technological advancements, government support, and increasing awareness. The insurance industry in India is likely to introduce new trends like product innovation, multi-distribution, better claims management, and regulatory trends in the Indian market as incomes rise and purchasing power and household savings grow exponentially. According to a recent research report by Swiss Re, the Indian insurance industry is poised to become the sixth largest market by 2032. 

The insurance industry plays a vital role in the financial sector. The insurance companies, with their accumulated funds from premiums, invest in ways that contribute to the growth of the economy. The organised insurance system offers numerous direct and indirect advantages to the individual, his family, business, community, and country as a whole, as well as to industry and commerce. As a result, the expansion of the insurance sector in India will contribute significantly to GDP growth. For this to happen, there is a pressing need to penetrate the underinsured markets.

However, it is very evident that Phygital is the way forward as, in spite of technological advancements, the human interface will continue to play a big role in the penetration of insurance in the country. Also, it is poised to be one of the largest employment generators for the educated youth in the country, a sector that brings out the entrepreneurial side of the youth and thereby offering excellent growth opportunities while contributing to the growth of the nation.

General insurance benefits provide a blanket of financial protection from the uncertain risks posed by medical emergencies, diseases, accidents, and more

In times of uncertainty or emergencies, arranging a substantial amount of cash instantly can turn out to be a liability for an individual. General insurance in such cases provides a blanket of financial protection from the uncertain risks posed by medical emergencies, diseases, accidents, and more. With the right insurance at your disposal, you get reimbursed in such situations, which makes it a lot easier to manage the heavy expenses.

However, as understanding insurance policies can be complex, not everyone can procure maximum benefits out of them. But there are certain measures you can take to utilise it in an efficient manner.

Right policy, more benefits

Today, health problems have become way more common in senior citizens and younger people alike. With the increasing costs of treatments, medicines, and diagnoses, it is better to have a general insurance policy at your disposal. However, choosing the right policy can and will help procure the complete benefits. You need to check your requirements first. While someone may have individual requirements, on the other hand, some people may require a family floater plan. Furthermore, a high claim settlement ratio can help increase the chances of getting a claim.

Knowing the coverage

Purchasing general insurance for yourself and your loved ones is an optimal thing to do in order to live a stress-free life. However, before getting a policy, reviewing and knowing the limits and exclusions carefully is also necessary. Insurance coverage can be considered a financial safety net. It is a financial protection that is given to the insured in case of any adversities. The premium you pay sets a limit for your coverage, and you cannot make claims exceeding this particular amount.

Knowing this will not only help you understand the policy in a better manner but will also aid in making informed decisions. The information can be garnered with the help of an insurer or an agent, who can help you understand the necessary details before the purchase.

Going cashless

In this era of digitalisation, we have the provision of going cashless, and general insurance is no exception. Several insurance companies in India are offering cashless facilities. As the name suggests, the insurer does not have to pay a rupee from their pocket while their medical expenses are taken care of.

A cashless claim has its own benefits and convenience when it comes to medical emergencies, which usually take a toll on the patient and their family. With cashless general insurance, the insurance company deals directly with the hospital, as they have their own established networks. Therefore, going cashless is a good option in order to avoid any unnecessary expenses.

Choosing network hospitals

One of the common pain points in general insurance is when a policy does not cover all the expenses and the insurer does not cover 100% of the claim amount. A lot of the time, a patient or their family might not understand the situation, but the bill post-hospitalisation can come as a shock. However, this can be avoided with a planned hospitalisation. The insurance providers give you the option of choosing from a network of hospitals.

These network hospitals are verified, they provide quality treatment, and they ensure that the policyholder gets a discounted rate as they have agreements with insurance companies. Knowing this can save a lot of expenses, however, you must also check out the breakup costs in order to know which hospital suits you best. This information might not be readily available, so you need to approach your insurer or an agent to learn more.

Taking the provision of preventive services

There is no doubt you can plan for an emergency; however, you can be strategic about the timing of your planned check-ups and screenings. Preventive care or routine care helps a person detect a disease or any medical problem that can become daunting for them later in their lives.

Several general insurance benefits providers include coverage of preventive care in their policies. Therefore, before purchasing the insurance, you must get this benefot included so that you can save on any sudden out-of-pocket costs. This can include any annual check-ups, screening for conditions, immunisations, or more. Utilising this benefit can not only help you live a healthy life but also avoid any costly medical bills.

Learning to claim promptly

In some cases, policyholders are reluctant to report an insurance claim, but that can lead to heavy costs in the end. If you fail to report a claim properly, it can be a violation of the policy and might result in the claim being rejected by the insurer. Promptly claiming in such a case allows insurers to act quickly and minimise the losses as much as they can. The sooner the claim is managed, the better, as it will cost less. If you want your insurance policy to work for you at the right time, prompt reporting of claims gives you this benefit. For this, it is necessary to make sure that you provide all the necessary documentation to avoid any delays or denial of benefits.

Using telemedicine services

Telemedicine is a convenient and affordable way to receive diagnoses, consultations, and treatment. Owing to its impeccable results in pandemics, telemedicine’s popularity has gained traction. Whereas regular consultations with a medical professional are permitted under the terms and conditions of the policy contract, the Insurance Regulatory and Development Authority of India (IRDAI) has requested that the insurer permit claim settlement for telemedicine consultations. Hence, you can select the policy that provides coverage for telemedicine to avail the benefits.

All things considered

By taking care of yourself and adhering to best healthcare practices, you may be able to reduce your chances of becoming ill and developing chronic diseases. It is captivating that insurance companies might also give such policyholders discounts on premiums or other rewards for following a healthy lifestyle. As a result, it may be lucrative for you in every sense. However, as an alternative, General Insurance Benefits are a tool that can help you maximise your wellness. Furthermore, this is only possible if you take full advantage of its benefits. To do so, you must be aware of your policy, use cashless facilities, use preventive services, select network hospitals, and submit claims on time.

Furthermore, before purchasing any policy, you must take some time to filter it and have a clear understanding of which plan will suit your needs the best. When in doubt, it is always better to get an expert opinion, as it can not only save you time but also ensure that your insurance needs are fulfilled in a hassle-free manner.