Scaling The Indian Insurance Business. Here Are The Insights And Challenges
Over the next decade, the total Insurance Business premiums are expected to grow on average by 14 per cent annually in nominal local currency terms (9 per cent per annum in real terms)
The Indian insurance industry, since its inception, has been providing security and resilience to businesses and individuals alike. As a result, India has not only emerged as the fastest-growing insurance market in the world but is also poised to become the sixth-largest by 2032, as per a study by Swiss Re. Over the next decade, the total insurance premiums are expected to grow on average by 14 per cent annually in nominal local currency terms (9 per cent per annum in real terms). And, the fact that the Insurance Regulatory and Development Authority of India (IRDAI) has committed to enabling ‘Insurance for All’ by 2047 further hints at the potential and new opportunities for the ever-evolving sector. In recent years, we have been experiencing a myriad of disruptions, innovations, and technological advancements that have given rise to several new insurance businesses.
Owing to the increased demand for insurance, several brokers look forward to scaling their businesses. But, scalability in dynamic times is a challenge like no other. No matter how much the fundamentals of its operation remain intact, new challenges are likely to emerge owing to the ever-changing market landscape. Therefore, insurance brokers looking to scale up need the right steps for growth, which include careful planning and strategic execution.
Expanding distribution channels
While scaling an insurance business, there are several areas that a broker needs to consider. One of the key areas is reaching a broader customer base. In a bid to provide a wider range of products to clients, the need of the hour is to build a strong distribution network. In India, Tier-2 and Tier-3 cities are becoming the next hotbeds of growth. Therefore, to tap this market, increase their reach, and scale efficiently, insurance businesses need to expand their distribution network in these areas. In this regard, the presence of physical distributors on the ground is critical, as face-to-face interactions ensure trust and credibility among customers.
Focusing on a client-centric approach
The ever-changing customer preferences pose a potential challenge for businesses that want to scale. Therefore, insurance businesses need to prioritise customer-centricity. According to a collective report by Deloitte and Touche, organisations that follow a customer-centric approach are 60 per cent more profitable. Therefore, the need of the hour is to comprehend the preferences of the customer and then offer them personalised advice, customised insurance solutions, and exceptional customer service. Also, to ensure efficient scalability with an expanding client base, it is vital to sustain a robust relationship with other stakeholders in the insurance ecosystem, such as insurers, technology providers, reinsurers, and more.
Embracing technological disruptions
In the digital era, it is evident that those businesses that fail to adapt technology for their operational purposes will fall behind. Therefore, a broker’s growth can be fueled by adapting the right technology, such as data analytics, which could provide market insights to spot new trends, consumer preferences, and business prospects. Also, a broker focusing on scaling their business can, in addition to traditional marketing tactics, invest in lead generation and digital marketing strategies that may help it extend its clientele and reach a wider audience. Moreover, scalability also depends on building a solid technological foundation that facilitates frictionless policy management, claims processing, and CRM (customer relationship management). Therefore, it is crucial for brokers to embrace technological disruptions in order to grow.
Leveraging ‘Phygital’ model
While technology has enabled people to buy insurance online, customers still prefer to talk to an expert before purchasing a policy. According to a Health and Term Technology survey, 66 per cent of individuals are not comfortable purchasing insurance digitally. This proves that, indeed, consumers enjoy the convenience of self-service, but human interaction still holds an important place in the insurance industry. Therefore, staying on par with modern-day technologies can provide a competitive edge to organisations, but integrating them with human touch will ensure efficient scalability. Several people in Tier-2 and Tier-3 cities may not have access to digital platforms, and PoSPs (point of salespersons) in this regard can aid insurance businesses in bridging the insurance gap in these areas. Owing to their better understanding of local culture and language, they can educate customers and provide personalised support. This, in turn, makes insurance more accessible to people and helps insurance businesses expand their customer base.
Scaling an insurance business necessitates a strategic approach that integrates technology with human engagement, broadens distribution channels, emphasises customer centricity, and follows a ‘phygital’ model. Insurance brokers, in order to successfully grow and tap new markets, can follow these steps, which will not only help them scale efficiently and negate challenges but also generate employment and bridge the insurance gap.
The writer is the CEO and co-founder of Policy Ensure.