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The insurance industry in India is witnessing an ongoing change. The way insurance was being viewed a couple of decades back has changed dramatically. The current situation can easily be credited to increased awareness, affordability, accessibility as well as economic growth in the country. The recent reforms in the insurance sector have also contributed to these drastic but positive changes. One can easily say that new-age insurance has taken over traditional insurance in India as well as across the world.
The entire insurance industry has been digitalized. The traditional ways of informing the public and selling the policies have changed completely over the past two decades. Now everything has gone online. From searching for an ideal general insurance policy to buying or renewing them, everything can be done online today without the need for the physical presence of the insurance company’s representative. It is also possible to renew an insurance policy online. That’s not all, a prospective buyer can also compare the coverage and premium rates offered by different insurance companies online before choosing a policy that fulfils his/her requirements.
All insurance companies in India have gone digital. Be it public-sector general insurance companies or private insurers they have all turned their operations online. This enables them to keep up with the ongoing developments in the industry and maintain their market standing.
Online insurance brokers have also emerged soon after the insurance industry was digitalized. They have become a crucial part of the industry and is a popular insurance distribution channel in the country. Brokers, such as Policybazaar have enabled insurance buyers to compare and buy insurance plans of different companies at one place. They provide information on different insurance products at one place facilitating the insurance purchase process. Eventually, it allows customers to make a sound decision in case they are confused about buying a policy from an insurance provider.
Digitalization is not the only factor that has majorly affected the Indian insurance industry at large. The entry of foreign investors has also tweaked the insurance industry in India. Several new-age companies have entered the Indian insurance market along with their innovative products. Not only has insurance become accessible for the people but the ease of buying a policy has always worked in their favour.
This has enabled the new-age companies to rise amongst their peers. As a result, traditional insurance companies have been forced to modernize with the changing market. They have taken this opportunity to reinvent with their outdated methods to maintain their position in the market. For instance, some of the top public sector insurance providers were enjoying a good market share amongst traditional insurers. However, with the emergence of new-age insurance companies these traditional or public sector insurers have reinvented their products and turned digital.
As a result, the insurance industry has become more competitive and experimental. Both traditional and new-age insurance companies are working towards introducing the plans that give true value to the insurers’ money. The basic principle is to give people what they want but in a better way than competitors.
The traditional insurance has gone through some major changes that transformed the face of insurance in India. Traditional methods have become obsolete, thanks to the digitalization of the industry and entry of new-age insurance companies. Some of the aspects that have gone through some major changes with the emergence of new-age insurance players are in terms of pricing, ease of buying, level of communication, paperwork, and claim procedures.
Firstly, the rates at which general insurance policies are available today are much lower than what it used to be traditionally. Traditional companies used to offer insurance at higher prices earlier as it included the operational costs. But with digitalization, there has been a significant fall in the prices of the insurance policies in India. Digitalization reduces the costs for insurance companies for about 20-30%, which is great for a customer, which not only benefits the customers as well as older companies.
Buying an insurance policy has been a mammoth task back in the older days. People had to find a reliable agent and then meet him to get an insurance policy. It involved a lot of paperwork and the payment had to be made by visiting the nearest branch of the insurance company. But none of this is required today. New-age insurers allows a customer to buy an insurance policy online. Even the payments can be made online through bank cards or via online banking.
As discussed above, traditional methods of buying insurance involved a lot of paperwork. A buyer had to fill-in several paper-based forms that were crucial for buying the policy. They were also required to submit several hard-copy of documents to support the information filled in the forms. Thus, traditional methods involved a lot of hassle for the buyer. That’s not the case today as online policy purchase requires minimal paperwork. Insurers do not require their customers to fill-in multiple forms and may need them to upload soft-copies of the required documents. Moreover, many new-age insurance companies offer zero paperwork during online policy purchase.
Online buying of insurance policy, without the need of an agent, has majorly been possible due to simpler communication. The policy details, including the coverage and exclusions, are available in simple and clear words at new-age insurers. It reduces any scope of confusion and allows a buyer to understand what is he covered for completely. That’s in total contrast to how plan details were communicated earlier by older companies. It was as complex as reading a report and was extremely difficult for people to understand.
Just like every other aspect of insurance, claim procedures have also simplified with the advent of new-age insurance companies. Earlier, the claim procedure was very lengthy and complicated. It was quite difficult for a claim to get processed. But today, one can easily file an insurance claim online. Even traditional players have made their claim process smooth and made it customer-friendly.
Development technology is the future of the insurance industry in India. All companies today, whether traditional or modern, are using digital tools, such as machine learning, artificial intelligence, geo-location, and data learning. These tools help insurance companies to study customer behaviour and their insurance requirements. It helps insurance companies to develop insurance plans that best suits the needs of the policy seekers.
Customer behaviour is also changing. Gone are the days when insurance buyers would accept lengthy, complicated, and costly insurance plans. Today, they prefer to go for a company that offers seamless buying experience and is transparent in its proceedings. They prefer to compare the prices, coverage and go through reviews before choosing a policy. Moreover, buyers rely on their smartphones and the internet more than an agent of an insurance company.
The world is continuously changing and so is the risks. While there has been a rise in lifestyle diseases, there is also more environmental risk enveloping the country. The current outbreak of coronavirus disease makes us realise how vulnerable people are and how the insurance industry needs to be on its toes at all times.
However, it is remarkable how insurance companies were able to adapt to the presence of COVID-19 and cover it under their health insurance policies. The adaptability of coronavirus demonstrates how important is it for general insurance in India to keep reorienting themselves to keep up with changing needs and innovations in the world. The existing plans may not work well in relation to new-age trends emerging the country due to technological advancements. Therefore, it needs to develop risk management frameworks that can assess new risks and define standards of safety and risk mitigations.
New-age insurance companies have brought change the way the insurance industry functioned in India. Digitalization has broken the barriers posed by the traditional insurance players of the insurance market and made them modernize to maintain their position. The need of the hour is for the insurance industry to assess the emerging trends and reorient themselves for unforeseen risks faced in the future. The process is an ongoing one and has to be continuously assessed to stay in the game.