Insurance has been an integral part of human civilization since ancient times. It started to hedge against unforeseen events that could lead to financial losses. Over the years, the insurance industry has evolved, and several new products and services have been introduced to meet the changing needs of consumers. The advent of technology has brought significant changes to the insurances sector, and the rise of insurtech has disrupted the industry in more ways than one.
The Indian insurance market is one of the most significant markets globally, with a worth of over $70 billion and growing rapidly. The insurtech space has opened new opportunities for companies to deliver better and more customized products and services to Indian consumers. However, there are also several challenges that both insurance holders and companies face in the Indian market. In this article, we will explore the current and future state of insurance apps in India, the opportunities ahead, and the challenges that lie ahead for the insurtech industry.
The History of Insurance in India
The origin of the Indian insurance industry can be traced back to the arrival of British colonial rulers in the country in the 18th century. The first-ever Indian insurance company was established in Calcutta in 1818. The primary insurance offerings at the time included marine insurance to cover goods and property transported by sea. Other types of insurance, such as life assurance and fire insurance, were introduced later.
In the years that followed, several other native Indian insurance companies emerged, including the Bombay Mutual Assurance Society (1871) and the Oriental Life Assurance Company (1874). During these early days of the industry, insurance policies were mostly limited to wealthy individuals and businesses.
The insurance industry went through several significant changes after India gained its independence in 1947. The government took over the ownership of foreign insurance companies in the country and established several new insurance ventures. The Life Insurance Corporation of India (LIC) was one of the first such ventures, established in 1956. Today, LIC is one of the largest life insurance companies in the world, with a market share of over 70% in India.
The Present State of Insurance in India
The Indian insurance market has come a long way since its early days. Today, it is a competitive market with several domestic and international players offering a wide range of products and services. The market is predominated by life and health insurance products, with the non-life segment having a comparatively smaller market.
The primary distribution channels for insurance products in India are currently tied agents and bancassurance. Tied agents work for a specific insurance company and promote their products to their customers. Bancassurance, on the other hand, involves selling insurance products through banks.
In recent years, there has been an increasing trend of insurance being purchased online. This trend is primarily driven by the growth of e-commerce in the country. Many insurance companies now offer their products through their websites or mobile applications. However, online sales are currently still limited to a few insurers. Most insurers are yet to fully embrace digital technologies in their operations.
The Future of Insurance Apps in India
The future of insurance in India is tightly linked to the development and growth of insurtech and insurance apps. Insurtech has been transforming the insurance industry all over the world, including in India. The use of technology has been vital in opening new channels of distribution and enabling insurance companies to provide customized products and services.
One significant opportunity for insurtech in India is the massive untapped market for insurance products. Despite the growth of the industry in recent years, insurance penetration in India is still low compared to other countries. A large population of the country is either underinsured or not insured at all. Insurtech companies can leverage technology to reach out to this untapped market and provide them with new and innovative products.
Another opportunity for insurtech companies is the increasing usage of smartphones in India. The rise of smartphones has created a new channel of distribution for insurance products through mobile apps. There has been a steady growth in mobile app usage in India, and it is expected to continue growing in the coming years. Insurtech companies can leverage this trend by creating mobile apps that offer a range of products and services customized to the needs of the users.
Trends in Insurance Apps
In recent years, there have been several significant developments in the Indian insurance app market. Some of the popular trends include:
1. Customized product offerings: Insurtech companies are focusing on creating customized products that cater to the specific needs of customers. Customers can now choose policies that offer benefits tailored to their requirements.
2. Robotic Process Automation (RPA) and Artificial Intelligence (AI): Insurers are using AI and RPA to automate many processes, resulting in faster and more accurate service delivery.
3. Digital KYC: Insurers are using digital KYC to reduce the time required to verify the customer’s identity and to onboard them for insurance products.
4. Health monitoring: Some insurance apps now offer health monitoring services that allow customers to track their fitness and wellness parameters.
Challenges Ahead for Insurtech in India
Despite the promising opportunities for insurtech in India, there are also several significant challenges that the industry must contend with. Here are some of the significant challenges faced by the industry:
1. Lack of awareness and trust among consumers: Many consumers in India are still unfamiliar with insurance apps and are hesitant to purchase insurance products online. Insurtech companies need to invest in educating consumers about the benefits of using their products and building trust and credibility.
2. Complex regulations: The Indian regulatory environment is complex and can be challenging for new entrants to navigate. Insurtech companies need to take into account the local regulatory environment and comply with all relevant regulations while launching their products.
3. Increasing competition: The Indian insurance market is highly competitive, and insurtech companies face stiff competition from domestic and international players. Companies need to differentiate themselves from the competition and offer unique products and services to retain customers.
4. Connectivity issues in some parts of the country: Although there has been significant progress in internet penetration in India, internet connectivity is still a significant challenge in some parts of the country. Insurtech companies need to ensure that their products can be accessed by customers in both urban and rural areas.
The Indian insurance industry is at a crossroads, with insurtech playing an increasingly significant role in shaping its future. Insurance apps have the potential to revolutionize the industry by providing consumers with more customized and accessible insurance products. However, there are still many challenges that the industry must overcome, from trust issues among consumers to complex regulatory environments and intense competition. Successful insurtech companies will be those that can innovate, adapt, and customize their products to make them accessible to consumers while overcoming the challenges that lie ahead.