InsurTechs Charting The Next Phase Of Life Insurance

The National Insurance Academy’s most recent report released in the first week of December 2023 highlights that almost 95 percent of the Indian population remains uninsured. Clearly, this is a grave scenario we are looking at, especially as there are reports of a new COVID variant making its impact in the country once again. Health and life insurance is not only critical at this point of time but it can be a safe anchor and refuge for households and organisations across the country.

Given this backdrop, it is clear that only InsurTechs such as Zopper can deliver a seamless experience through its contextual solutions that are a part of its smooth digital journey, besides sachetised insurance offering with affordable premiums. Technology, as we all know, enables a level-playing field that increases the scope for offering innovative solutions through the digital ecosystem in a seamless way.

Major Gaps in Life Insurance Penetration Raise Grave Concerns

In the Indian context, the latest data insights from National Insurance Academy points out that 84 percent of Indians in low-income and middle-income segments, in addition to 77 percent residents of tier 2, tier 3 cities and coastal areas have no property insurance. 

The report further points out that it is necessary for farmers to opt for crop insurance, especially if they availed bank loans or in case they have taken financial support from microfinance institutions. 

Increasingly, it is necessary for scientists, researchers and the medical fraternity to engage and figure out a bigger picture to tackle the increase in healthcare costs and weather-related crises that affect public health in India. 

India’s Medical Inflation is Higher Than China: What about Insurance Penetration?

Meanwhile, India’s medical inflation is as high as nearly 15 percent —outpacing even China and Indonesia, as shown in a Motilal Oswal report published in June 2022. As per the Motilal Oswal report, the surge in medical inflation has been in marked contrast to the country’s Consumer Price Index (CPI) inflation that is usually pegged at 6%. Of course, variables such as frequency of claims tend to drive a rise in premiums, particularly as large hospitals have their own rising costs to manage. 

An important caveat pertains to many rural areas where there is almost negligible reporting of illnesses, and this which is attributed to poverty and lack of health awareness. This further explains why the proportion of patients preferring private hospitals in urban areas has increased in the past decade, and why those who mostly go to government hospitals in rural areas have remained unchanged.

In life insurance, as the latest report by National Insurance Academy points out, there is a significant protection gap of around 87 percent, with health insurance also emerging as a key concern as 73 percent of the population lacks coverage. The report goes on to cite that the gap in annuity and pension protection is ranked at 93 percent!

The broader problem, however, is that increasing premiums become a reason that holds back many Indian households from being fully insured. This is a serious bottleneck that requires a more nuanced approach so that costs can be streamlined.

At this juncture, the role of leading InsurTechs such as Zopper in leveraging technology and bridging the protection gap is noteworthy as several innovative and embedded solutions are already taking shape.   

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