2023 witnessed a significant development in the insurance sector - the 121st meeting of the Insurance Regulatory and Development Authority of India (IRDAI) held on 25th March 2023 granted a gift of registration to two new life insurance entities. There were two noteworthy things about this news; one that IRDAI awarded licences after a long gap of 12 years and two, the number of life insurance players in India has now gone up to 27 from 25.
This strategic move begs us to question: Why now?
As per the data, life insurance companies reported a 25.28% decline in premiums in 2023.
By inviting more insurance players, the Indian insurance watchdog, IRDAI, is maybe hoping to inject healthy competition and tangible changes into the market. Several factors contribute to this transformation, impacting both customers and the industry as a whole.
The influx of new players has heightened competition, leading to the diversification of products and competitive premiums. Insurers are introducing innovative policies with unique features, catering to a broader range of customer needs. However, the Indian market is all about affordability and making life insurance more reasonable for a larger segment of the population is what life insurers are aiming for.
Leaders across industries are rushing to employ technology in models to better adapt to an evolving world. New and old life insurance players are leveraging technology to enhance customer experiences through streamlined processes, online policy management and quicker claim processing. The digital focus has led to increased online visibility and engagement, allowing customers to research, compare, and purchase policies conveniently. As per Allied Market Research, the digital insurance platform market is estimated to grow at a CAGR of 11.3% from 2021 to 2030.
Insurers are waking up to the fact that the one-size-fits-all approach may not work for modern customers. The key lies in personalisation. Insurers are adopting personalised strategies, tailoring policies to individual customer needs. Additionally, companies are investing in user-friendly interfaces, responsive customer support, and educational resources to enhance overall customer satisfaction.
New entrants are focusing on untapped markets and underserved segments of the population where life insurance coverage is at a measly 8-10%. This includes innovative approaches to reaching rural areas and providing insurance solutions for those with modest incomes. Microinsurance is also coming into play here. Some new players are actively promoting Microinsurance by providing coverage to individuals who may have been excluded from the traditional insurance markets.
InsurTech-Led Market Expansion
By adopting innovative distribution channels and collaborating with InsurTech companies, the new life insurers are widening their market reach. The insurers are tapping into an expansive agent network as well as fortifying partnerships with banks, InsurTechs and financial institutions to gain a foothold in the Indian market.
In conclusion, the changing landscape of life insurance in India is not just a numerical expansion but a dynamic shift that is substantiated by data-driven insights. The journey towards a transformed life insurance landscape in India is marked by both opportunities and responsibilities, presenting a promising trajectory for the industry and its stakeholders.