Insurance Industry Trends

In India, the life insurance sector is growing at the rate of 11-12% per annum, general insurance at 18% per annum and standalone health insurance has seen an average growth of 35% per annum. The insurance sector is undergoing constant and massive shifts- the most significant trend is that products are becoming more personalised and customisable than before.

Let’s take a look at some new trends we might see this decade:

##1. Blockchain Insurance Technology: Blockchain technology is a distributed database system that is used to sign, exchange and verify transactions and records. It is updated in real-time and maintained on multiple computers, thereby allowing parties to maintain simultaneous records of assets, contracts and data ownership. Tampering is extremely difficult as any attempt to do so leaves behind evidence, and new data can only be added when it is confirmed by all the different computers using unique keys. The advantages of using this technology are that it ensures:

Speedy and secure data reconciliation Increased accuracy Increased efficiency Reduction in cost When blockchain is combined with smart contracts (agreements where words are replaced by code, so that they can be read by computers), it enables insurers to automate processes and develop innovative products. Shorter claims cycle, reduced inefficiencies, smoother interactions ensure customer satisfaction and retention.

##2. High Personalisation of Insurance Offerings 88% of insurance consumers today want more personalisation in their insurance products. With today’s hyper-competitive markets, insurers need to offer more customisable products (in terms of features, benefits, premium pricing and repayment options) as well as personalised messaging. Concepts such as ‘Pay As You Live’ or ‘Pay How You Drive’ are born out of the changing consumption patterns of today's consumers.

Another way that insurers are personalising insurance offerings is through bundling. Consumers tend to be partial to the same insurance provider for different insurance products. According to a survey conducted by Mintel, 42% of consumers would prefer to buy a financial package or bundle that was customised for a specific time in life.

Comprehensive insurance policies also help the insured to cover multiple risks and contingencies by allowing customers to pick and choose the covers they want. Additionally, every cover can be modified with the help of suitable riders. The premium amount in such a package would depend on the number of covers for which the insured opts.

The good news for insurers is that consumers are willing to pay a higher price for personalised products. A recent study by Mindtree revealed how banking and insurance companies across the U.S., Europe and Asia/Pacific noticed that 77% of consumers bought products and services they had not considered before solely because they were accompanied with customised promotions. However, to leverage this opportunity, insurers need to understand their demographic and study the behaviour of their consumers to create products better suited to their customers.

##3. Insurance for the Digital Age: The purpose of the new-age cybersecurity insurance is to safeguard users from online criminal activity. Disclosure of personal and financial data is a cause of worry to many. Cybersecurity coverage provides financial cover and acts as a psychological buffer against the stress which may arise when personal data or sensitive information is hacked into or shared publicly. The digital age has allowed Indian consumers to utilise services like net banking, online shopping and social networking services. Inversely, this also means that people are more susceptible to online theft, cyberstalking, hacking, malware attacks and phishing. Insurance covers can be provided to safeguard users against all these crimes. Cybersecurity insurance can be individual cybersecurity insurance which is meant for the regular online users or cyber liability insurance, which covers IT firm related cyber risks.

##4. Autonomous Vehicles: According to a report by Market Research Future[8], it is estimated that the autonomous vehicles market is expected to reach $65.3 billion by 2027. However, with this growth, there are related motor insurance issues[9]. Even though such vehicles reduce the chances of human-caused accidents exponentially, the biggest challenge remains that the software could potentially malfunction. For instance, data could be misinterpreted, resulting in accidents. The types of insurance required by companies that make autonomous vehicles include:

Technology Errors & Omissions and Cyber Liability Directors and Officers Auto Liability and Physical Damage Coverage With the Indian insurance industry expected to grow to USD 280 billion by FY 2020 and owing to the increasing awareness about the need for protection, it is no wonder that insurance penetration in the country reached 3.7 per cent in 2017 from 2.71 per cent in 2001. Additionally, the gross premium had also reached Rs 5 lakh crore in 2017-18 from a humble Rs 3.2 lakh crore in 2011-12.

The sheer magnitude of these numbers only goes to show that the insurance sector is all set to make enormous progress during this decade. As the purchasing power of India's burgeoning middle-class increases, there is a greater need to protect the many things we own, and love. For this to happen, the nature of protection itself needs to change, and insurers need to #ThinkAhead.