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India offers a compelling opportunity for insurance companies to grow at over 17 percent year on year, with a forecast to reach USD 240 billion in next 10 years from a USD 60 billion market today and this growth is projected to be driven by rapid adoption of digital technologies in rural India, according to CII-PWC Report.
However, this will need a massive drive for simplification of products and processes, working in tandem with all other initiatives, to succeed. Financial literacy is one of the key drivers for penetration of insurance. The National Institute of Security’s market report on financial literacy shows a clear gap between urban and rural levels of literacy and knowledge of insurance products in specific, said the Report.
Niti Aayog, in its report on Digital payments (January 2017) has proposed a slew of initiatives to push digital payments in the country. One of the goals set by the committee of Chief Ministers who participated in the deliberations is to increase the number of transactions from 900 million (in October 2016) to 30 billion by December 2017.
“There is a push for rural adoption of digital technologies through proposals such as provision of free data, and adoption of technology for Regional Rural Banks, Scheduled Commercial Banks and Cooperative Banks,” highlighted CII-PWC Report.
According to MEITY’s statement in December 2016, rural adoption of e-wallets was over 70 percent and rural adoption of UPI was also fairly high (16 percent), primarily driven by demonetisation.
A report published by the Insurance Information Bureau revealed that there is a direct correlation between banking inclusion and insurance penetration. Adoption rates of digital payments in rural India indicates that the potential for disruption in the insurance industry by going digital is high.
The CII - PWC report, titled ‘Evolving Considerations for the Indian Insurance Industry’ discusses three key areas relevant to the current insurance sector – Simple Products and Low Cost Distribution, Digitization and Fraud Management and Broadening Investment Horizon.
Eco system for insurance in India is rapidly changing. Government of India initiatives such as demonetization, introduction of UPI, India Stack are accelerating the adoption of digital technologies. The Insurance Regulatory & Development Authority of India (IRDAI) is heralding change through its e-insurance initiative and financial literacy programs. Mobile adoption and internet trends under Digital India banner are bringing in a new generation of customers who are conversant and comfortable with using technology for their financial decisions. It is important to adapt to strategies that align with these changing trends to stay ahead of competition.
Chandrajit Banerjee, Director General, CII said, “The Insurance Industry is at the threshold of a long period of growth. With the rapid change in technology and digitisation, the drivers of insurance business are changing. Those insurers who disrupt themselves continuously would be the ones who will succeed in the long run. All stakeholders – the industry, intermediaries, government and regulator need to work together in transforming customer experience”.
Rural and urban customers alike would appreciate total clarity in enumeration of products’ benefits, and use of normal language in place of legalese for in policy wording. Therefore, it is amply clear that application and claim processes need to be streamlined to achieve predictable outcomes.