Is year 2022 a pre-cursor to long-term insurance industry growth?
29 Dec 2022
Synopsis Insurance is certainly becoming the sunrise sector of the Indian economy. As insurers look to expand their presence and scale up, it will become among the top industries providing employment opportunities to Indians. Aligned with this expectation, the industry has been on a journey of reorienting its workplace strategies to make the sector more lucrative for employment.
The Indian economy continued to show remarkable resilience amid challenging few years, driven by a triad of factors – progressive policy reforms, strong macroeconomic fundamentals, and an aggressive digital push. This display of economic strength has prompted financial pundits to estimate that India will become the 3rd largest economy by 2030. As India sprints towards this aspiration, the insurance sector will play a vital role in fueling its global ambitions.
Just like the broader Indian economy, the year 2022 has been a vital one for the insurance industry. Not only did the industry regain growth momentum, but also benefitted from a fundamental reorientation brought about by the pandemic, which bolstered customer awareness of insurance.
The Covid years also prompted the industry to embrace digital solutions in a big way to bring operational efficiency and transformation. This has allowed the industry to restructure its practices around risk management, product design, customer experience and more. Against this backdrop, the industry is poised for growth in the next few years and here are the 3 key trends likely to dominate in the foreseeable future.
● The growing role of technology in bolstering CX
The government has been aggressively pushing the agenda of Digital Bharat in recent years. Its initiatives, most notably India Stack, have been instrumental in bringing systemic and systematic changes in customer behaviour. Be it digital banking, online payments, or data security, the government has facilitated a methodical unlearning and relearning of people at large. This change has been critical in bringing rudimentary changes to the insurance industry like online premium payments, benefit payouts, etc.
The digital explosion during Covid years has brought about a new era of reorientation. There has been an unwavering focus on process automation and optimization. For instance, predictive modelling and data analytics has been beneficial in improving fraud detection and prevention process, which in turn has brought cost efficiencies. Insurers have been able to automate processes like KYC, customer verification and underwriting, thereby making customer life cycle management more seamless. The last year, especially, saw a heavy push on redefining of CX strategies and aligning them with the fast-evolving external environment as well as customer expectations.
Going ahead, dematerialization will play a big role in enhancing CX for insurance companies. Dematerialization will allow customers to store all policy-related information in one place and make claims/maturities a much simpler process than today.
● Regulatory reforms
2022 was perhaps the most memorable one in recent memory as far as insurance regulatory reforms are concerned. Through these reforms, the regulator has underscored its agenda of sustained growth for the industry and EXPAND insurance for all. Over the long term, these changes will make financial protection pervasive in the country and improve insurance penetration.
More critically, the focus on facilitating ease of business will bring a structural transformation and elevate the Indian insurance sector at par with its global peers. Not only do we see capital inflows into the sector, but also estimate it will continue to be one of the fastest growing insurance markets in the world.
● Reinvention of workplace strategies
Insurance is certainly becoming the sunrise sector of the Indian economy. As insurers look to expand their presence and scale up, it will become among the top industries providing employment opportunities to Indians. Aligned with this expectation, the industry has been on a journey of reorienting its workplace strategies to make the sector more lucrative for employment. From flexibility of work to a booming center for technology, the industry continues to enhance its quality of talent to support its aspirations of customer centricity.
As we inch closer to 2023, Budget FY 2024 will be the most-watched event of the year. The government is likely to table the Insurance Laws (Amendment) Bill 2022 in the Budget session. If implemented, this Bill will bring another round of positive reforms and bolster the growth prospects of the industry.
In the years to come, India’s insurance industry is poised to become the 6th largest insurance market globally. A sharp growth backed by a conducive regulatory environment, rapid economic expansion and unwavering focus on customer experience will remain the predominant trends in the near term. These trends will also make insurance the most-watched industry in India’s Amrit Kaal.