Over the past few years, rapid digitalization and increasing internet penetration have led to the rise of the digital economy; with many customers preferring to choose providers that deliver exceptional value and quality with utmost transparency. Thanks to the internet, information about products and services being offered across the industry is easily accessible, leading to increased customer awareness and a demand for more customized offerings.
In the insurance space too, customers are increasingly seeking to protect themselves from future risk by purchasing insurance products that are tailored to their specific requirements. With the COVID-19 pandemic spurring customers to plan for future financial uncertainty, the demand for personalized insurance solutions will be the major theme going forward. Thus, empowering customers with the “power of choice” to choose covers as per requirements, delivering quality services, and innovating solutions to cater to the varied demand will be the key focus for general insurers, especially relevant in the context of the Indian general insurance space.
As more Indians shift to consuming services online and through their mobile devices, insurers are responding by improving the customer experience provided by enhancing the range of services offered through digital platforms. From providing information on the different insurance solutions on offer to allowing customers to compare different products online, insurers are including more such services and augmenting their digital presence to reach out to more customers. As per the Swiss Re Sigma March 2021 report, as of 2020, the non-life insurance penetration in India stood at 1% of the GDP, compared to the global average of 4.1%, and is indicative of the huge potential available in the Indian market.
With the Indian economy projected by IMF to be the fastest-growing major economy in the world this year too and to become a $5trillion economy by 2027, Indian insurers will have to constantly innovate with new products across health, motor, travel, home, and commercial insurance segments to ensure country’s long-term wellbeing and prosperity. There is a clear need to shift from product-centricity to being more customer-centric and insurers that rise to the occasion to provide the highest personalization will remain relevant in the eyes of the Indian consumers.
In this journey, insurers will need to constantly innovate new products and services that cater to the evolving customer preferences and needs, while moving away from transactional relationships to fostering a more relational bond with every customer. Solutions such as add-on covers, designed to supplement the base insurance policy, will be increasingly preferred as Indian customers move to supplement their risk coverage with a value-conscious approach. In addition to introducing new insurance products, insurers will have to deliver high levels of customer engagement while also providing a personal focus during the purchase stage.
This will necessitate leveraging the power of Artificial Intelligence (AI) & Machine learning (ML) to understand customer preferences, so as to suggest and deliver the right solutions for every nuanced requirement. During the claim process too, insurers will need to maintain an intricate focus on dispensing or collecting only the relevant information and providing quick service consistently. As a result, it is important for insurers to overhaul existing customer-facing divisions and integrate overlapping processes to provide a seamless experience to every customer.
In a bid to help the general insurance sector in India to respond to these changing preferences, the Insurance Regulatory and Development Authority of India (IRDAI) has extended the “Use and File” procedure to all health and most general insurance product segments including motor, marine, fire, and engineering.
Consequently, insurers can now introduce unique insurance products, riders or add-ons in order to cater to different customer segments without having to undergo approval procedures that were in effect in the previous “File and Use” regime. On their part, insurers will now be able to offer insurance products that will be priced based on market metrics, as long as they establish a board-approved policy to govern all modifications in product terms or revisions in prices. This bodes well for Indian insurers who are well-poised to introduce more personalized insurance products and will set in motion a customer revolution where more Indians will gravitate towards protecting themselves with general insurance products.