Insuring Everyone by 2047

Insurance Sector in India: Challenges, IRDAI Vision 2047, and the Way Forward

IRDAI Vision 2047:

1. Insurance for all citizens by 2047.
2. Making Indian insurance sector globally attractive.
3. Focus on policyholders, insurers, and intermediaries.( three Pillars )
4. Right products, robust grievance redressal, ease of doing business.
5. Regulatory alignment, innovation, and technology adoption.

Bima Trinity Initiatives:

1. Bima Sugam: Unified platform for policy purchases, service requests, and claims settlement.
2. Bima Vistar: Comprehensive bundled policy for life, health, property, and accidents.
3. Bima Vaahaks: Women-centric workforce promoting comprehensive insurance awareness.

Others

4. Linking death registries with Bima sugam to settle claims immediately
5. Roping in states to form insurance committees like banking committees. It makes strategies very specific and granular at district level.
6. Insurers will be permitted to sell value added services.

Challenges:

1. Low adoption rate due to lack of awareness and trust. only 10% of Indian population has life insurance coverage.
2. Focused to Urban areas and rural penetration is very low. According to IRDA – rural areas penetration rate is 2.8%, Urban areas penetration rate is 18.9%
3. Lack of product innovation and differentiation. Insurance sector is dominated by life insurance policies.
4. Increasing fraudulence and identity theft cases. According to IRDA – an annual increase of fraudulent claims is around 15%.
5. Shortage of skilled professionals in the industry. Ex – Risk assessment professionals – KPMG estimated shortage at 50,000
6. Slow digitalization and inefficient processes. – According to Deloitte India, only 40% insurance companies initiated digital transformation initiatives.
7. Complicated and slow claims management process – LIC has close to 2 billion unclaimed deposits in 2020.

State of insurance sector in India

• India has huge protection gaps and insurance penetration of India is very low.
• India’s insurance penetration has risen from 2.7% in 2001-02 to 4.2% in 2021-22. It is still considered low
• Most of the insurance sector is dominated by life insurance. Non life insurance penetration is yet to cross 1%
• India can be considered as a fastest growing market in the world. Today it is 10th biggest market in the world and is expected to be 6th largest by 2032.

Way Forward:

1. Prioritize digitalization to reduce costs and improve efficiency.
2. Offer personalized products and flexibility to meet customer needs.
3. Optimize data usage and analytics for customized products and risk management. Ex – ICICI Lombard General Insurance uses data analytics and machine learning algorithms to analyze customer data, identify risk patterns, and offer customized insurance solutions with accurate pricing
4. Streamline claims management for improved customer satisfaction. Ex – HDFC Ergo General Insurance and Bajaj Allianz General Insurance, have implemented digital claims settlement processes
5. Enhance talent management for skilled professionals in the industry. Ex the Insurance Institute of India offers professional certification programs