Industry Odisha Bureau, Jun 17: Even though India is expected to grow rapidly as an insurance market with a reportedly projected increase in total insurance premiums by 7.1% real term from 2024 to 2028 along with the Insurance Regulatory and Development Authority of India (IRDAI) allowing 100% foreign direct investment (FDI) into the sector, analysts reportedly claim that the sector is currently facing several challenges despite digitisation and a massive market.
Outlining certain challenges, the analysts have reportedly pointed out ‘low penetration’, ‘operational inefficiencies’, ‘product mis-selling’, and ‘limited rural outreach’.
So far the ‘low penetration’ issue is concerned, it is being reportedly attributed to ‘trust deficit’, ‘misinformation’, ‘lack of awareness’ among the customers as well as ‘increase in the premium rates’ owing to ‘macroeconomic instability’ and ‘inflation’ for which customers are reportedly shying away, and the aforesaid factors are being reportedly standing as stumbling blocks, opine the analysts.
Thus, the onus is on the authorised agents and their respective development officers (DOs) to leverage advanced technologies, even the AI-powered data assessment tools to sell insurance policies, religiously maintaining transparency by taking advantage of digitisation so that it could build and augment trust among the customers even in the rural belt.
Hence, the analysts reportedly view: “Trust once built makes it easier to retain the customers by means of maintaining transparency, tailored communication as well as personal rapport.”
Analysts are also of the viewpoint that, the Indian insurance sector needs to “evolve customer’s expectations by innovating insurance policies as per the specific needs of the customers, because rapidly adapting to the customers’ needs is the success mantra in today’s digital world.”
Another major challenge is the “cyber crime” as it is being reported aplenty that “cyber crime is the leading risk for insurance companies since 2021 affecting with technology failure claims and the vulnerability of the systems of insurance companies to cyber threats, such as ransomeware attacks, data breaches, and phishing scams that not only cause financial losses, but also damage both reputation of the firm and trust among the customers.”
The most powerful challenge, as deemed by the analysts, is India being “exposed to several natural disasters due to the climate change following which natural calamities in shape of earthquakes, droughts, cloudbursts, floods, and even deteriorating air quality in certain cities are among the most common occurences almost every year and in multiple Indian states having far-reaching consequences for lives and properties.”
Thus, these risks are reportedly “straining the country’s economy, insurance sector and even market failures in the worst cases.”
It is being reportedly claimed that “the insurance sector has a massive market to capture since 93% of the individuals, property and businesses in India are still uninsured”.
However, analysts reportedly opine that, this massive uninsured market is “turning out to be riskier and more unpredictable.”
Hence, it is high time the Indian insurance providers should bank on the advance technologies so that the “high-risk regions, classes, individuals and businesses could be easily identified and the requisite as well as the adequate insurance coverages could be evolved out and offered as per the expectations of the customers resulting in benefits reaped by the customers and their bona fide nominees in real term, in true letter and spirit.
