Insurance plays a significant role in securing individuals and businesses against unforeseen risks. However, despite the importance of insurance, India’s insurance penetration is still low, with only a small percentage of the population having insurance coverage.
The Insurance Regulatory and Development Authority of India (IRDAI) has set a target of achieving insurance for all by 2047 and they have taken significant steps to promote innovation, competition, and distribution efficiencies in the insurance sector. With the aim of moving towards a principle-based regulatory regime, the regulator has introduced various measures to enhance the use of mainstream technology in the industry.
BIMA SUGAM & BIMA VAHAK Initiative: Get Insured with Ease
One such recent initiative is the creation of a joint digital platform where customers can directly transact with all insurance companies known as BIMA SUGAM (DIY)/BIMA VAHAK (Assisted). This is being promoted by the regulator and will offer customers a trusted and convenient way to buy insurance products. In this way, the regulator is driving a customer-centric approach in the insurance industry by leveraging the power of technology to enhance customer experience and accessibility.
Embracing Digitisation in 2023 - From “Should Have to Must Have”
As IRDAI is promoting digitisation, it has become a "must-have" in the insurance industry. However, it's not just the big players who need to keep up with the changing times. Traditional insurance distributors, including small cooperative banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs), must also embrace digitisation to remain competitive and relevant in the market. So, for these traditional players, digitisation is no longer a "should have" - it's a necessity for survival.
Implementing Relevant Modules
Once traditional insurance distributors have embraced digitisation, they can move towards implementing modules which will be relevant to their customer segment. This can include digital portals that empower customers to manage their policy life cycle, make payments, and initiate claims. Automating the onboarding process allows traditional insurance distributors to reduce turnaround times, improve accuracy, and enhance overall efficiency.
Product Innovation
Niche Products Targeted to Specific Customer Bases and Geographies
Over the years, Financial Institutions have been serving the specific needs of customers in a specific geography and gained huge insights into the geographical and customer segment-specific challenge. For example, some states experience floods every year and need insurance coverage which can provide coverage against damage caused by floods. Similarly, customers with different socio-economic profiles need different types of coverage. Financial Institutions with their deep understanding of the customer segment and geography can co-create products with insurance companies and focus on their customer base.
Combo Offerings:
Combo offerings have emerged as a popular trend in the Indian insurance industry, as insurers seek to cater to the evolving needs of their customers. These combo offerings provide a range of insurance products that are tailored to meet the specific requirements of a particular customer base. Bima Vahak and Bima Sugam will play a significant role in driving the popularity of combo offerings, with these digital platforms enabling insurers to offer bite-sized products as a combo to fulfil the needs of their customers. For instance, an insurer can offer a health insurance policy along with a critical illness cover bundled with a personal accident cover and term life cover. FIs can partner with insurers to co-create micro-level combos focused on the needs of their customer base. This will give FIs exclusivity on the product co-created by them for their customer base and strengthen their relationship with their customers.
