Insurance penetration is expected to increase in the coming years due to a number of factors, including changes in consumer perception and attainment of financial security. IRDAI Company level regulation with respect to product approval and distribution, customization across products, balanced channel mix and digitization efforts.
During 2017-22, the life insurance industry has grown at a CAGR of 11% in total premiums and 17% in new business premiums. It is projected to grow at a CAGR of 9% by 2027. At 3.2% penetration, India ranks 10th in the global life insurance market and is ahead of China (at 2.4%) and the UK (at 3%).
To better understand consumer preferences towards life insurance, Benori conducted a snap poll to find that 70% of respondents claimed financial security to be the primary motivator to buy life insurance for the family . 91% of the respondents say that their perception of life insurance has changed, from being seen as an investment to being for protection. 55% say they bought their policy through an insurance agent, while 23% bought it online (including direct purchases through bank portals, web aggregators and websites).
While the poll indicates the importance of agents, insurance agencies rank second among the distribution channels. bancassurance The primary opportunity for consumers to discover and purchase life insurance is 55% of the distribution share in 2022. The breadth of the Bancassurance channel is attributed to consumer confidence and pre-existing relationships with banks as well as banking institutions- in-depth knowledge of the assets of their customers, enabling them to provide products tailored to the needs of their customers.
The share of insurance agencies in the distribution mix is ​​falling, from 30% in 2017 to 23% in 2022. The reduced growth in premium purchases through agencies is not expanding beyond the bancassurance segment, but overtaking direct-to-consumer (D2C). ) Channel. Although the D2C distribution of life insurance in India is still in its infancy (3%), players such as dad aia,
And experiencing strong business growth through D2C online delivery. Tata AIA, Kotak and SBI Life have shown strong business growth of over 45% over last year within this channel.
The penetration of smartphones and the popularity of fintech offerings in Tier II/III segments will continue to drive D2C Insurtech channels.
With the life insurance industry on a 9% growth path from 2022-2027, Benori Knowledge finds five key trends that will define the next five years. Demand will continue across all age groups and demographics, despite the rise in prices of Pure Protection products. Growth will also be seen in ULIPs. New ways of interacting with customers through hyper-personalization and more intimate digital sales interactions will encourage companies to explore new ways to enhance customer engagement and experience. Companies will invest in data science and analytics to better understand customer personality and needs.
Easy access and on-the-go insurance will be an important business objective for life insurers and speed will emerge as a differentiator. Lastly, partnerships with market specific insurtech/fintech companies are expected to grow after relaxation of norms from IRDAI. Insurance companies are looking to partner with fintech companies or insurtech startups that operate markets that overlap with their customer base. Local startups can also help insurance companies work to increase their rural footprint and help offset their agency-based expenses.
Commenting on the findings of the report, Ashish Gupta, Co-Founder and CEO, Benori Knowledge said, “Life insurers should work on leveraging advanced technology stacks such as AI/ML and customer segment analytics to drive action from customer behavior. Get appropriate insight. A better-suited, easy-to-understand product line. Investment in these technologies will also help in developing intelligent process automation that can reduce underwriting errors. To achieve this, effective partnerships should be made with emerging fintech/insurtech companies.”