India’s Leading BFSI and FinTech Companies 2023

26 | India’s Leading BFSI and FinTech Companies 2023 [ INDIAN INSURANCE SECTOR OVERVIEW ] KEY TRENDS WITHIN LIFE INSURANCE SECTOR Product innovat ion cater ing to varying customer needs: Customers prefer innovative life insurance products, personalized options, and flexibility in payments. As a result, insurers are creating i nnova t i ve produc t s wi th a digital first approach. Besides, digital method has emerged as a preferred method of buying of insurance products. Leveraging digi tal methods: I n s u r e r s a r e i n c r e a s i n g l y leveraging digital platforms while also automating their processes. Thi s has ensured enhanced accessibility, product diversity and ease of use for customers. Further, there is growing preference for digitized delivery of services. This has also seen rise in insurtech, with its funding almost doubling in last two years to 800 million USD in 2021. India has 3 unicorns in insurtech as of 2021. KEY CHALLENGES Huge protection gap and under penetrated market: Although, there is rise in the purchase of life insurance policies, the protection gap in case of l i fe insurance continues to be high at 92%. This massive protection gap is also a sign of under penetrated market and can be reduced by offering affordable and innovative tailor- made products. Pressure on profitability: While there is aggravated price pressure by price comparison websites, cost savings through productivity improvement are limited. This has affected profitability of life insurers. Increased cyber risks: Increased focus on business continuity since thepandemic has largely increased dependence on digital technology which has increased the cyber risk. With many employees working remotely and many activities like marketing, post sales servicing, etc. getting digitized, the cyber risks have increased manifolds. This has further expedited the need for risk management controls so that the vulnerability to malpractices can be prevented at the starting point itself. OUTLOOK Lower penet rat ion to dr ive growth going forward: Despite the push given to sector by the government by introducing a flagship life insurance scheme PM Jivan Jyoti Bima Yojana, most of the Indian population still remain non-insured. This low penetration will drive growth of life insurance sector in the coming years . However, concerted efforts are required to reach out to informal sector of the economy. This is the bulk of non-insured category which has traditionally placed low emphasis on life insurance. Financial inclusion benefiting insurance sector: The improved access to banking facilities which has served as one of the main deterrents in the past, will help in enhancing insurance reach. This coupled with rise in awareness will drive growth of life insurance sector going forward. Dun & Bradstreet