Weekly Insurance Round-up Tuesday, October 26, 2021
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We're back, with the next edition of Beshak's Weekly News Round-up - an analysis of all Insurance News & Updates, straight from our research desk! Hope you find this interesting and useful - and don't forget to share your feedback with us! 🤙
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- As per recent industry data, insurers have settled Covid claims worth ₹20,859 Cr. Out of 25,96,072 claims, 22,84,429 (88%) claims were settled by the insurers.
- The possibility of a third wave had increased the demand for Covid specific policies - Corona Rakshak (Benefit-based plan) and Corona Kavach (Indemnity-based plan). IRDAI had also extended the validity for these covers till March 31st, 2022.
- But now, as the Covid cases are dipping, demand for Covid policies is declining too and insurers are witnessing a rise in demand for health covers for Non-communicable diseases (NCDs) and critical illnesses.
- People have become more inclined towards products that give value-based high sum insured to deal with problems related to medical inflation.
- While some insurers have stated a rise in demand since the pre-Covid times, some have stated a similar demand (no drop).
- They also believe that the industry is expected to witness a fast-growing trend in innovative products, in-built with benefits and optional covers that can be customized as per the needs of the customers.
- These covers will help secure the current as well as the future healthcare needs that may arise at different stages of people’s lifetime.
- Beshak Take: The pandemic has made people realize the importance of comprehensive health and life insurance policies, thereby increasing the demand for these products. This increase is also driven by products that allow users to customise features, based on their needs.
- While it’s a relief that the Covid cases are going down, we must still follow the Covid protocols and keep ourselves safe by masking up, washing our hands regularly, and maintaining social distance. We must also make sure that we buy sufficient insurance covers for ourselves and our families.
Source: The Hindu Business Line
- As per the FY 2020 -21 report by the Economic Survey of India, as of 2019, the penetration of Life insurance in India is 2.82% and for Non-Life insurance, the penetration is 0.94%, the insurance density in India is $78.
- The Economic Survey is the flagship annual document of the Finance Ministry that reviews the past year’s economic development in the country, and gives detailed statistical information across all the sectors i.e. industrial, agricultural, manufacturing among others.
- The low insurance penetration is a result of a lack of awareness about insurance and no proper channel to provide the right information to the customers, majorly in rural areas.
- There is a huge opportunity for insurance penetration by reaching these places, and digital efforts will help increase the awareness of insurance all across the country.
- With the government's “Digital India” initiative, it has become easy to reach the masses through digital means, as people are increasingly using smartphones in remote areas.
- V. Viswanand, Deputy Manager of Max Life Insurance, opines in adopting three megatrends to reach and attract the untapped market using the digital medium:
- Vernacular: There is a need to optimize the websites, apps, and services in the regional language so that insurance can be delivered to the masses in a language that they understand and are familiar with.
- Video: As the pandemic made in-person meetings difficult, many companies have come up with a video interface as a solution for this problem. Adopting video will make customer interactions easier, while maintaining trust.
- Voice: Voice technology can be the future of the insurance sector as voice searches in India are growing at 270% per year. Through voice assistance, insurers can offer customized features like renewal reminders, policy-related updates, claim updates and assistance, etc.
- Taken together, these technological advancements can help create better awareness among customers about life and other insurance products, and thereby improve penetration.
- Beshak Take: While insurance awareness is growing, the growth has been concentrated in the metros and tier-one urban locations across the country. As a result, there are still places where people are completely unaware of the benefits of insurance. Hence, the overall penetration of insurance remains very low.
- While this is a challenge, it also presents the industry with a great opportunity to expand and grow the market.
- Insurance companies should:
- Organize campaigns in rural and other remote parts to create awareness about insurance - its importance, benefits, and types of products available - in a language that the locals speak.
- Launch new products that customers can customize as per their suitability.
- Create a trust factor among the customers by interacting with them regularly.
- As per the Emkay Global Financial Services report, life insurance premiums will grow 15% annually for the next decade.
- Emkay Global Financial Services, founded in 1995, deals in Institutional Equities, Portfolio Management Services, Wealth Management, Investment Banking, Commodities, etc.
- According to Emkay, several factors will lead to the growth in life insurance premiums such as -
- Insurers have started offering tailored products for retirement savings and mortality protection that differentiate them from other financial products.
- People are now considering insurance as a savings and investment tool.
- The growth in premium will increase the count of policy in force as well as the average ticket size.
- Nominal GDP per capita has crossed $2,000 (approximately). The journey of nominal GDP growth from $2K to $5K (approximately) in FY31 should lead to significant savings and investment ability for the masses.
- The report further states that private insurers are expected to post strong new business growth with the above-mentioned favorable conditions in FY22.
- Also, with the product mix changes and operating leverage, the value of the new business is expected to grow more than 20%.
- In July, Digit Insurance raised funds from investors like Sequoia Capital India, IIFL Alternate Asset Managers, Faering Capital, and others at a valuation of $3.5 Bn.
- This capital was to be used to increase market share and provide capacity to the Indian industry.
- After the travel guidelines were normalized by the government, Digit Insurance witnessed a rise in demand for travel insurance.
- Digit Insurance has always invested in technology to facilitate growth and help customers and have -
- Made vehicle inspections online where customers can send the documents online and immediately know the status of the same.
- Cut down the dependence on call centers by enabling service requests on Whatsapp to assist the customers.
- With 56% of the premium coming from motor insurance, Digit Insurance recorded a gross written premium of ₹2,196 Cr for the first half of FY22, 67% more than the same period last year.
Source: Times of India
- Bharti Axa Life Insurance and Utkarsh Small Finance Bank have come together to distribute life insurance products via the bank's branch network across India.
- Customers of Utkarsh Bank will be able to purchase life insurance products of Bharti Axa life insurance including protection, health, savings, and investment plans via 600+ branches of the bank across the country.
- With this partnership, Bharti Axa Life insurance aims to grow its network in tier II and tier III markets.
- Utkarsh Small finance bank, established in 2009 with an aim to empower the low-income group financially, operates with 608 branches across India.
Source: The FreePress Journal
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