Growth Of Insurance In India Will Come From Real BHARAT Through Insurtech Platforms
India is a country where there is a huge latent need for insurance, but there is a lack of information and access for consumers. After so many years of privatization and extensive push, not more than 100 million Indians have insurance. Insurance penetration, even today, exists in the top 50-60 cities. While there are more than 700 million consumers in the country staying in tier 3 cities and beyond who need insurance, and can afford to pay the premiums, there is a big gap in availability of right advice and suitable products for them due to lack of distribution beyond tier 1 & 2 cities.
These 700 million consumers are from Real Bharat, who have been traditionally underserved. Why – Simply because there are no branch networks of insurers beyond top cities. The traditional, physical and branch led driven model of insurance, has made it difficult to reach out to the large uninsured consumer base of the country. This gap can only be solved using a digital distribution model.
Digital insurance and insurance for ‘Real Bharat’ are co-related. The growth of one will push the growth of the other segment. On one hand, digital insurance will increase consumer outreach in the smaller towns and cities; on the other hand, increased consumer outreach will give a double boost to digital insurance to expand its infrastructure and further outreach.
Below are the reasons why the growth of digital insurance will come from Real Bharat.
Traditional and branch led model will become redundant- One of the major reasons for insurance gap is the lack of branch led models in the smaller cities and towns. With digital, there would not be any need for insurance branch to take insurance to consumers. Digitally enabled apps/ technology-based models can recreate what a fully operational branch can do. Moreover, a branch led model can only serve consumers within a certain radius, the outreach of digital insurance is limitless. With almost 54% of smart phone penetration into the country, insurers can service consumers even in territories where they may not have physical branch network, just by using a technology enabled distribution platform. A digital driven model is clearly the only model that can work in Tier 2/3 and beyond to provide right insurance plans to the uninsured.
Increased awareness- Another reason for under-penetration of insurance is due to lack of awareness, especially in the Tier 2,3 & beyond cities. Digital will play an instrumental role in building awareness amongst consumers in those cities and towns. Covid played a significant role in building the importance for health and life insurance, across the country and digital will play the next big role in taking the momentum forward. Government insurance schemes such as Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jeevan Jyoti Bima Yojana can be further boosted using digital.
Increase in Insurance Advisor outreach- The reason why people do not want to take up insurance advisor as a career in the smaller towns and cities is because, insurance is not a thriving sector in those cities. People who might have the potential to become the best of insurance advisors might not even be aware of this as a career. He/ she can earn as much an insurance agent earns in metro cities; or even more. A digital driven insurance framework can train and make people eligible to become an insurance agent, even without the presence of a branch in that town or district. Online classrooms, digital exams are equally effective to empower insurance agent in a remote city, and make them eligible to earn a livelihood. Thus, there will be an increase in insurance advisor network in ‘Real Bharat’ which will become a huge driving force to accelerate insurance outreach amongst consumers.
Focus on choice, transparency and consumer satisfaction- From the epoch of no insurance access to digital insurance; consumers in the smaller towns and cities will get access to the best and most suitable insurance plans. While this segment of population has struggled over the years to get access to insurance; they will now experience digital and real time insurance. From waiting for days to receive an insurance policy, they will be guided with buying the right insurance policy, serviced real time, and will experience seamless claim settlements. Digital will also make consumer experience personalized and they can buy insurance policies as per their family needs and requirements. For a consumer in the remotest of the country, this is as good as a dream come true. These satisfied consumers will bring in more consumers into the sector.
While the insurance industry has been talking about digital being a key driving force for taking insurance to the masses; we also need to note that the real growth of digital insurance will come from the Tier 2,3 cities & beyond, where the real insurance demand supply gap exists.
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