In a new report, “The Future of InsurTech in India”, PricewaterhouseCoopers finds that InsurTech has emerged as a critical technology for the future growth of the property and casualty (P&C) insurance industry in India. The report discusses the importance of InsurTech to both current and potential entrants in the Indian P&C market. It also concludes that the sector’s growth will be driven by a low penetration rate of 35% of population. Furthermore by increased accessibility due to the emergence of emerging markets like Myanmar and Bangladesh.
The fintech report on insurance in India
PwC’s research calls upon insurance companies in India to undertake InsurTech strategies that address two major hurdles in the industry: the under-utilization of technology by underwriters to speed up the claims handling process; and the ability to reduce risk costs through product innovation and automation. According to the report, some solutions can address these challenges without major disruptions.
The study reveals that InsurTech – can improve the claims handling process, decrease product costs, and allow for innovation in products and distribution channels . This could help improve insurance penetration in India by as much as 15%, by 2020. However, the contribution of technology to P&C industry will be limited due to the lack of skilled manpower, the inability to employ third-party administrator (TPA) expertise, and a general shortage of market data.
India’s Insurance Sector Is Challenged to Innovate
The report also finds that 50 percent of insurers report that they lack sufficient information to form strategies that could lead to growth opportunities in the InsurTech space, though 60 percent believe it is an area of interest. Other reasons include a lack of knowledge of insurance best practices, lack of knowledge of technical and legal nuances, and lack of data about potential future growth patterns.
However, InsurTech is only an enabler to change the way InsurTech experts and P&C insurance providers operate in the market. Technologically-led innovations could increase efficiencies and increase the rate of claims settlement in underperforming market segments, such as the recently-introduced crop insurance products. Moreover, one of the key challenge of InsurTech in the Indian P&C insurance sector will be the lack of a formalized definition of InsurTech to define solutions for problems existing today. The over-reliance on approaches such as customer experience management and telesales for marketing could hinder the adoption of InsurTech technologies.
What the InsurTech Revolution Means for the Future of Insurance in India
In addition, InsurTech is crucial to the greater adoption of digital channels. For example, mobile technology and social media, which could drive up business transaction volumes through the use of internal technologies. Some of those are enterprise resource planning (ERP), live chat, customer service, and collaboration portals. These are already gaining traction in India. Moreover, the InsurTech market will be commoditized in the next 10-15 years. The innovations will be available at lower prices as the cost of core innovations will decline. Also lower risks will result in the availability of InsurTech services. Thus, this kind of businesses will start competing on price rather than quality.
Given India’s under-investment in its innovation ecosystem, PwC recommends that insurance executives across the globe should use strategic partnerships. This way they could explore lots of products and practices to ensure they remain at the forefront of InsurTech development.
InsurTech organizations can benefit from R&D funding or technical and sales resources, as well as asset-light marketing and distribution. One of the way is by partnering with innovators with deep domain knowledge. Another is by knowledge of emerging markets, and an ability to rapidly enter new markets.
Andrea Miteski, PhD and MD in the field of reinsurance. Long term senior insurance executive with specialization of reinsurance optimization.