The Indian insurance industry has experienced significant changes and developments in 2022, including new regulations, proposed amendments, and growth opportunities. These changes have allowed the industry to adapt to new trends and digital disruptions, and the Insurance Regulatory and Development Authority of India (IRDAI) is actively working to ensure that insurers remain relevant and achieve its goal of providing insurance for all by 2047. The IRDAI has plans in place to address the challenges facing the industry.
Globally, the insurance sector is adopting advanced technologies such as machine learning in automating claim management, using the Internet of Things for personalized insurance pricing, and Telematics for car insurance. In the Indian insurance industry, according to the India Fintech Report 2022, various insurtechs are offering Artificial Intelligence/Internet of Things/Machine Learning, automated claims, web aggregations, e-commerce insurance marketplaces, software/white label/Application Programming Interfaces, and embedded insurance due to the digital boost in the sector. The Insurance Regulatory and Development Authority of India (IRDAI) appears to be supportive of these technological advancements and innovations in the industry.
Permission to invest up to 30% of assets in the BFSI sector
This reform allows insurers to optimize their investment strategy, potentially leading to higher investment income and more efficient claim settlement policies, resulting in a better experience for customers in terms of claim reimbursement.
Proposal to relax the INR 100cr. minimum cap requirements for new insurers
Relaxing capital requirements could lead to the creation of specialized or mono-line insurance for specific segments such as motor and properties. This would allow policyholders to access a wider range of competitively priced, technologically innovative products and increase competition, job creation, and transparency in the insurance sector. It may also result in the emergence of micro or specialized insurance companies in fields such as agriculture, small and medium enterprises, travel, and consumer electronics.
IRDAI extending the “Use & File” process
This norm has the potential to greatly benefit the insurance sector by allowing for more product innovation and customization, faster market entry, the ability to test products on smaller groups, and increased adoption, all of which could positively impact the penetration rate.
Bima Bharosa Platform in making
The platform will be beneficial for customers as it will provide a single source of information and allow them to track existing complaints and file new ones, building trust between customers and insurers and increasing data authenticity.
Telematics for motor insurance
This reform offers customers the opportunity to lower their car insurance premiums by installing a free telematics device to measure mileage and report on their car’s health. It also allows for flexibility and customization options for the plan based on the customer’s preferences.
Bima Sugam as a game changer
The platform, which will be supervised by a regulator, will standardize the industry, increase transparency, and reduce instances of misselling and fraud risk. It will also enhance the credibility of agents and insurers and support early-stage startups in testing innovative covers such as OPD covers.
Paving the way for a composite insurance license
The composite insurance license proposal will offer a range of benefits for the industry, including the ability to achieve portfolio profitability and long-term sustainability of programs, improved product creation with a mix of health and life covers, and higher returns on investments in technology.
Intermediaries are now allowed 3x tie-ups
Going forward, potential and current policyholders will have access to a wider range of options when selecting the best policy for their needs. The new tie-up limit for corporate agents is nine insurers and six insurers for individual marketing firms per line of business (life, general, and health insurance), resulting in a greater variety of options and more competitive pricing for customers.
Regulatory sandbox for the Insurance companies
The insurance sector, which is regulated, will now be able to conduct small-scale experiments thanks to the new regulatory sandbox guidelines. This will allow the testing of innovative products and technologies in a controlled regulatory environment for a maximum of 36 months. The mid-way approval process will also enable the faster release of new innovative products in smaller batches, improving the customer experience.
In 2023, the insurance industry will need to continue implementing significant changes, with a focus on technology-enabled customization and transparency in order to increase demand for insurance in India’s tier 2 and tier 3 cities. The bundling of policies could also become a major source for addressing customer needs and increasing policy sales. According to industry reports, the insurance industry will be impacted by technological disruptions such as cloud computing, data and analytics, automation of claims through telematics technology, and the use of Artificial Intelligence. These disruptions are expected to significantly shape the future of the industry.
