5 Recent Developments in the Life Insurance Industry

Strong economic factors and the government pushing the right buttons with the implementation of technology has propelled all sectors of the Indian industry on a glorious path.  Life Insurance industry has also made a significant contribution in putting our country on this glorious growth trajectory. 

Adopting life insurance for risk management and using it as a preferred tool for achieving major life goals has made a noteworthy contribution to the growth of the life insurance industry. Insurance density of life sector has grown to 55 US $ in the year 2017-18, a growth from the previous figure of 46.5 US $ in the year 2016-17. Similarly, Insurance penetration has grown to 2.76% in the year 2017-18 from the previous figure of 2.72% for the year 2016-17.

Let’s have a look at the 5 recent developments in the Life Insurance Industry.

1.     Growth in Premium

Life Insurance industry has seen a significant jump in the amount of premium collected. The premiums collected for the year 2017-18 stood at a behemoth amount of Rs. 4.58 Lakh Crore, a considerable jump from Rs. 4.18 Lakh Crore recorded in the previous year 2016-17. A commendable growth which shows the acceptance of life insurance by the people of the country.

All 23 private life insurance companies and the public sector life insurance giant Life Insurance Corporation of India have introduced products that meet the varying insurance needs of India’s versatile population. 

2.     Outstanding Claim Settlement Ratio

Claim Settlement Ratio is an important factor that helps people in choosing their life insurance plans from the various players operating in the Indian life insurance market. An important landmark seen here is that this is the first time that a private life insurance company Max Life Insurance has overtaken the market giant Life Insurance Corporation of India by settling 98.26% of the claims. It is not just that, out of the 23 private life insurance companies, 12 companies have a claim settlement ratio of above 95%, 7 life insurers have a claim settlement ratio between 91% - 95%. There are only 3 life insurers who have a claim settlement ration between 80% to 90%.

Here is a table showing the Claim Settlement Ratio of all the Life Insurance companies for the financial year 2017 - 2018 as per the data released by the Insurance Regulatory and Development Authority of India (IRDAI)        

3.     Better Fraud Management Practices

A good claim settlement ratio is a result of a robust underwriting practice and better fraud management practices implemented by the insurer right at the proposal and policy issuance stage. These vigorous checks, use of data analytics and technology-enabled KYC verification process has enabled the insurers to detect fraudulent attempts and practices even before a policy is issued. Stringent practices have allowed insurers to reign in and reduce the fraudulent practices which are causing life insurance companies to bleed on the financial front.    

4.     Digital Push

Life insurance companies have already started implementing technology on a larger scale in all stages of a life insurance contract. Starting from pre-policy issuance i.e. verification of an applicant’s proposal to paying out the claim. The digital push by the government along with a strong push towards a cashless economy also has provided considerable help in implementing digitization that has touched every aspect in the life insurance industry.

Data analytics, Block Chain, Internet of Things (IOT), Artificial Intelligence, Machine Learning and other technological advancements have helped insurers to work efficiently and smartly. Insurers with the help of digitization have created a beautiful harmony between the services offered on the online and offline front to its customers. 

5.     Better Reach

Life insurers have also started employing various ways by which they can reach people across the length and grid of the nation. Innovative ways like life insurers’ mobile apps, websites, integration with the platform of online brokers and POS agents has enabled people to secure their lives with life insurance. The digital push has also helped the insurer in providing life insurance policies with a reduced policy issuance time and other customer-related services through their online platform.

The Future

Digitization and its fastest implementation will determine the future of all life insurance companies. The company that achieves this at the earliest will propel themselves ahead in the race of capturing a considerable size of the market pie. Digitization will also help in a smooth and effortless journey for the customer starting from an application for life insurance to receiving the claim amount without any hassle. Thus creating a delightful journey for the customer in all.

The author is the Director – Health, Life & Strategic Initiatives, Coverfox.com