Year 2018 For The Insurance Sector

The year 2018 is proving to be a defining year for the life insurance business in India. The industry has seen more focus on customer services with deeper penetration of digital technology and innovation in processes and products; but at the same time the growth of the life industry has been subdued. 

March ’18 saw the Private Life Insurance Sector close the previous fiscal with a growth of 26% on total individual premium. This growth was primarily driven by bank distribution channels and ULIPs. 

In the current financial year the dynamics of business in both the private companies as well as LIC are seeing a revision which could set the future course of the industry. The sector is struggling to maintain the same level of growth with only 15% growth for the Private Insurance sector up to Nov 18. In comparison the public sector behemoth LIC has negative growth figures on total Individual Premium for the same period due to strong de-growth on Single Premium. Similarly, the bank promoted companies which were the earlier flag bearers of the Private Industry growth are currently at a near flat growth on total Individual premium.  

The current movements in the Industry indicate towards the return of the agency/direct channel as a driver of Individual APE growth. The trick seems to be to maintain a good mix of both the agency and bancasurance channel to ensure continued growth as the “non-banca” companies lead the growth chart in the current fiscal. The industry is also witnessing a return of traditional products with ULIPs struggling to maintain previous growth numbers. The coming months of the current fiscal would be crucial to define the future progression and maintain the expected growth figures. 

Year 2018 saw continued focus on bringing services and products closer to the customer. Government-driven insurance schemes, both at the central and state levels, have created a favourable environment by demonstrating the value of insurance. It significantly complements the efforts of the insurers and the regulator.  The regulator has also continued to show support towards the growth of the industry with focus on enhancing customer protection and increasing insurance penetration. Dialogue started towards further regulatory reforms for ease of doing business and innovation in product offerings has been positive and bodes well for the future.

The emergence of small finance banks, allowing the sale of micro-insurance products through POS, the proposed changes to IMF norms have made distribution of insurance products easier and reach a wider populace. On the other side, the Supreme Court disallowing access to aadhaar authentication will keep the cost of onboarding of customers higher, especially in rural areas and it increases paperwork for the customers. 

Insurance awareness on term and health insurance continues to be on a rise. The year saw various companies launching term and health insurance plans, like cancer care plans. 

Life insurance companies are also employing a spectrum of technology enhancements ranging from analytics, artificial intelligence to digitally assisted sales and underwriting processes to service customers better. There has also been initiation of collaborations among insurers for technology like block-chain that could help ease processes and customer services.

The future growth of the industry would be defined by the timely technology changes adopted by the insurance companies. With the current movements in the industry it can also be implied that insurance companies would soon become technology driven companies that sell insurance as technology becomes core strategy area. The coming year would continue to witness more advancements on customer focus driven by technology knowhow. Also, based on growth trends of 2018-19, the industry could also see a focus shift on products and distribution strategies to strike the right balance between the traditional well tested formulae with new innovations.