Page 36 - Insurance Times August 2019

and development perspectives in Insurtech. The Lombard, Bajaj Allianz, HDFC Ergo, TATA-AIG, Reliance,
predominant basis of the research stated that Blockchain Cholamandal etc.
has led to the technological innovation in the insurance
market. It has hiked operational efficiency by automation With the advent of new technology and some alternate
of the claims handling process as well as transparent enhancement factors, the insurance industry shows
payment mechanism systems. promising growth. All the processes having been taken
online has led to increase in operational efficiency of
Alexander Braun and Florian Schreiber have explored the insurance companies. The incumbents have started
insurtech potential in their book: The Current InsurTech adapting to new ways of customer engagement through
Landscape: Business Models and Disruptive Potential. This NBFCs, bancassurance, online web portals and Insurtech.
book has gauged the Insurtech landscape to greater depths But along with a promising future, there are a lot of
by doing a retrospective study of Insurance business models challenges that these incumbents face. The majority of life
and patterns. The book also talks about insurtech being a insurance policies are sold in the last quarter which gives
disruptive innovation and the extent of its disruption for the an irregularity in the sales pattern. Insurance is also merely
insurance incumbents. All the studies and conclusions have perceived as a tax saving instrument. This sentiment in the
been backed by various empirical analyses by conducting minds of the consumers has been a barrier to the sales of
international surveys targeting primary insurers, brokers, insurance policies. The strategies for distribution channels
venture capital firms, incubators, accelerators and insurtech have also never been quite impressive sided by poor data
startups. collection and management.

In 2017, Infosys had published an article on the changing The rural insurance sector is highly untapped by private
face of insurance industry. The article stated how players. The micro insurance industry shows high potential
technology and business trends pose to be a challenge as in the rural areas. The insurance companies, apart from LIC,
well as an opportunity for the insurance sector. It also stated do not show any interest in such areas thereby neglecting
that Insurance industries should invest more in the the establishment of any satellite branches. The lack of
computive technologies like blockchain, Internet of Things, literacy in terms of insurance also plays a major role in not
cognitive computing, digital analytics, digital distribution letting people purchase insurance policies. On the
channels etc. The article posed a conclusion that alongside foundation, some do not know of such schemes while some
investing in technology, insurance companies should always others lie on the below poverty line where the basic
look forward to acquiring or partnering with insurtech necessities like food, clothing and shelter themselves are
startups and connecting with customers at a personal level not fulfilled.
so as to enhance their insurance experience. This would
help to retain the existing customers and generate new There has been an apparent drop in persistency ratio as
leads by giving financial security and protection against well. Persistency ratio is defined as the percentage of all
uncertain losses. existing policies that are renewed by the insurer annually.

Indian Insurance Scenario
The Indian insurance landscape has seemed very promising
in the last decade. The total insurance market has
mushroomed from US$23 billion in FY2005 to US$84.74
billion in FY2017 giving an annual compounded growth rate
of 41%. The total premiums have increased at a rate of
11.48% CAGR over the same tenor. The life insurance sector
is being dominated by LIC with a staggering market share
of 71.07% whereas the following players are ICICI
prudential, HDFC, SBI Life with single digit market shares.

The non life insurance sector has a similar growth story with
the market blooming at US$19.6 billion in FY17 at a rate of
about 10% CAGR. The major players in the market are ICICI

36 The Insurance Times, August 2019