Page 151 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 139

terms that discourage potential policyholders. By adopting a customer-centric approach and transforming
intricate concepts into accessible language, insurers can empower individuals to make well-informed
decisions, demystify insurance, and cultivate trust and clarity. Moreover, the low insurance penetration
rate can be partially attributed to a lack of financial literacy among the population. Educating individuals
about the importance of insurance, its benefits, and the available coverage options is crucial. Collaborative
efforts involving insurers, regulators, and educational institutions can contribute to improving financial
literacy and equipping consumers with the knowledge to make informed choices.

The insurance industry has been heavily reliant on high commission payouts, leading to a
misalignment of incentives that prioritise sales over meeting consumer needs. However, regulators have
taken commendable steps to cap commission payouts, aiming to strike a balance between agent incentives
and consumer welfare. Rebuilding trust in the industry requires a collective effort to educate consumers
about the essential role of insurance as a protection product rather than an investment tool. Transparent
communication, ethical practices, and robust regulations will play a crucial role in restoring confidence
and faith in the industry. In India, insurance is still perceived as a product that is pushed onto consumers
rather than being driven by consumer demand. To change this perception, the industry needs to emphasise
its role as a protection industry and use consumer-friendly language that simplifies complex concepts.
While profitability is important for insurance companies to sustain their presence in the sector, it is
crucial to distinguish them as providers of protection rather than primarily sellers of investment solutions.
It is worth noting that, even today, many large insurance companies are predominantly associated with
their investment products despite offering a broader range of services.

Closing the trust gap is of utmost importance for increasing insurance penetration. Building trust
requires transparency, ethical practices, and a strong regulatory framework. Insurers must prioritise
consumer interests, ensure timely claim settlements, and adhere to strict codes of conduct. Similarly,
regulators must strengthen consumer protection measures, enforce compliance, and establish effective
grievance redressal systems. To instil confidence, regulators can utilise commercially available digital
tools to regularly publish dashboards that showcase claim settlements and average settlement times for
various categories. Taking proactive measures and having regulatory professionals with strong capabilities
are crucial for utilising all available resources to build trust among consumers.

Achieving a delicate balance between standardising commodity products and allowing customisation
is crucial to improve consumer convenience. Setting a baseline for essential insurance coverage enables
consumers to comprehend and compare policies more effectively. However, it is equally important to
provide customisation options that cater to individual needs, ensuring flexibility and a personalised
experience. By striking this equilibrium, the insurance selection process becomes simpler while addressing
the diverse requirements of customers.

Although the Indian insurance sector has embraced digitalisation, there is still ample room for
improving the overall customer experience. Insurers can utilise technology to simplify the onboarding
process, streamline claims settlement, and deliver personalised services. Investing in user-friendly digital
platforms and mobile applications can enhance accessibility and convenience for policyholders.
Collaborating with fintech startups can bring fresh perspectives, innovative ideas, and technological
advancements to the insurance sector. Insurers can explore partnerships to leverage advanced analytics,
artificial intelligence, and machine learning algorithms to enhance risk assessment, product design, and