Page 36 - India Insurance Report 2023- BIMTECH

24 India Insurance Report - Series II

platforms are not only increasing the reach of insurance services but are also simplifying the insurance
buying process, making it more appealing to the younger, tech-savvy generation.

A rising middle class with higher disposable income is one of the primary drivers for premium
growth. As the middleclass expands, so does the demand for assets like vehicles and homes. These assets
require protection, leading to an increase in demand for motor and home insurance and, consequently,
a rise in premium volumes.
Rapid urbanization is another factor contributing to the growth in premium volumes. Urban areas
generally have higher insurance penetration rates due to better awareness and access to insurance products.
With the pace of urbanization increasing in India, it’s expected to lead to higher insurance adoption and,
consequently, an increase in premium volumes.

Increasing awareness about the benefits of insurance is crucial for premium growth. As individuals
understand the importance of having a financial safety net in the form of insurance, the demand for
insurance products increases. This is especially true for health insurance, where rising healthcare costs
make insurance a necessity, as we have seen post-COVID. Initiatives by the government and private
insurers to spread awareness about the benefits of insurance are likely to result in higher premium
volumes.

Innovative insurance products and platforms also play a critical role in premium growth. Traditional
insurance products are often complex and hard to comprehend for the average consumer. Insurers are
now offering simplified insurance products with easy-to-understand terms and conditions. Moreover,
digital platforms make it easier for consumers to purchase insurance, leading to higher adoption. The
rise of insurtech also plays a crucial role in driving premium growth by making insurance more accessible
and appealing to the newer, technologically inclined generations.

Furthermore, government initiatives aimed at financial inclusion can also boost insurance penetration.
Schemes like Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima
Yojana (PMJJBY) have already made strides in increasing insurance coverage among the low-income
population.

While the penetration gap presents a significant opportunity, it’s not without its challenges. Building
awareness and trust, simplifying product offerings, creating cost-effective distribution channels, tailoring
products to the specific needs of the rural population and controlling claims fraud, waste, and abuse are
some of the hurdles that need to be overcome. Insurers who can effectively address these challenges will
be well-positioned to tap into the vast opportunity presented by India’s insurance penetration gap.

According to reports, Total insurance premiums in India will grow by an average of 14% per annum
in nominal local currency terms over the next decade, making India the 6th largest in terms of total
premium volume by 2032 from the 10th largest in 2021. (Source : Swissre)

2. Technology - The Key to Enhanced Penetration and Innovation

Technologies like Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoT)
are transforming the general insurance sector in India, revolutionising everything from distribution and