Page 58 - India Insurance Report 2023- BIMTECH

46 India Insurance Report - Series II

According to the Swiss Re Report of 2021, the number of people aged 60 and above is increasing
globally. It is expected to double in 2050 due to improved quality of health care, innovation in Stem Cell
Therapy, genealogical breakthroughs, use of technology in health care, etc. India is similarly expected to
account for more than 20% of its population over 60 years in 2040, as per the Swiss Re Sigma Report, 2021.

In 2030, India will add 140 million middle-income and 21 million high-income households. These
demographic changes would drive the demand and growth of the Indian insurance sector. Insurers must
understand these changes and develop appropriate business strategies to attract them.
The Customer Demographic changes require understanding the insurance buying behaviors of the
customers – their lifestyle changes, preferences, perception about the insurance products and services, etc.

Today, various risks – climate, financial, low returns, increasing inflation, credit, lifestyle diseases,
cyber, and mental illnesses - constitute a daunting risk landscape. Insurers must know these emerging
risks and customize the product offerings according to the individual/corporate client’s risk profile.

Though insurance awareness has improved during the pandemic, many customers still have poor
financial literacy, a lack of understanding of the importance of insurance / perceived need for insurance
in protecting their lives or assets, and a higher cost of insurance, which may discourage individuals from
taking insurance. Hence, we must bring out the required change in the customers’ mindset.
Increasing usage of AI & ML would help insurers understand the changing risk dynamics and customers’
needs. Also, introducing Risk-Based Capital (RBC) Solvency by 2024-25 would enable insurers to develop
risk-based premium rates and innovative products and solutions. However, implementing RBC in the
insurance industry would require the insurance companies to have substantial capital requirements as
insurers must allocate capital for every exposed significant risk. This would make them realize the
importance of capital and also need to improve their operational excellence as the current expense ratio of
well over 30%, in most cases, may have to be brought down, along with lowering incurred claims ratios
through various methods, to achieve capital efficiencies and expanding their businesses.
Customers’ personal health and fitness behaviours can be tracked through various IoT-related devices
like Fitbits Apple Watch, and Health Applications like Healthify, Pharmeasy, etc.; insurers can customize
the Wellness Insurance following the health fitness of the customers and offer attractive incentives to
attract them. We have over 400 insurtech and fintech companies that can help insurers develop product
innovation and need-based products or embedded and parametric insurance products in the coming years.

With Satellite Data and the Internet of Things (IoT), Embedded Sensors, Telematics, Usage-based
Insurance or Parametric Insurance solutions can be developed for most natural catastrophic disasters
like floods, cyclones, crop damages, property damages, etc.

The use of Virtual (VR) and Augmented Reality (AR) would significantly transform the way the
insurance business is done, as it enables quicker and more accurate loss assessments of property damages
and disaster risk losses.

Blockchain technology would enable insurers to develop end-to-end tech-based customized solutions,
issue Smart contracts, and Faster underwriting and claims settlements. The above initiatives would transform
the insurance business drastically, provide new customer experiences, and improve customer engagement.