Page 29 - Insurance Times May 2023

Understanding

the Crisis Plaguing

the Insurance

Jagendra Kumar
Industry of India Ex. CEO,

Pearl Insurance Brokers

Insurers are increasingly dependent on emerging technologies and data sources to drive efficiency,
enhance cyber security, and expand capabilities across the organization. However, most insurers
focus on improving the customer experience by both streamlining processes with automation as
well as providing customized service where needed and preferred.

he challenges insurers face range from economic slower to adjust to an online mode of growth and the reliance
T hurdles such as the potential for sustained on physical meetings was higher.
inflation; to sustainability concerns including
climate risk, diversity, and financial inclusion; to
rapidly evolving consumer product and purchase preferences. This resulted in a 2 per cent y-o-y decline in business at Rs
71,800 crore while the private sector reported 8 per cent y-
Insurers are increasingly dependent on emerging o-y increase in gross direct premium income to Rs 1.13 lakh
technologies and data sources to drive efficiency, enhance crore. The life insurance industry is expected to increase at a
cyber security, and expand capabilities across the CAGR of 5.3% between 2019 and 2023. India's insurance
organization. However, most insurers focus on improving the penetration was pegged at 4.2% in FY21, with life insurance
customer experience by both streamlining processes with penetration at 3.2% and non-life insurance penetration at
automation as well as providing customized service where 1.0%. In terms of insurance density, India's overall density
needed and preferred. stood at US$ 78 in FY21.

On a more fundamental level, many insurance companies It is becoming increasingly challenging for insurance
consider taking steps to bolster trust among stakeholders to companies to survive in their current form. While the
boost retention and profitability. This might be achieved in insurance industry was already fighting to adjust and
part through greater transparency in how insurers collect transform itself to overcome multiple threats plaguing its
and utilize personal data. They are more proactive in seeking growth, the pandemic has further worsened the problems
comprehensive solutions to big picture societal problems-such for the insurers across the globe. It is become necessary to
as mitigating the financial impact of future pandemics and understand the role of process automation, cloud-computing,
closing coverage gaps for natural catastrophes. In FY21, the and other digital technologies, and how they can revolutionize
industry witnessed a 4 per cent year-on-year growth to Rs the industry. Today, this undercapitalized industry is already
1.85 lakh crore. Public sector undertaking (PSU) entities were charging many businesses far too much in premiums while

26 May 2023 The Insurance Times