Page 27 - Insurance Times December 2021

Insurance Product Innovation Back- products was limited to Life Insurance which was taken up
as an annual tax saving instrument or Motor Insurance
ground: because it was mandated by law. All other products were
Innovation in product development is not an alien concept taken up only if the dire need for them arose.
for insurance companies. From its origin somewhere in 1750
BC when the first maritime loss limitation loan was Post-2014, upon the further raising of FDI limits from 26%
documented in the Code of Hammurabi to the modern day, to 49%, the insurance landscape has seen a slew of measures
insurance has indeed come a long way. Over the centuries that are all designed to improve the pace of product
and decades, the concept of insurance has evolved to innovation. In this new phase specific innovative products
encompass broader geographic coverage areas, newer have been developed and become available in the insurance
verticals and products within these as the need and market.
consumer preference surfaced.
Today, insurance exists in all verticals viz. Motor, Health,
The most documented peril, the Great Fire of 1666 that Travel, Accident, Life, General, and many more. Innovation
devastated central London, brought forth a new product - in Product Development is present in most verticals although
the world's first property insurance. Fire Insurance for the pace of innovation varies in each of them. There has
houses became available and standardized only after been a tectonic shift in the way insurance now operates in
Benjamin Franklin set up his company to provide fire the market. Distribution channels have multiplied, customer
coverage. This was in response to the Fire of 1730 which touch points have radically moved beyond just policy issuance
ravaged much of the Fishbourn's Wharf in Philadelphia (USA). and settlement to interim handholding by the insurer, and
Franklin was hailed as the "Father of American Insurance" legacy systems are being replaced. Consumers are slowly
but the ease of providing insurance was a complex process. changing their perception of Insurance and the uptake of
Houses needed to conform to certain design standards products is slowly but surely increasing. Insurance is now not
before they were accepted for insurance and this process just a safety net perceived by consumers as the fall back
entailed many man-hours where surveyors actually visited option for hazards and perils, but also now as a partner to
those houses. achieving financial independence and peace of mind.

Similarly, the need to divvy up money among the heirs of a On their part, the once slow to change insurance industry is
deceased brought forth the first life insurance policy. also now becoming nimble and swift to respond to external
Edmund Halley produced the first "life table" in 1693 but it changes. For example in India, the Real Estate Regulation
was much later that statistics, mortality tables and actuarial and Development Act (RERA) passed in 2016 mandated the
science was used to establish the method for modern day purchase of title insurance for all development projects. This
life insurance. Accident insurance too was a product led to insurers launching the Title Insurance Policy. The more
introduced in 1848 to respond to a need for insurance by recent Covid-19 contagion has also led to a spate of
the fledgling railway system where fatalities were on a rising launches to provide cover to this disease.
trend.
The current ecosystem shift has also led to many insurers
All the above examples and product introductions highlight jumping onto the Platform bandwagon. The digital world
the backdrop against which new product innovation took has meant that there is a proliferation of tools, cloud, data
place in insurance in the past. Need and not efficiency and networks which can be leveraged to quickly achieve
spurred the introduction of a product. Demand and not scale. Whilst earlier scaling up or ramping up a successful
creation of an undiscovered market drove all insurance product innovation could take many years, now insurers are
activity. accessing various data tools and technologies quickly
through Application Program Interfaces (APIs). Access to
Insurance Product Innovation in India - these insurance platforms built by technology providers is
allowing insurer's to accelerate product innovations at a
The Current Scenario: relatively low cost.

The Insurance landscape in India can be divided into two
eras. The pre-2014 era had particularly low insurance In fact, this is also changing the way insurance is now sold.
penetration in India and products were sold through Earlier only tie-ups, brokers, agents, the insurer website
traditional brokers. As a field, the common man understood were chief selling points where consumers could reach out
very little of insurance. The primary uptake for insurance for a purchase. Today insurers are partnering with digital

The Insurance Times, December 2021 27