The general insurance and life insurance sectors showed positive steps towards recovery after the COVID-19 pandemic, reaching growth rates of 16% and 18%, respectively, in 2023 compared to the previous year.
Projections from Insurance leaders indicate a continued growth trend, with further advances in technology, regulatory frameworks, customer-centric approaches and innovative product offerings driving the overall expansion of the sector over the next decade.
The Insurance Regulatory and Development Authority of India (IRDAI), in 2023, brought multiple reforms, focusing on 3 prominent themes – strengthening the ecosystem, improving accessibility and reach, and securing the interest of defendants. As we now look forward to 2024, regulatory reforms are expected to continue to drive the industry.
Here are some of the main trends likely to develop in the new year:
The general insurance industry in the year 2024, is expected to see insurers venturing into new territories to extend coverage to a wider section of the Indian population. Collaborations will increase, with insurers partnering with insurtech startups, healthcare providers and government bodies.
“These partnerships will drive innovation, going beyond traditional insurance offerings to create products that meet the evolving needs of customers. The integration of advanced technologies such as AI, blockchain and big data will play a crucial role in improving efficiency and improving CX. Technology. will empower insurers design highly tailored insurance products, addressing precisely individual customer needs,” said Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance.
Looking ahead, generative AI promises a future where hyper-personalized services will be available on the go, improving customer satisfaction and improving risk assessment, fraud detection and claims handling. Additionally, regulatory reforms, including IRDAI’s ‘Risk-Based Oversight’ framework, aim to ensure a thorough understanding of risky activities, contributing to financial stability, he added.
New entrances, composite license and Insurance bill 2023
Although the regulator has already licensed 3 new players this year, it is expected to allow entry of more companies going forward. IRDAI said it is looking to grant licenses to 20 new insurers in the immediate future. Additionally, the regulator is also likely to revisit the capital requirements, making it easier for new players to enter.
With increased competitiveness in the market, the sector will see more innovation, improved distribution models, automation and more, Sumit Rai, MD & CEO, Edelweiss. Tokyo Like Insurance highlighted.
One of the expected developments of 2024 is that the government will introduce the Insurance Laws (Amendment) Bill 2022 as it has the potential to bring another round of positive reforms and strengthen growth prospects of the industry, he added.
Proposals for composite licenses also promise a variety of insurance offerings, ensuring enhanced affordability and accessibility.
Life Insurance -Budget Wish List
The journey towards ‘Insurance for All by 2047’ is marked by strategic steps and some recommendations for the upcoming Budget that could pave the way for growth and accessibility in the Life Insurance Sector, said Satishwar B, MD & CEO, Aegon Life Insurance.
1. No Tax for Annuity Plans to Benefit Both Retirees and the Industry.
2. Improve Tax Benefits to Increase Insurance Coverage
a) Separate Savings for Life and Health: Amend tax sections 80C and 80D to provide separate tax credits for the life-threatening risk portion of life and health insurance premiums, as well as for fixed-term insurance plans, he emphasized.
b) Complete Deduction for Life Insurance Premiums: According to the expert, allowing individuals to deduct the entire amount paid for life insurance premiums from their taxable income, as stated in Section 56, without any reduction due to claims made under other sections such as 80C. , will encourage more people to buy insurance.
3.) GST Reforms for Wider Reach: GST on term life insurance and application of ‘Zero rating’ -which means fixing the tax at 0%- for certain essential policies like the Pradhanmantri Jeevan Jyoti Bima Yojana (PJJBY), smaller insurances covering up to ₹ 2 lakh, and annuity products for National Pension Scheme (NPS) subscribers, he added.
Empowering Communities through Bima Vahaks
The IRDAI’s Bima Vahaks initiative is set to make insurance knowledge more accessible. This female distribution force promises to bridge the gap between insurance and the masses through personal interactions and localized insight. Bima Vahaks, along with Bima Sugam (the one-stop insurance platform) and Bima Vistaar (an affordable composite insurance product) promise to lead the way to insurance for all.
Use of AI in Health Insurance to transform industry
Crossing the landscape of health finance with the vision of “health for all” left a mark in 2023. The growth of telemedicine, addressing the need for safe and convenient treatment, is preparing for further expansion in 2024. The use of AI for accurate diagnoses, a prominent trend , is projected for big growth this year. Aniruddha Sen, co-founder of Kenko Health, said the pivotal role of AI in streamlining insurance processes, detecting fraud and improving health system efficiency remains crucial.
The proliferation of wellness programs, fitness apparel, and incentive programs from insurers are guiding individuals toward healthier lifestyles. Firmly rooted in 2023, this trend will solidify in 2024, fostering a holistic approach to wellness.
Anticipated innovations by insurance providers are expected to introduce policies encouraging proactive healthcare initiatives, Sen added.
Insurtechs are likely to witness more investments, M&As
We will also see new-age players tackling various unique challenges of the industry and investment in insurtechs can be expected to increase in the coming year. With IRDAI also allowing additional spending on insurtech expenses up to 5% of the allowable expenses of management to broaden customer reach, one can expect insurance companies to increase investment in developing better technical solutions for customers, Vivek Chaturvedi, CMO and Head of Direct Sales. at Digit General Insurance said.
With IRDAI reviewing more than a dozen applications for licenses, new players are expected to enter the market, which could spur M&A activities in the insurance sector and insurance brokerage field. Mergers and acquisitions within the insurtech space have the potential to drive significant consolidation, transform market dynamics and contribute to the growth and progress of individual companies, he added.