The future looks promising for the life insurance industry in India with several changes that will transform the way the industry conducts its business and engages with customers, says the India Brand Equity Foundation (IBEF).
In a recent report on the insurance industry, the IBEF—which is a trust established by the Ministry of Commerce and Industry—says that the life insurance market in the country is expected to expand by 14-15% annually for the next three to five years.
The country’s growing middle class, increasing awareness about the importance of insurance and retirement planning, and advances in digitalisation are expected to drive this growth. The Indian government has also played a crucial role in increasing the scope of the insurance sector through various policies and schemes. This trend will continue in the future through schemes like the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) providing life insurance coverage at an affordable price to those aged 18-50.
Turning challenges to opportunities
The insurance sector in India faces several challenges that can be viewed as an opportunity for the growth and innovation of the sector, adds the report.
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Challenge
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Opportunity
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Low insurance penetration of 4%
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This highlights the untapped potential in the rural and semi-rural urban areas. Insurers can create products that cater to the underserved population, by leveraging digital capabilities, thereby expanding their customer base
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lack of financial literacy
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The government and insurers can undertake campaigns to educate the population about the importance of being financially secure through diverse types of insurance. This will not only enhance trust as a customer but also ensure that awareness is raised in the country
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Regulations that are often complex
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Insurers can leverage their innovative side and maintain robust operations, which helps to build a stronger industry
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Heightened competition
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Existing insurers and new entrants will be driven to keep innovating sp that life insurance becomes a customer-centric sector, which increases the overall quality and accessibility of insurance
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The report says that the IRDA is “vigilant and progressive and is determined to achieve its mission of ‘Insurance for all by 2047’“, with aggressive plans to address the challenges faced by the insurance industry as a whole.