2020 was an unprecedented year with the pandemic taking over. The overall economy had also seen a degrowth in Q1 FY21, however, a positive sign has been witnessed since June. The outlook for the GI industry is now positive as we are on the road to recovery.
While Covid-19 had its impact on individuals, organisations and nations, it brought to the fore the frailties of life and health. This in turn has increased awareness about insurance, especially Health. People have increasingly started considering insurance as a necessity and not an after-thought.
So in this scenario, where insurance is no longer just a tax-saving instrument but is an essential need, what does 2021
bode for the industry – especially the general insurance sector?
As we prepare to step into a new year, we turn our focus on five key areas.
1. Technology as a key change agent:
Foremost amongst the many effects of the pandemic on businesses, was the way technology completely turned around the way organisations conducted their operations. The insurance industry is no exception. From selling new policies to settling claims, the extended lockdown in the wake of covid-19 forced insurance companies to depend seriously on digital. Insurers were challenged to assess and update their crisis management plans and take steps for effective business continuity while staying accessible to their customers.
2021 will see the industry take this one step further and go big on technology. Tech-savvy Insurance companies worldwide are already optimizing their services by deploying AI for better cost efficiency and customer delight; this will become more mainstream. From customer communication tools to predictive innovations in products and services – AI will be used to streamline and refine each and every aspect of the business.
There have been newer learnings that will continue to be focussed on like operational excellence and cost efficiency will be a top priority, process automation is being aimed at across functions, distribution channels have included additional mode of selling keeping a balanced mix of digital and physical (phygital) and so on.
With the entire process going digital, there will be an increased emphasis on security. Enhancing cyber security to protect customer data and their own systems will be a key focus area for all insurance companies.
2. Refocussing attention on key business segments:
COVID – 19 along with the natural calamities like Amphan, Nisarga and so on, brought the impact of uncertainties to the fore. Depending on the same, companies will be refocussing attention on certain segments.
We at SBI General too have have identified three key business segments to focus on with renewed vigour.
Health: The pandemic has highlighted the need for health insurance and this trend is expected to sustain over long term as people realize that health insurance is not an optional financial product.
Home: In India, though the purchase of a house is considered the biggest financial decision, homeowners have seldom felt the need to protect their home and its contents. However, the alarming rise of natural calamities in the recent past, has led to increased awareness about home insurance products.
SME: The small and medium enterprises (SME) segment is considered the backbone of the country’s economy as it contributes to nearly 45% of industrial production. It is our responsibility to secure this extremely significant sector, help them assess their risks and insure their businesses adequately.
3. Product innovation
Customer expectations towards insurance has changed significantly as a result of COVID-19. They are looking for byte sized products that can be accessed from the safety of their homes. In response and at the instance of the regulator, the industry launched multiple products like Arogya Sanjeevani, a standard and simple health insurance policy, Corona Kavach and Corona Rakshak that specifically cater to COVID-19 expenses. Keeping the changing customer expectations and distribution landscape in mind, new and innovative products will see great focus.
A significant impact of technology on product innovation lead to launch of teleconsultations. The industry is increasing looking at leveraging the change in scenario to innovate.
4. Wider reach through multichannel distribution
While traditional channels worked well in establishing quick and digital mode of communication, Companies also focussed on strengthening their digital partnerships. With their domain expertise, greater reach and cost efficiency these channels help in deepening insurance penetration. At SBI General, there is a significant improvement in transactions through intermediary portals, micro-sites and full-scale digital integrations.
We can say, that in distribution, there will still be a combination of physical and digital. Phygital is here to stay.
In the year ahead, insurers will focus on strengthening our digital partnerships.
5. Financial inclusion
The pandemic has yet again proved the scope and power of digitisation and it has provided great scope for insurers to reach diverse demographics and geographies thereby aiding financial inclusion.
We are implementing these learnings in the field of micro-insurance for greater financial inclusion with low ticket size products. We are in the process of launching two products in the micro-insurance space to protect human assets and physical assets. With these products, we will bring forth innovation both in the distribution space and claim settlement processes.
Across the globe, the insurance industry is expecting 2021 to be a golden recovery period. The driving force for this would be the evolving growth potential of the Indian market. This is a great time for the Indian insurance industry to adapt, innovate and thrive!
