How Regulatory Reforms & Tech Trends Reshaping Life Insurance Sector In 2023
The year 2023 might be remembered as a landmark year for the life insurance industry with the Regulatory reforms and progressive initiatives by the Regulator along with the significant impact of the change in consumer behaviour driven by technology.
Though the pandemic has in some ways become a past memory, it has had lasting consequences on the industry and consumer behaviour which have driven some permanent changes shaping the future of the Industry.
The awareness levels for insurance have increased, the customers today are more aware and look to meet specific needs while deciding which insurance to buy. We have over the last few years witnessed a trend towards guaranteed products.
The tax saving attraction of the Life insurance policies was observed in the spike of higher premium policies sold in March 2023 before the new tax regime set in. This also led to a high base in the previous financial year that might impact the growth shortly, as was witnessed in November 2023. Further, the companies would be forced to look at other markets to cover the gap of the business from these high premium segments impacted due to the tax changes.
The Regulator’s progressive and innovative stance has also set a new pace for the Industry. These Regulatory reforms have set a very crucial trend of a shift from a more rule-based to a principle based approach for the Industry and its rules.
One of the more critical changes was to remove the commission cap, implementing an overall cap on expenses of management. This move from the Regulator instils confidence that the Industry has matured. It provides the industry with more flexibility without adversely impacting the customers’ interests. Penetration into the rural and more underserved segments has been a key focus for the Regulator for some time now with the “Insurance for all by 2047” initiative as well. The year 2023 saw the focus on this multiply with more companies looking to innovate for increased penetration. The Regulator’s “Bima Trinity” – Bima Vistaar, Bima Vahak and Bima Sugam have the potential to be revolutionary. These along with the more high-level principle focused rather than doctrinaire rule based approach will provide the industry the needed flexibility to grow and expand.
Further, the sector has become more competitive with more entrants and also the continued rise of Insure-Tech. Technology will continue to drive the future in the Insurance Industry. Technology is also facilitating the industry to focus more on newer markets through innovation and digital first approach. It has been quoted that the InsureTech sector which is relatively very young is estimated to cross $330billion by 2025. The key trends that are driving this growth are the need based and customised insurance products, use of data analytics and AI to price insurance policies, provide customer service and enhance customer experience.
This is also leading to a trend of developing technology driven ecosystems with focus on sustainability. The increased use of technology and AI is also leading to a higher focus on cyber security, data protection and privacy which will also drive many decisions in the future.
Overall, the year 2023 has helped increase the pace of the Industry transformation especially with the regulator being on the forefront, the increased consumer interest and tech adoption. These will continue to drive the growth of the sector in the coming year.
