2016 Opportunities And Challenges For Life Insurers

2015 has been an eventful year for the life insurance industry   as it has witnessed changes that have potential to impact its future course of action.

In 2015 itself, the most awaited Insurance Act was passed by the parliament. It increased Foreign Direct Investment Insurance Policy (FDI) limit for the sector from 26% to 49%. It also gave the Insurance Regulatory and Development Authority of India (IrdaI) more regulatory powers.

After seeing sluggish three years which saw a decline in new business premium, the industry witnessed polarized growth with a few private sector companies leading the growth in the private sector but others including Life Insurance Corporation of India (LIC) witnessed a sustained downward trend.

The industry witnessed several important changes including some successful experiments resulting in new learning’s. The success of the Pradhan  Mantri  Jeevan Jyoti Bima Yojana highlighted the success of a simple product backed by an easy technology led process.

A significant development on the distribution front was providing corporate agents the option of tying-up with multiple insurers in each line of business. This may change the third party distribution landscape in the industry. New formats of distribution such as Insurance Marketing Firms may provide new business models.

A key focus for both, regulators and life insurers, have been improving customer centricity resulting in vastly improved 13th month persistency levels for the industry of 69% in 2015 from a low of 60% in 2012 with some market leaders even nearing 80%. Low customer retention results in sub-optimal outcome for all stakeholders.

Going ahead, in 2016 we can expect to see simplification and transparency in product design with an emphasis on responsiveness relating to ‘customer mindfulness’ and ‘customer engagement’. Focus on sales practices, adequate disclosures, seller accountability, grievance management and claims settlement are likely to occupy the industry’s attention as well in coming year.

Regulation related to no rejection of death claim after three years, will require the life insurers to increase underwriting efforts at the time of policy issuance.

An important catalyst to growth in the industry is the rapid deployment of digital technology in India. This has been aided by deeper penetration of mobile connectivity resulting in the number of connected devices increasing significantly. This has led to social networking sites becoming more popular with Indians than ever leading to large volume of data being generated. In 2016, this will present a huge opportunity for life insurers to tap into this large volume of data and turn conversations into connections.

Digitalization also encourages the industry to have the digital touch throughout the customer journey. E-commerce will continue to strengthen as a channel for new acquisition but at the same time internet penetration will support the research online purchase offline phenomenon in life Investment Insurance Policy.

The customer during their digitally integrated journey will continue to look for more efficient post purchase service and engagement. Digital service solutions and social CRM for on the move service support in the environment where customers are already present are expected to gain more traction over the next few years.  

Source: https://www.policymantra.com/blog/2016-opportunities-and-challenges-for-life-insurers/