Indian economy continued to show remarkable strength in 2023 amid an evident global slowdown. This strength was largely driven by robust consumption, strong investment activity, and a burgeoning, aspirational consumer class.
The country’s focus in recent years on bringing progressive policy reforms, and digital transformation has also supported this growth trajectory, enabling India to outperform its peers globally, particularly those in the Asian Pacific region.
Driven by this broader economic resilience, the insurance industry also stayed the course on growth. The year 2023 saw some market-moving developments for the industry including the government’s decision to levy tax on income arising from insurance policies with an aggregated premium worth Rs 5 lakh every year, starting April 2023.
There was a sustained emphasis on digitalization to reimagine customer and distributor management processes. The Insurance Regulatory and Development Authority of India (IRDAI) brought multiple reforms, focussing on three prominent themes – strengthening the ecosystem, improving accessibility & reach, and safeguarding policyholders’ interest.
As we now look forward to 2024, I expect regulatory reforms to continue to steer the industry. There are 3 key trends likely to unfold in the new year:
Bima Trinity
IRDAI has unveiled Bima Trinity initiative as a part of its vision of Insurance For All by 2047. The primary objective of this initiative is building affordability and accessibility of insurance. This project, which includes Bima Sugam, Bima Vistaar and Bima Vaahak, is expected to take off next year at different intervals.
Bima Sugam, which is an online marketplace encompassing the entire customer journey from buying to servicing, is expected to make accessibility of insurance much easier. Bima Vistaar promises to be a revolutionary insurance product which seeks to offer affordable protection to the masses. It is expected to be launched by January 2024. Bima Vaahak is a women-centric distribution channel at the Gram Sabha level that aims to empower women by educating them about the benefits of comprehensive insurance thus enabling their financial security.
Together, Bima Trinity will promote financial inclusivity, leverage digital to create an unmatched convenience, accessibility and simplification, affordable coverage, and foster higher participation of women in the insurance industry.
Product innovation
The regulator has been placing a higher emphasis on the need for simplified, personalized products, aligned with the expectations of today’s customer expects. It also introduced the Use & File norms to achieve this goal and has been expanding the scope of these guidelines this year. We expect the regulator to proactively push the industry to leverage technology including new-age solutions like AI, and ML to create better and simplified solutions. We will see more niche products coming into the market in the medium-term as the overall efforts of the regulator through initiatives like state-level insurance project provide higher clarity of nuanced needs of the customers across geographies.
New players will get licensed
While the regulator has already licensed 3 new players this year, it is expected to allow entry of more companies going forward. IRDAI has said that it is looking to issue licenses to 20 new insurers in the immediate future. Additionally, the regulator is also likely to relook the capital requirements, making it entry of new players easy. With an increased competitiveness in the market, the sector will see more innovation, improved distribution models, automation and more.
One of the awaited developments of 2024 is that the government will table the Insurance Laws (Amendment) Bill 2022 as it has the potential to bring another round of positive reforms and bolster growth prospects of the industry.
The writer is MD & CEO, Edelweiss Tokio Life Insurance. Views are personal.
