The approval granted earlier in January 2020 to around 15 companies to develop new insurance products in India shows how the market there is changing fast. For decades Indian insurance was paper based, usually sold via agents and very much focused on life and illness products lines. But the rapid growth that India has seen in the last decade in particular has created a consumer economy, and a smartphone based buying experience.
IRDAI, the regulatory body, approved various products for the 2020 Sandbox – similar to the Google idea whereby new websites are on a trial basis. These include things like wearable device fitness tracking and wearable health insurance policies, online motor claims and salvage auction, co-payment policies, online PAYG driver insurance and more.
There are also start-up ideas like Shagun gift insurance. This is a wedding gift, often cash inside a decorated envelope, or perhaps something made from 21ct gold, which is given at weddings. There is an obvious theft risk at an event where over 200 guests may attend, plus catering staff. Other companies in India are targeting particular niches, such as crop insurance, or ridesharing/delivery rider cover, which has seen Ola and Uber both offer products, with micro-payment options to generate premium revenues.
The Life market is predicted to grow by 12-15 percent annually, according to IBEF. Crop insurance accounts for about 30 percent of non-life insurance product lines, plus there has been strong growth in the motor market, as car and motorcycle sales have boomed over the last 15 years.
Big insurers are watching India with interest. Lloyd’s Chairman Bruce Carneige-Brown recently told the media that he wanted syndicates to gain more access to India, and like many others expressed a level of frustration at the Indian government’s reluctance to deregulate their market as regards ownership of insurance companies, which currently stands at 49 percent.
Lloyd’s syndicates have money to invest for sure, but then, why should local companies give up their lucrative revenue streams to outside players? Investment is a financial calculation of course, but it’s also an emotional thing – people buy into dreams, as much as they gamble on a future return on capital. In this regard, India has a powerful belief in its own destiny and UK companies would be wise to avoid any accusation of colonialism by venture capital. Just saying.
Insurance Edge thinks that big names will have to forge long-term partnerships to enter and succeed in the Indian market for many years ahead. Those companies who offer a wealth of technical know-how, marketing muscle and can develop new ideas whilst employing locally based staff may find that doors open that bit quicker for them.