The changing face of life insurance in India

Digital, a small word with just seven characters, is the largest trend of our times and is shaping, disrupting and transforming many industries. Insurance is no exception.

Three key developments are redefining how insurance business will be done. The advent of tablets, the explosion of smartphones and the rapid reduction in the cost of computing, coupled with advanced technologies like machine learning, artificial intelligence and bots, is allowing insurers to completely re-imagine their business models. Combine this with the emergence of the connected world—the true Internet of Things (IoT), with a wide variety of devices connected to capture rich real-time data. Connected cars, humans and even homes is soon going to be the norm. The third development is the ability to garner and use data. Data is really the new oil.

The combination of these three developments enables the delivery of a world class experience to customers across various digital channels. The business of insurance is being completely redefined. Insurers no more see themselves as just payers to cover unforeseen events but as partners to offer support and even prevent such events from occurring. The business of insurance is moving away from protection to prevention. In the process, many insurers are transitioning from being just insurance product providers to being providers of an ecosystem of services.

Let’s do some crystal ball gazing to see what life insurance has in store for you as a customer.

Every customer journey will be completely re-imagined. Take for example the mundane task of a change of address. Imagine a world where insurers will proactively reach out to you basis partnerships with telcos (GPS tracking will throw up alerts about potential relocation) to prompt you to provide the latest information. You will experience a significant enhancement in customer engagement. More often than not, the underlying trigger for life insurance purchase is a change in life stage e.g. new job, change in job, promotion, marriage, child birth, etc. Imagine an existing customer is in the hospital and his wife has just delivered a baby. While his joy knows no bounds, he also feels an additional sense of responsibility towards his new born and his family.

At this point of time, he will get a message from his life insurance company congratulating him on this event. The message will also explain how buying a child education plan that matures 20 years hence would help them cover their child’s college education and that a friend of his recently bought a similar plan. And this could be availed of at the click of a button, with no additional documentation.

Every time the parent gets a promotion or a pay hike, the life insurer will make a targeted reach out with a customized message for cover enhancement or top-ups. The possibilities are limitless with the right data capture and use of analytics and technology. You will see insurers adopting a lot of scenario- or situation-based sales and these engagement options will be inserted into your regular journeys.

Serving retirees is clearly going to be one of the largest needs for India going forward. According to World Bank data and projections, it is estimated that India will have over 350 million people over the age of 50 years by 2030. Couple this with the increasing life expectancy for urban Indians, which has grown substantially over the past few decades and is already more than 70 years for men and over 73 for women. And that will be even higher for the more aware segment within urban India. This is just the average. Add to this the results of a research study by a French Asset Management company that reported India ranked last in their Global Retirement Index (GRI) in 2016 amongst 43 nations in the survey. This all adds up to create a perfect mix, talk about a market begging for disruption.

You are likely to experience a comprehensive ecosystem of services for the elderly serving a range of needs including experts catering to their travel requirements, mental health counselors, health care providers, will services, estate planning agents etc. And all of these offered on a single holistic platform where financial contributions, vested benefits, periodic payouts are readily accessible. This could be a one-stop shop for all retirement needs readily accessible at the swipe of a screen.

It is clear that the world has moved to a stage where the risk of dying too early (the traditional basis of life insurance) is far outweighed by the risk of living too long. The question you need to answer is whether you are well covered to live long!

Alpesh Shah is a Senior Partner and Director and leads the APAC insurance practice for The Boston Consulting Group. Nipun Kalra is a Principal at The Boston Consulting Group. This is the first part of a three part series focused on the changing face of Indian insurance sector. All views are personal.