Traditional and industry-led models become obsolete. One of the main reasons for the insurance gap is the lack of industry-led models in the smaller cities.
India is a country with enormous latent insurance needs but a lack of information and access for consumers. After so many years of privatization and extensive push, no more than 100 million Indians are insured. Insurance penetration still exists in the top 50-60 cities today. While there are more than 700 million consumers in Tier 3 cities and beyond in the country who need insurance and can afford the premiums, there is a large gap in the availability of the right advice and products due to the lack of distribution for them beyond tier 1 & 2 cities.
Those 700 million consumers come from Real Bharat, who are traditionally underserved. Why – Quite simply because there are no branch networks of insurers outside of the top cities. The traditional, physical, and industry-driven insurance model has made it difficult to reach the country’s large uninsured consumer base. This gap can only be closed with a digital sales model.
Digital insurance and insurance for ‘Real Bharat’ are related. The growth of one segment will drive the growth of the other segment. On the one hand, digital insurance will increase the reach of consumers in the smaller cities; On the flip side, the greater reach of consumers will give digital insurance a double boost to expand its infrastructure and reach.
Below are the reasons why the growth of digital insurance will come from Real Bharat.
Traditional and industry-led models become obsolete. One of the main reasons for the insurance gap is the lack of industry-led models in the smaller cities. With digitization, it would not be necessary for the insurance industry to bring insurance to consumers. Digitally activated apps / technology-based models can reproduce what a fully functional branch can do. In addition, an industry-led model can only serve consumers within a certain radius, the reach of digital insurance is limitless. With nearly 54% of smartphone penetration in the country, insurers can serve consumers even in areas where they may not have a physical network of branches, simply by using a technology-enabled distribution platform. A digitally driven model is clearly the only model that can work in Tier 2/3 and beyond to provide the right insurance plans for uninsured people.
Heightened Awareness – Another reason for insufficient insurance penetration is the lack of awareness, especially in Tier 2, 3 and beyond cities. Digital will play a vital role in raising consumer awareness in these cities. Covid played a significant role in building the prominence of health and life insurance across the country, and digitization will be the next big part to drive the momentum. State insurance programs such as Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana can be further strengthened through the use of digital media.
Increase Insurance Advisor Reach – The reason people in the smaller towns don’t want to pursue insurance advisor careers is because the insurance sector is not a thriving sector in these cities. People who have the potential to become the best insurance advisors may not even be aware of this career. He / she can earn as much as an insurance agent in big cities makes; or more. A digitally controlled insurance framework can train and empower people to become insurance agents without having a branch in that city or district. Online classrooms and digital exams are equally effective in empowering insurance agents in a remote city and making them a living. Thus, the insurance adviser network in ‘Real Bharat’ will grow, which will be a tremendous driving force in accelerating insurance contact among consumers.
Focus on choice, transparency and customer satisfaction – From the era of uninsurable access to digital insurance; Consumers in the smaller cities get access to the best and most suitable insurance plans. While this population group has struggled to gain access to insurance over the years; you are now experiencing digital and real-time insurance. From waiting for days to receive an insurance policy, you will be guided in purchasing the right insurance policy, serviced in real time and experience seamless claims settlement. Digital will also personalize the consumer experience and they will be able to purchase insurance policies based on their family needs and requirements. For a consumer in the most remote part of the country, this is as good as a dream. These satisfied consumers will bring more consumers into the sector.
While the insurance industry has been talking about digitization being a major driving force in bringing insurance to the masses; We also need to note that the real growth in digital insurance will come from Tier 2.3 cities and beyond, where the real supply gap is in insurance demand.