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1、Unlocking growth opportunities in Indias insurance sector2 PwC|Unlocking growth opportunities in Indias insurance sectorContents1.Introduction2.Changing customer expectations3.Emerging growth avenues4.Regulatory developments 5.Primary focus areas6.Key considerations7.Conclusion031014081211163 PwC|Un

2、locking growth opportunities in Indias insurance sectorThe Indian insurance market is characterised by low penetration and insurance density.A recent study suggests that the overall insurance penetration in India stands at 3.7%,with life insurance at 2.8%and non-life insurance at 1.0%.1 These figure

3、s are notably below the global average,reflecting an opportunity for insurers to develop their customer network and ensure comprehensive coverage.Furthermore,insurance density in India,primarily driven by life insurance,was approximately USD 95 in 2023,2 which is merely 10.6%of the world average.3 T

4、his scenario reinforces the vast headroom available for insurers in India to expand their reach and ensure growth of the Indian insurance market.Figure 1:Insurance penetration as a%of GDP2.9%2.1%0.4%2.8%2.1%9.2%4.2%1.8%0.7%1.0%1.8%2.3%WorldBrazilRussiaIndiaChinaSouth AfricaLifeNonlifeSource:Table D,

5、Summary,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance1.Table D,Summary,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance2.Table E,Summary,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov

6、.in/handbook-of-indian-insurance3.IbidIntroduction4 PwC|Unlocking growth opportunities in Indias insurance sectorFigure 2:Premium density per capita(in USD)WorldBrazilRussiaIndiaChinaSouth AfricaLifeNonlife36120757702745775281839825234141Source:Table E,Summary,Handbook on Indian Insurance Statistics

7、 2023-24 https:/irdai.gov.in/handbook-of-indian-insuranceThe Indian insurance market consists of a variety of products,including life insurance,health insurance,motor insurance and agriculture insurance along with more targeted offerings such as travel and home insurance.5 PwC|Unlocking growth oppor

8、tunities in Indias insurance sectorIn 2024,the Indian insurance industry witnessed immense growth,especially in the non-life sector which grew by 15%,against a 16.7%increment from 202021 to 2022234,possibly hindered by elevated retail inflation,post-pandemic savings shortfalls and stagnant salaries.

9、Non-life insurance premiums,including health coverage,are expected to grow at an annual average rate of 1315%in the medium term,5 supported by a favourable macroeconomic environment,strong distribution channels,government support and conducive regulatory changes.The health insurance sector,the large

10、st segment,is projected to grow at 12.8%annually from 202428,6 driven by increased consciousness about health,rising medical costs and initiatives like Ayushman Bharat a comprehensive health insurance scheme targeting affordable healthcare for millions of underserved citizens.Motor insurance is expe

11、cted to grow at 7.9%annually from 202428,7 driven by a revival in automobile sales,rising incomes and demand for electric automobiles.Similarly,agriculture insurance is predicted to grow at a more modest rate of 2.5%in the medium term,8 supported by technological innovation and the governments suppo

12、rt in to improve crop insurance infrastructure through initiatives such as Pradhan Mantri Fasal Bima Yojana(PMFBY).Figure 3:Premium inflows of non-life insurance(in INR lakh crore)PrivatePublic0.931.051.141.311.581.880.720.770.750.780.860.942018-192019-202020-212021-222022-232023-24Source:Table 40,P

13、art II,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance4.Table 40,Part II,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance5.India non-life insurers face impact from 1/n rule transition:CareEdge|Insurance

14、Asia6.https:/ Survey 2023-24:Crop insurance to see growth from 2024 onwards,government tech push to boost sector-The HinduInnovation and growth trends in non-life insurance6 PwC|Unlocking growth opportunities in Indias insurance sectorSome of the recent shifts in the non-life insurance industry are:

15、9.Table 44,Part II,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance10.Ibid11.Ibid12.Ibid13.Ibid14.Table 2,Part I,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance15.IbidImprovement in key metrics of life i

16、nsuranceThe life insurance sector demonstrated a steady growth rate of 6%in 2024,but this growth rate fell short of the 13%achieved in 202314 primarily due to modifications in tax exemption limits for high-value policies.Looking ahead,an annual growth rate of 10%is anticipated from 2024 to 2028,15 f

17、uelled majorly by growing demand from the middle class and younger demographic segments,as well as the adoption of InsurTech solutions.Health insurance is surpassing motor insuranceOver the past decade,health insurance premiums grew nearly 400%to INR 93.5 thousand crores,9 surpassing motor insurance

18、s 130%growth to INR 77 thousand crores.10 Evolving customer priorities,growing healthcare expenses and an increasing prevalence of lifestyle diseases are some of the factors contributing to this trend.Standalone health insurers(SAHIs)are leading the growth in the sectorSAHIs achieved a CAGR of 32%,o

19、utperforming private insurers at 22%and public insurers at 14%.11 This growth is fuelled by high persistency rates,pricing power and low loss ratios,making SAHIs a key player in the sector.Improvement in incurred claims ratioThe non-life insurance sector saw better risk management with private firms

20、 maintaining stable ratios(7580%)12 and SAHIs operating in a tighter range(5563%),13 except during the COVID-19 pandemic.Public service undertakings(PSUs),though lagging,have demonstrated a positive reduction trend during the past few years.This pattern indicates insurers growing ability to optimise

21、 claims management,contributing to the financial wellness of the non-life insurance sector.7 PwC|Unlocking growth opportunities in Indias insurance sectorSome of the recent changes in the life insurance market are:16.Table 15,Part I,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in

22、/handbook-of-indian-insurance17.Table 28,Part I,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance18.IbidThe growth of insurance products in India accentuates a rapidly evolving market that has successfully adapted to cater to varied customer demands.As

23、the industry continues to grow,it is essential to understand the changing demands of the customers which are primarily driven by evolving customer expectations,emerging growth areas and increasing conduciveness of the regulatory frameworks.Together,these factors are setting the stage for the next wa

24、ve of advancement and pioneering innovations in the Indian insurance sector.Rising claim settlement ratios boosting customer trustPrivate insurers have seen a rise in their individual claim settlement ratio,rising from 97%in 202021 to 98.9%in 202324,which is slightly better than public insurers sett

25、lement ratio,which was 98.15%in 2023-24.16 This improvement has bolstered consumer trust,encouraging prospective customers to explore offerings from private insurers as well,especially in Tier 2 and Tier 3 cities where the public insurer was often the sole choice.Increased persistency ratios enhance

26、 loyaltyThe 61st-month persistency has also shown improvement.Private insurers have led this change,with persistency rates improving from 21%to 45%17 over the past decade.This improvement can be attributed to customer-focused strategies,innovative products and proactive customer engagement.Public in

27、surers have seen a steady improvement from 44%in 2015 to 49%in 2024 and,due to the fluctuations over the years,it has even reached 50%in some years.18Improvement in key metrics of life insurance sectorFigure 4:Premium inflows of life insurance(in INR lakh crore)PrivatePublic2018-192019-202020-212021

28、-222022-232023-241.711.942.252.653.083.543.383.794.034.284.754.75Source:Table 2,Part I,Handbook on Indian Insurance Statistics 2023-24 https:/irdai.gov.in/handbook-of-indian-insurance8 PwC|Unlocking growth opportunities in Indias insurance sectorAs customers become financially aware,their expectatio

29、ns for insurance products and services also evolve.Customers now ask for personalised,simple,transparent and accessible solutions.Technological advancements,socio-economic modifications and cultural trends are reshaping consumers demands.Therefore,insurance firms must ensure that their growth strate

30、gies are aligned with the changing needs and preferences of their clients.If insurers struggle to adapt,they risk stagnation,losing their competitive edge and face impending decline.With numerous established insurance companies and emerging InsurTech firms,customers now have many options to choose f

31、rom for their insurance services who can fulfil their needs.Some of the aspects which customers seek in their insurance providers are:Changing customer expectationsTailored and personalised product offerings with:simple policy terms and conditions including benefits and exclusions tailored coverage

32、levels availability of multiple insurance offerings within a singular policy flexible pricing to accommodate diverse budgetary needs.Simplified accessibility and convenience through:consistent and accurate information,agnostic to the channel of interaction self-service models,supported via a suite o

33、f interactive tools and resources,be it insurance calculators or comparison charts secure touchpoints for customer transactions,increasingly varying cyber fraud 24x7 omnichannel customer support.9 PwC|Unlocking growth opportunities in Indias insurance sectorChanging preferences of customers have und

34、erscored the imperative for insurance companies to invest in digitisation to enhance customer service.However,a key challenge for insurers is how these investments can be targeted towards areas which can align with the companys larger objectives.Achieving this alignment requires a balance between bo

35、th immediate and long-term goals.Quick turnaround times with:single window processing with minimal redirection streamlined documentation,limited paperwork and reduced administrative hurdles transparent claim processing with minimal manual checks guaranteed claim approval timelines(e.g.3 hours for he

36、alth,12 days for motor/life)notification and updates in real-time regarding the status of applications,claims and other requests.Consistent customer engagement and interaction using:personalised communication via e-mails,messages and newsletters informative content through mediums such as blogs,webi

37、nars and workshops periodic updates about existing policy,new product launches,and changes in terms and conditions surveys and feedback forms aiming to improve the quality of service based on customer opinion rewards in the form of discounts,bonuses,or special offers,to ensure continued partnership.

38、10 PwC|Unlocking growth opportunities in Indias insurance sectorAccording to a recent survey,merely 30%of people in Indias Tier 2 and Tier 3 cities possess insurance policies.19 These cities are emerging as major growth areas for insurers driven by rapid demographic and socio-economic changes.An exp

39、anding middle class,coupled with increasing disposable household incomes and urbanisation,has chosen to increasingly prioritise financial security,driving demand for insurance products.The COVID-19 pandemic highlighted the importance of health and life insurance,with more and more people from these

40、areas seeking insurance coverage.Government campaigns such as Ayushman Bharat Yojana aim to provide health insurance to economically weaker sections while technological innovations coupled with digital adoption are driving market growth.With more than 50%of smartphone sales in Tier 2 and Tier 3 citi

41、es,20 and mobile data usage 30%higher than in metropolitans21 insurers can increase their presence in these areas via digital platforms,by facilitating access to a wide-range of insurance products,simplifying policy documents and ensuring shorter claim processing timelines.The establishment of the I

42、nternational Financial Services Centres Authority(IFSCA)at GIFT City,Gujarat,also aims to simplify regulatory processes,enhance global connectivity,and setup Indias insurance sector to integrate and compete with international players for servicing the needs of global customers.Insurers are tailoring

43、 product portfolios and distribution strategies to cater to the needs of emerging markets.New-age players are bringing pioneering offerings in health,travel,pet and event coverage to the market.This ranges from flexible health plans and real-time travel assistance to specialised pet insurance polici

44、es and event-specific protection.These areas,once considered niche,now aim to address emerging customer needs and add a refreshing touch to the Indian market which is saturated with policies having limited differentiation in areas of traditional coverage.Although challenges like low penetration and

45、higher servicing costs persist,the headroom for growth is substantial.Insurers can foster financial empowerment and help realise the Insurance for all by 2047 vision by leveraging technology and building more extensive distribution networks across channels.Emerging growth avenues19.https:/ PwC|Unloc

46、king growth opportunities in Indias insurance sectorTo support the growth of the insurance sector in India,the Insurance Regulatory and Development Authority of India(IRDAI)has begun a comprehensive regulatory overhaul which intends to create a more conducive environment for insurers to conduct busi

47、ness and innovate.It consolidates 34 existing regulations into six principle-based ones22 and has also introduced two new regulations to ensure simplicity and provide greater clarity.The reforms prioritise setting minimum business obligations for insurers while operating in rural and social sectors,

48、establishing a digital marketplace called the Bima Sugam which streamlines the registration processes for insurers and implements a comprehensive framework for governance.They also emphasise the importance of creating innovative insurance products,supporting foreign reinsurance companies,and adoptin

49、g prudent risk mitigation practices.The anticipated regulatory changes signal promising prospects with a focus on growth and innovation.The plan for permitting 100%foreign direct investments(FDI)23 could attract substantial foreign capital,strengthening the industrys capital base and encouraging inn

50、ovation as foreign entities could bring in innovative offerings backed by advanced technologies,making the consumer choice rich.Proposed changes in bancassurance and distribution regulations aim to reduce reliance on parent banks,encouraging diversification and independent operation thereby enhancin

51、g competition,along with the intent to move towards a principle-based reserving(PBR)which focuses on dynamic reserve calculations,considering future economic conditions and insurer-specific factors like mortality and expenses wherein insurers must hold the higher of reserves calculated using prescri

52、bed factors or those considering various future conditions.The push from industry experts and relevant stakeholders for a reduction in Goods and Services Tax(GST)on health and term insurance policies could make policies more affordable,potentially improving insurance penetration.Furthermore,a compos

53、ite insurance licence could streamline costs,and increase operational efficiency while simplifying compliance for insurers,potentially providing more comprehensive insurance options and lower premiums for consumers.All changes,implemented or planned,aim to foster innovation,enrich competition,ensure

54、 sustainable growth and improve consumer access to insurance products,taking India closer towards achieving its goal of Insurance for All by 2047.24Regulatory developments22.https:/ PwC|Unlocking growth opportunities in Indias insurance sectorEvery insurer has a distinct approach towards servicing c

55、ustomers.For insurers to adapt to the rapidly evolving market dynamics and regulatory landscape they must prioritise strategic focus on best practices that improve customer satisfaction and streamline service delivery.To ensure sustainable development while remaining competitive in the ever-changing

56、 insurance landscape,companies need to focus on the following strategic growth areas:Primary focus areasCustomer-centric process transformation Simplify the onboarding process for new customers.Offer extensive personalisation and customisation.Implement greater transparency during the claims settlem

57、ent process.Facilitate easy policy management and renewals.Utilise digital content and tools to improve customer engagement and inculcate brand loyalty.Ensure proactive communication and assistance to ensure quality customer experience.Product and service simplification Flexible and modular product

58、design.Distinctive product features such as usage-based,green insurance,etc.along with value-added services.Transparent and easy to understand pricing structures.Succinct and simplified policy terms,benefits and conditions.13 PwC|Unlocking growth opportunities in Indias insurance sectorBy implementi

59、ng comprehensive strategies,insurance companies can be well-equipped to enhance their market penetration and achieve substantial sales growth.These initiatives will help optimise operations while assuredly elevating customer satisfaction.They will also promote innovation and resilience in an increas

60、ingly dynamic industry.By implementing these transformations,insurers will be better positioned to cater to the varying needs of customers across segments more effectively and efficiently,thereby sowing the seeds for long-term success and sustainable growth within the Indian insurance sector.Embrace

61、 digital transformation Build user-friendly digital platforms.Automation tools to streamline key processes and repetitive administrative tasks.Develop digital ecosystems including a robust API strategy to integrate with third-party services and platforms.Collaborate with strategic technology partner

62、s.Ensure scalability and flexibility in operations.Robust cybersecurity measures to protect customer data.Develop an agile workforce Flexible work arrangements.Use digital collaboration tools to facilitate teamwork.Foster a culture of innovation.Invest in employee upskilling for future growth.Create

63、 mentorship programs to facilitate knowledge transfer and professional development.Delivery model optimisation/expansion Easy access and availability of services for the customers.Integrate various service channels to offer consistent customer experience.Scalable operating model to accommodate growt

64、h.Data-driven channel strategy to tailor marketing efforts and optimise channel usage.14 PwC|Unlocking growth opportunities in Indias insurance sectorBefore implementing any strategic initiatives,it is crucial for insurance companies to meticulously evaluate and consider key considerations which cou

65、ld determine the direction and success of these efforts.These considerations help ensure that the initiatives are well-planned and executed while being tailored to cater to any specific needs and challenges of different insurers.By addressing these elements proactively,insurers can mitigate risks,op

66、timise resource allocation,and achieve their strategic goals more effectively.Key considerationsCustomer-centric process transformation Access to the required data and analytics is essential to perceive individual needs and preferences.Design products which can fulfil the needs and preferences of va

67、rious customer segments.Build digital tools and platforms to optimise the onboarding process.Access KYC and other documents directly from central repositories to ensure a seamless submission process.Enhance customer service with 24/7 support and chatbots for routine inquiries.Collect and incorporate

68、 customer feedback for continuous service improvement.Measure the success of personalisation/customisation initiatives and incorporate it back into customer communication to increase customer satisfaction and retention.Implement systems to provide customers with real-time updates on their queries,sp

69、ecifically on claims.Adopt self-service tools for policy management and renewals.Product and service simplification Offer various choices of customisation allowing customers to mix and match coverage options.Identify smaller segments in products and identifying potential areas with headroom for grow

70、th.Map patterns in customer demand to leverage first mover advantage by prioritising innovation,e.g.pet insurance.Enhance technical capabilities for flexible and modular product designs.Ensure transparency in pricing models incorporating various influencing factors.Optimise costs to maintain competi

71、tive and profitable pricing.Simplify policy language to make terms and conditions easily comprehensible for customers.15 PwC|Unlocking growth opportunities in Indias insurance sectorEmbrace digital transformation Leverage AI and data analytics to further personalise customer interactions to improve

72、risk assessment.Balance automation with human involvement in high-value relationships.Protect customer data with comprehensive security measures to prevent cyber fraud.Development of an agile workforce Establish necessary IT infrastructure and security protocols to allow flexible working environment

73、s.Digital collaboration tools to synchronise organisational needs and team dynamics with current systems and workflows.Ensure that the sales force is ready for adaptation in compensation,training and processes.Delivery model optimisation Target the right markets and customer segments specific to the

74、 insurer.Expand their presence in tier 2/3 cities.Identify relevant and effective distribution channels(digital,agents,brokers,bancassurance).Develop omnichannel experiences that combine self-service and physical touchpoints.The Indian insurance market is undergoing a transition which presents sever

75、al opportunities for insurers.However,the key question insurers need to address is how they can capitalise on these opportunities.Rising consumer awareness and increasing regulatory oversight has led to the expansion of the insurance sector in Tier 2 and Tier 3 cities.To leverage this expansion insu

76、rers must consider diversifying their product range to accommodate diverse customer preferences and facilitate personalised products,easy accessibility and swift service.They should also focus on adopting an agile,technology led approach and proactive communication to offer customised experiences.By

77、 prioritising technology-driven,long-term solutions,insurers can significantly improve customer experiences and make internal operations more efficient.Furthermore,implementation of strategic initiatives with a long-term outlook and a customer-centric approach can foster innovation and ensure adequa

78、te preparation to adapt to future trends.Conclusion16 PwC|Unlocking growth opportunities in Indias insurance sectorpwc.inIn this document,PwC refers to PricewaterhouseCoopers Private Limited(a limited liability company in India having Corporate Identity Number or CIN:U74140WB1983PTC036093),which is

79、a member firm of PricewaterhouseCoopers International Limited(PwCIL),each member firm of which is a separate legal entity.This document does not constitute professional advice.The information in this document has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limite

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82、any decisions readers may take or decide not to or fail to take.2025 PricewaterhouseCoopers Private Limited.All rights reserved.AW-April 2024-M&C 44912Data Classification:DC0(Public)About PwCAt PwC,our purpose is to build trust in society and solve important problems.Were a network of firms in 149 c

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84、or further details.2025 PwC.All rights reserved.EditorContributorsMadhavi Gupta,Udbhav TandonRubina MalhotraDesignAkshay WadhawanContact usAmit RoyPartner,Leader Insurance and Allied BusinessesPwC IPragya ShreeExecutive Director,Financial Services Advisory PwC IGouri GuptaDirector,Financial Services Advisory PwC INitin JainPartner,Financial Services Advisory PwC I