Digital alliances, momentum in traditional products key for life insurers in 2023

The life insurance industry faced the brunt of elevated claims during the pandemic, but the period also brought with it increased awareness regarding the need for life insurance and accelerated digital adoption across industry players.

In addition, 2022 also saw a slew of regulatory reforms, including amendments to the IRDAI sandbox, aimed at driving insurance penetration, enhancing customer centricity and leveraging the growing digitalisation of the industry.

Initiatives

Recent initiatives such as opening of e-insurance accounts and setting up the Bima Sugam platform will aid dematerialisation of insurance policies and help integrate the entire insurance ecosystem, industry participants said.

“As we move into 2023, digital transformation, product customisations and innovations, and service enhancements, are likely to continue as the industry looks to further build upon the momentum achieved this year,” said Vighnesh Shahane, MD and CEO, Ageas Federal Life Insurance.

Year gone by

Owing to high interest rates over the last two years, the life insurance sector has been witnessing a surge in traditional products, especially guaranteed plans, which in turn helped life insurers’ improve their margins.

Insurers have also seen an increase in demand for group-term business, where prices have moderated to pre-Covid levels, and strong flows — both new and renewal — in savings plans such as ULIPs (unit-linked insurance plans) owing to a buoyant stock market, industry participants said.

“This year, we saw a rise in savings insurance plans and term plans with features like ‘special exit value’, which added a money-back feature to the traditional term plan,” said Satishwar B, MD and CEO of Aegon Life Insurance, adding that this was aided by the emergence of newer digital distribution avenues through insuretech partnerships.

The way ahead

The ‘digital explosion’ has brought about a new era of re-orientation in the insurance industry, with an unwavering focus on process automation and optimisation to make customer life cycle management seamless, said Sumit Rai, MD and CEO, Edelweiss Tokio Life Insurance.

However, the industry will need to make sure that as they navigate this structural and technological transformation in the industry, all market players and segments are able to keep pace with the rapid changes.

“One challenge that we need to address is to enable digital interactions across agency workflows and make sure that agents find it convenient to do business,” said Kamlesh Rao, MD and CEO of Aditya Birla Sun Life Insurance, adding that the sector is expected to continue seeing double digit growth in 2023 led by more innovation and process changes.