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India’s Insurers Embrace Digital’s New Normal


Our latest study reveals that Indian insurers are contending with business disruptions across the value chain, which are impacting traditional views of their customers, channels, competition and operations.

Some the trends impacting India’s insurance industry include heightened merger and acquisition (M&A) activities, increasing participation of foreign partners and reinsurers, the entry of Lloyd’s of London into the reinsurance market, IPOs from public insurers and elevated competition by all of the recent entrants. Insurance carriers are also challenged by low insurance penetration levels (3.49% currently), rising commission payouts, volatile economics and changing regulations.

Meanwhile, digital technologies are already disrupting businesses, accentuated by government initiatives and the entry of digital technology providers. Interestingly, the rate at which digital is penetrating in India is faster than ever before.

In our quest to better understand the pulse of the industry, we interviewed several C-suite executives across leading tier-1 life and general insurers, tier-2 life and general insurers and insurtechs across India. We were able to identify the likelihood and impact of the potential digital disruptions, and the potential future end-state scenarios for the industry. This article lists some of the key findings of our research.

Insurance Industry Headwinds

India’s insurance companies are firmly onboard the digital bandwagon. They are testing digital prototypes and thinking along the value chain. Prudent regulations and newer government initiatives such as ”Modicare” are reinforcing the need to digitize operations, from front to back. Following are some of the key insights we gained from the interviews.


  • Adoption of online/mobile channels (urban and rural): The adoption and trust of the online/mobile channels for buying is said by respondents to have increased among urban and rural populations. Over the last year, approximately 10% to 15% of the rural/urban Indians are moving beyond just researching to buying high-value and complex goods and services.

  • Adoption of sharing economy (urban and rural): More than the 80% of respondents said that both rural and urban Indians are likely to trust the sharing economy and share more personal goods and services with others through these platforms.

  • Adoption of connected health devices/Wearables (individuals): All respondents said that adoption of wearables will continue to increase significantly in the near future. They also indicated that Indians would be very comfortable sharing their personal data, such as health, in return for value additions like assistance, discounts, etc.

  • Adoption of AR/VR devices (individuals): The majority of the tier-1 and new-age insurers said that Indians will become better acquainted with these devices and will be comfortable interacting with business providers, something that was not agreed to by a majority of tier-2 insurers.


  • Rise of web aggregators/Marketplaces & online brokers/agencies: All respondents, including new-age insurers, said that web aggregators will be a prominent channel in the future, but it won’t displace the traditional agent and bancassurance channels.

  • Rise of other insurance aggregator incumbents: Respondents unanimously believed that the industry could see several businesses expanding their value chain into insurance aggregation. Established brands such as Flipkar and Paytm could serve as new distribution channels for established insurers.


  • Rise of non-traditional insurance incumbents: All tier-2 insurers voiced a belief that non-traditional players that have entered insurance distribution wouldn’t move further into insurance underwriting given the insurance regulation complexity. About 90% of the tier-1 insurers and new-age insurers, however, said the opposite.

Business Models

  • Rise of peer-to-peer insurance models: Roughly 80% of the insurers interviewed, including new-age insurers, said that peer-to-peer insurance would take more than five years to mature in India.

Future-State Scenarios for Indian Insurers

As one CIO of a leading Indian insurer told us, ”Digital is changing the Indian insurance landscape. It is imperative for us to innovate and stay relevant.” The potent disruptions and limited disruptors were marked with high relevance for insurers, as they are slated to disrupt different nodes of the insurance ecosystem. Figure 1 depicts a relevance heat map based on the survey results and our viewpoints.

Figure 1

Based on our interviews, the disruption heat map indicated high-level relevance of the trends — adoption of online platforms, sharing economies and connected devices among customers and industries; the rise of web aggregators and other aggregator incumbents; the rise of chatbots; and the rise of new-age insurers and insurtechs. Relevance levels are factored based on both the likelihood and impact levels.

Some of the possible future states for insurers derived from the relevance levels of the different disruptions considered include:

  • Your traditional risks will be overtaken by new risks: Convergence of digital technological advances with Indian consumers and industries is reshaping the face of traditional risks and exposures across the insurance sectors.

  • Your customers may not be the same: The millennial digital Indian customers of tomorrow, thanks to rapid urbanization and digital penetration, will be more aware of and demanding in their product and service choices.

  • Your traditional insurance products may take a new shape: Driven by digital companies’ experiences outside of insurance and their exposure to new-age digital services, Indian customers will increasingly expect more flexibility in their coverages — with the ability to switch on/off coverages, expand/reduce coverage limits and blend coverages to obtain cross-asset protection.

  • Your competition will no longer be homogeneous: As digital technologies become pervasive, they remove the barriers of entry such as prohibitive costs and enable the scaling of operations on demand. As a result, the competitive set is bound to change.

Preparing for the Future

The digital future is ripe for insurers. We believe that it is critical for insurers to frame business strategies to ensure that they are flexible enough to effectively harness technology-enabled forces of change. Some of the key themes insurers need to follow are:

  • Redesign current products & service offerings: To take on the future forms of risks and increase the ”buying insurance” culture among millennial Indians, insurers need to look at remodeling their current products. The traditional ”one-size-fits-all” approach will not sail well into the future.

  • Develop strategic partnerships: With the Indian insurance landscape expanding to include new distribution agencies, new-age insurers and insurtechs, it is important for insurers to explore strategic partnerships to achieve scale across the value chain. All of the life and general insurers we interviewed said that they plan to increasingly focus on strategic partnerships over the next three to five years.

  • Tech up the channels: Artificial intelligence-based tools and solutions can help traditional agents and banca agents sell better by providing real-time customer insights, products/coverage recommendations and sales support.

  • Future-proof enterprise IT: Indian insures will progressively move to an ecosystem of continuous changes in their operating and business models, rewritten by evolving technology advances. The key to success for insurers is to ensure business agility. Winners will be those carriers that deploy flexible IT systems and processes required to enhance business agility.

  • Ensure data at the core: Indian insurers should look at investing in creating a centralized data warehouse scalable enough to capture and store the real-time data and business intelligence systems to make informed business decisions, backed by an effective data strategy.

Looking Forward

The proliferation of digital technologies and thinking, combined with improving socioeconomics across India, are reshaping the country’s insurance ecosystem and will continue to bring dramatic changes over the next few years.

Insurers need to embrace new business and IT strategies that can withstand impending market changes wrought by consumer need, market shifts and new regulatory mandates. Investment in digital technology will prove to be a huge differentiator in the coming years.

”Innovate soon or perish” is a new mantra shared by the Indian insurers with whom we spoke. All of them are keeping a close eye on emerging digital technologies to make sure that their organizations are among the survivors.

To learn more, read the full report “India’s Insurers Embrace Digital’s New Normal,” visit Cognizant India page or insurance section of our website, or contact us.

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India’s Insurers Embrace Digital’s New Normal