India is expected to overtake the United States to become the world's second-largest economy in purchasing-power-parity terms by the late 2040s, according to the Organisation for Economic Co-operation and Development.
As the country grows, the local insurance industry is expected to expand the fastest among G20 nations. The sector will be instrumental in underwriting development and business risks, enabling this growth and catering to the life and health protection of a growing middle class. This is borne out by the Insurance Regulatory and Development Authority of India's projection that the local insurance market can grow from the world's 10th largest today to the sixth largest within a decade.
This growth comes against the backdrop of climate change, which is increasing the frequency and severity of extreme weather events and touches every aspect of our economy and society. Insurers often adjust to climate-driven risks by ceasing underwriting or raising premiums for exposed sectors, such as agriculture, making coverage unavailable or less affordable. However, they must continue to play their part in enabling the country’s development across all industries.
As the country grows, the local insurance industry is expected to expand the fastest among G20 nations. The sector will be instrumental in underwriting development and business risks, enabling this growth and catering to the life and health protection of a growing middle class. This is borne out by the Insurance Regulatory and Development Authority of India's projection that the local insurance market can grow from the world's 10th largest today to the sixth largest within a decade.
This growth comes against the backdrop of climate change, which is increasing the frequency and severity of extreme weather events and touches every aspect of our economy and society. Insurers often adjust to climate-driven risks by ceasing underwriting or raising premiums for exposed sectors, such as agriculture, making coverage unavailable or less affordable. However, they must continue to play their part in enabling the country’s development across all industries.
Regulatory Tightrope
As risk underwriters are to most industries and individuals, insurers are custodians of an enormous amount of confidential data, including people's personal health data, that can be used to facilitate identity theft if stolen. Hence, data privacy frameworks such as India's Digital Personal Data Protection and the EU's General Data Protection Regulation impose significant and increasingly onerous compliance demands on the insurance sector.
On the positive side, initiatives like India's Jan Dhan, Aadhaar and Mobile programme have increased customer comfort in sharing data with financial services providers, enhancing the potential for data collection. However, insurers must ensure that data access does not come at the expense of security.
Insight Advantage
Amidst these challenges, insurers must act faster to cater to evolving market conditions. The firms that react fastest will gain a significant advantage over their competitors.
It is, therefore, timely that the advent of generative artificial intelligence offers insurers the ability to leverage their data and analytics for better and faster decision-making while increasing efficiency and reducing cost.
Insurance companies must leverage modern data cloud platforms to create a competitive "insight advantage" and maximise Gen AI's transformative potential. This approach enables insurers to make strategic, data-informed decisions that spur growth, enhance cost competitiveness, and improve customer experiences. Simply put, legacy data platforms — frequently built on-premises — need more capabilities to deliver on the promise of original AI business use cases. They need to be able to deliver on-demand services to build and deploy additional analytics-driven use cases.
Through software-as-a-service data and analytics solutions, insurers can leverage data, analytics, and AI across crucial functions, including product development, pricing, risk selection, underwriting, claims management, and customer engagement. Integrating first-party Internet-of-Things data with third-party demographic information facilitates the development of detailed customer profiles for underwriting and risk selection. This data fusion can then inform machine learning models, improving risk assessments.
In product development and pricing, SaaS data and analytics solutions can efficiently process and analyze data to help capture emerging market opportunities. Claims management also stands to benefit, with AI-driven tools enhancing efficiency and customer satisfaction by assisting adjusters with routine tasks. The problem is that overhauling the entire data estate can seem daunting. But there is good news: insurance firms don't have to do it alone.
Today, cloud-based SaaS data platforms enable insurance organisations of any size to build foundational data, AI, and analytics capabilities so they can confidently and profitably move forward and prepare for the business imperatives ahead.
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Deeper Insights
Insurers must manage internal and external data and develop advanced analytics practices to remain competitive. Given the vast availability of third-party data, first-party representation can be augmented by a broad set of demographic data for individuals or firmographic data for commercial businesses. Integrating unstructured data, such as property aerial imagery, claim case notes, or weather data, further supplements a broader view like this. Insurers can then gain a 360-degree view of customers, agents, and brokers, which will be crucial as Gen AI projects mature.
That's because a 360-degree view enables insights across numerous business processes, including risk selection, prospecting, underwriting, onboarding, servicing, claim triage, fraud detection, customer journey building, and more. Managing both internal and external data while fostering advanced analytics capabilities is critical and insurers that equip themselves for success will have the insights to outpace the competition and thrive.
Vijayant Rai, managing director for India at Snowflake.
Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.
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