The launch of Bima Sugam, an online marketplace for all insurance services, and the rollout of 5G services are expected to help insurance reach to a wider population and provide a hassle-free experience for customers and insurers in India, says GlobalData, a leading data and analytics company.

The Insurance Regulatory and Development Authority of India (IRDAI) announced the launch of ‘Bima Sugam’, a tech-based insurance exchange platform for insurance sales, renewals, and post-sales services, including claim settlements, in January 2023.

Chandini Sharma, Insurance Analyst at GlobalData, comments: “Bima Sugam will significantly reduce the time spent in buying an insurance policy and offers an easy portability facility to policyholders. IRDAI is encouraging insurers to provide premium discounts on policies sold directly on the platform, which will further boost policy sales.

“For insurers, the marketplace will significantly remove intermediary commissions and reduce overall operating costs. It will also facilitate the entry of neo insurers that adopt a Sandbox approach and offer unique and niche products in the market.”

The overall insurance penetration rate in India was 3.8% in 2021, which is mostly concentrated in urban areas. This is very low when compared to the other developed markets in the APAC region and highlights the growth potential.

Traditionally, insurance distribution in India is dominated by agents, brokers, and bancassurance, and the channels collectively accounted for 90.6% and 66.6% share in the life and general insurance segments in 2021, respectively.

However, the trend is now changing with an increase in digital distribution, supported by the growing smartphone and internet penetration in the country. Furthermore, the rollout of 5G in October 2022 will allow insurers to expand their digital footprint in tier two and tier three cities, and gradually to rural areas.

Sharma continues: “5G networks, which enable faster delivery and processing of consumer data, will ensure a rapid digital evolution in the area of underwriting, distribution, and policy servicing.”

By leveraging 5G networks, insurers will be able to more accurately track and monitor policyholders’ data via wearables and other advanced tracking devices to profile risks and make informed decisions on product designing and underwriting. Insurtech players riding the digital wave are already innovating and leveraging this opportunity by creating customized products with faster and better consumer journeys.

Sharma concludes: “IRDAI’s initiative to launch the Bima Sugam marketplace is a welcome step towards wider adoption of insurance. The platform along with the launch of 5G will provide new growth opportunities for insurers while making purchasing journey easier for the buyers.”