Special Newgen Survey Report on Insurance Adoption in India

The Indian insurance sector has been gearing up for transformative reforms to accelerate growth, enhance accessibility, and boost penetration, thanks to the 2047 vision of ‘Insurance for all’. India’s insurance sector is expected to grow the fastest among the G20 nations, with the total premium expected to rise by an average of 7.1% as compared to the global average of 2.4% during 2024-2028.

Despite offering financial security and peace of mind, insurance adoption, especially for health, life, and motor coverage, was stubbornly low. This reluctance posed a significant opportunity for the nation’s insurance sector.

Methodology: Newgen’s Consumer Insurance Survey 2024

Newgen Software conducted a detailed survey across various demographics to explore the disparities, shed light on the challenges, and identify the opportunities for insurers. This comprehensive survey assessed the level of insurance awareness and the factors influencing the adoption.

The survey encompassed a diverse sample of participants, representing a wide range of age groups, income levels, and geographical regions across India.

Key Findings of the Survey

Finding 1: Awareness and Adoption Gap

While three-fourths of the respondents were aware of insurance products, the survey demonstrated a low adoption ratio. The gap between awareness and adoption, ranging between 4% and 20% for life, health, and motor insurance, called for the attention of the leaders.

Finding 2: Lack of Clarity

A lack of clarity and transparency in policies hindered insurers from reaching a wider audience. Nearly 50% of respondents expected simpler policies, necessitating insurance providers to modify their approach to framing policies.

Finding 3: Preference for Digital Services

A growing number of tech-savvy customers drove insurers to adopt a digital-first strategy. To stay competitive in the market, insurance providers across various lines of business must offer omnichannel interactions and self-service portals.

Challenges Hindering Insurance Growth in India

The survey highlighted several obstacles that contribute to the gap in insurance awareness and adoption. Among the key barriers identified were affordability, product complexity, and a lack of trust in insurance providers.

• The Affordability Barrier: The most prominent issue was affordability, with over 60% of respondents pointing toward high premium cost as a primary factor for dissatisfaction. This was particularly evident in the lines of business, where affordability remains a significant hurdle.
• The Maze of Complexities: The intricacy of insurance products emerged as another critical deterrent. Many consumers reported feeling overwhelmed by the myriad options, the fine print, jargon, technical terms, and lengthy conditions.
• Deficit of Trust: A significant factor was the lack of customer trust in insurance. Many people were skeptical due to negative perceptions, hidden costs, and unpredictable claims processes. Along with distrust, many customers opt out of coverage altogether to avoid the perceived financial risks.

Seeking Opportunities to Bridge the Gap

To address the gap in insurance adoption, insurers should focus on enhancing customer engagement through improved education, affordability, and digital capabilities. These efforts can unlock several key opportunities for insurers, including higher policy uptake, stronger customer relationships, and improved credibility.

Improving the quality of personalized customer service can make customers feel valued. Expanding digital capabilities can also help meet modern customer expectations. AI/ML-powered, user-friendly platforms enhance online experiences with self-service options, accurate risk assessments, and personalized recommendations, simplifying decision-making and fulfilling the growing demand for accessible, tech-driven solutions.

While the survey reveals a noticeable gap between awareness and adoption of life, health, and motor insurance, the ultimate decision lies in the hands of insurers to address the disconnect. India’s insurance sector is at a pivotal moment, and embracing digital tools, enhancing service transparency, and offering flexible plans can help insurers overcome the challenges and open new avenues for a bright future.

Read the complete survey analysis here to create value for both customers and the industry and help India move closer to its ‘Insurance for All’ vision.