Policybazaar: From paperwork to platforms – breaking bottlenecks in global reinsurance

For the person in the street, an insurance policy protects against risks to life and health, but what protects that insurance policy?

The answer, of course, is reinsurance, the ultimate financial shock absorber for the insurance industry. Reinsurance bears large-scale financial jolts, and precisely, this is what keeps your insurance up and running.

The problem is, this critical shock absorber is often weighed down by a persistent and debilitating digital lag between insurers and reinsurers.

The information supply chain is creaking under its own weight. Imagine gathering vital data, only to have it manually processed and passed down the line. By the time the reinsurer gets this information, it’s often outdated.

Not just that, this often also results in inaccuracies stemming out due to the nature of this process.

This forces the reinsurer to make decisions based on an outdated picture, a delay that introduces friction, inflates costs and blunts the industry’s ability to respond to a rapidly changing risk landscape.

This slow, fragmented flow means reinsurers are often pricing risk by looking in the rearview mirror. The result? Inefficiencies in capital allocation, conservative underwriting, and a system that is reactive rather than proactive.

Pricing the risk with a data disconnect

The business of life insurance is fundamentally about understanding human risk. For decades, this was based on broad mortality parameters.

Today, it’s a different world. Risk is no longer just about age and occupation; it’s a dynamic picture shaped by lifestyle diseases, genetic predispositions and so much more.

The challenge is that while the primary insurer or the digital aggregator might capture this rich, fleshed out risk profile during the application, a significant portion of this insight gets lost or delayed on its journey to the reinsurer.

This means the ultimate risk carrier, the reinsurer, is often working with a not-so-accurate risk snapshot to price a lifelong promise.

This “information fog” creates a system that is less efficient, less fair and more expensive for everyone.

The price for this disconnect is paid across the board. In life insurance, risk is pooled, meaning any disparity in the data skews the integrity of the entire set.

When reinsurers have to price for this uncertainty, and that can make coverage more expensive for everyone, including the low-risk applicants.

With timely and accurate information, however, the dynamic changes. For instance, digital platforms see medical disclosure rates of 35%, which is more than double the industry average of 15%.

This higher transparency lowers the possibility of a claim and results in a loss ratio that is ~20% better than insurer averages and a claim settlement ratio that is ~10% higher.

With timely and accurate information, a reinsurer can confidently hedge the risks within their portfolio and balance different profiles with precision. This leads to a more efficient use of capital and, most importantly, pricing that reflects the actual risk, not the fear of it.

Differential pricing for varying profiles

A real-time flow of data fundamentally changes the way people get insured. The goal is to ensure that high-risk customers are not automatically excluded.

Instead, they can be priced correctly, a crucial step toward increasing India’s glaringly low insurance penetration.

In the current system, an applicant with a managed chronic condition might be rejected because their risk is hard to quantify with static tools.

With a clearer, data-rich picture, they can be offered a policy that is priced for their specific situation, bringing them into the financial protection net.

This is where large distributors and aggregators benefit from vast, segmented data sets covering the full spectrum of the Indian population: customers with pre-existing diseases, individuals from low and high-income groups, the young, the old, and even traditionally excluded segments like homemakers.

With millions of registered consumers and years of historical data, these platforms have a “filter advantage” that enables dynamic, channel-based pricing rather than relying on static industry measures.

By creating secure data pipelines, the reinsurance industry could tap into this rich, real-time insight. It would be a shift towards underwriting which is based on current realities, a win-win that would drive both profitability and greater financial inclusion.

The way forward: a shift in perspective

The path forward demands a radical shift in perspective. This is not a technology problem waiting for a solution, but a strategic one requiring innovative ways to collaborate for the greater good.

The industry must move from a linear, fragmented chain of data hand-offs to a collaborative, real-time ecosystem powered by shared intelligence.

The vast, granular data held by digital platforms goes beyond customer acquisition.

It can be a strategic asset for the entire industry’s stability. For India to achieve its ambitions of Insurance For All By 2047, the gap between a citizen’s reality and the financial system’s understanding of it must be reduced to zero.

Closing this data lag will create a critical infrastructure needed to de-risk India’s trillion-dollar economy. Because risk, at the end of the day, is everyone’s business, not just the reinsurer’s.