Page 30 - Insurance Times November 2020

of purchasing insurance. Additionally, studies show that a engagement has hampered all business sectors. It is now
typical online customer is well aware of his/her needs and necessary to accept that social distancing is not going to end
has been taking informed decisions. Online life insurance soon. Travel will likely not be as easy and convenient as it used
sales are expected to grow at approximately 5% of the to be. There will be fewer in-person meetings and more remote
individual annualized new business premium by 2020, connections. For some, the days of going to work in a crowded
whereas the non-life insurance sales are expected to grow office may be over. The new realities will require Indian
at more than 15% of non-life retail insurance business. insurance companies to innovate in all aspects. Business
processes and client servicing will have to be recalibrated in
This growth trend, expected to grow stronger in future, is order to respond to changes in consumer behaviour.
primarily attributed to the increase in smart phone usage
and internet penetration. Health insurance has seen a jump Effectively, this will mean accelerating the digital
of 35-40 per cent on its platform, while life insurance transformation that has been talked about for years but has
registered a 20 per cent growth during this period. Digital not yet been widely embraced. Current situation has taken
players aside, the trend is opposite for traditional insurers, customer expectations for online service to an even higher
who sell their products primarily via insurance agents. level. In a time of stringent social distancing, advisors can
Although, on an average only 10-20 per cent business comes no longer meet face-to-face with clients. Clients can't visit
digitally for traditional players, they have realised the need their local branch to make policy changes. In India, this
to push it forward. Insurers such as HDFC Ergo Health presents bigger challenges than in some other countries
Insurance, Religare, Max Bupa, HDFC life, Max Life and Tata since the vast majority of insurance sales are still being
AIA are working with Policybazaar to ramp up the tele- made face-to-face-perhaps around 90% of them.
medical services.
That creates a big potential challenge. Generating new
Health and term life insurance now can be bought through business premiums is heavily dependent on the in-person
Policybazaar without physical medical check-up to ease the efforts of the agency and bancassurance sales forces. But
burden on medical centers. Meanwhile, Star Health has how will those sales be made when advisors can no longer
expanded its digital operations to on-board customers 100 meet prospects in their homes or receive them in their
per cent digitally. Insurance products are complex in design, offices? What happens when consumers can't enter a bank
so difficult for people to understand. On the online platform, branch to discuss a new policy? First year premiums are the
they will have to make sense of the policy by themselves. engine of growth for insurance industry. Without them,
This is why we never attempted for 100 per cent digital on- what are insurers going to do?
boarding process. The current situation is forcing insurers
to go through a painful but a positive reform. Offline Sales Model:
The insurance industry in India largely relies on an offline
Barriers & Solutions for Insurers: sales model which involves the use of agents and brokers to
While online on-boarding may involve low-cost and garner more than 64% of the total insurance policy sales in
convenience, divulging any inaccurate information may both the life and general insurance category. The lockdowns
catch you by surprise when you settle a claim. If the have resulted in a short-term impact on the sales volume of
customer disclosure is incorrect and it gets proven during new policies. The total presence in online sales of new
the investigation then the Insurance company holds every policies forms a share of less than 2% in the total volume
right to completely decline the claim, In many ways, India which can result in near term weakness in the new policy
faces the same challenges as many other parts of the world sales of insurance companies. The economic impact of the
when it comes to responding to the issues presented by virus pandemic is being felt across all sectors in the economy
covid-19. Halting the spread of the virus requires testing and and the resultant effect has been industry wide pay cuts
tracking to be implemented on a large scale. along with job losses.

Additionally, social distancing requirements have locked down The Government of India has also provided a grace period
most of the country to slow the spread of the disease through towards those citizens who are unable to meet their
our densely packed population of 1.3 billion people. The insurance premium obligations during the lockdown period
lockdown has helped curb the rate of growth of the virus, but in the country. This is expected to create a short-term
it has come at a great economic cost. Lack of physical pressure on both, the new premium business and the

30 The Insurance Times, November 2020