Niranjan Roy (not his real name) is a harrowed insurance agent. In his mid-40s, Roy held a permanent job at a private sector company. The life insurance business was experiencing double digit growth and part-time agents like him had their hands full. Six years ago, Roy decided to quit his job and become a full-time insurance agent.
Around the same time, customer preferences were changing. Customers wanted to get rich quickly and did not want to invest money in a slow-burn category like insurance. At present, Roy finds it difficult to even meet 50 per cent of his annual targets.
The Indian insurance industry is facing a number of challenges such as low customer penetration, inadequate insurance coverage and misfiring distribution channels. For the past six years, the life insurance business has grown at a measly four per cent. As a result, life insurance penetration in India has declined to levels that are similar to 10 years ago, says a recent report on the insurance business from industry body CII and consultancy EY. The stunted growth has created a host of other issues, including expense inefficiencies and lower-than-expected profitability. So what could be the way forward?
The CII-EY study says insurance has traditionally been a product-centric business, focused on developing products for a given risk and delivering them in a cost-effective manner.
However, social media and unprecedented access to information, such as peer-to-peer product and service reviews, are giving consumers greater power and creating more informed and demanding customers.
These experiences are shaping consumer expectations across all industries, including insurance. Customers prefer values that are clearly demonstrated, price that is balanced, and product features and services that are tailored to their needs.
Therefore, insurers need to better understand the true needs of their customers to redefine the products and services they offer and the ways in which they interact and serve their customers. They need to know their customers better than ever and use the information and knowledge as a source of competitive advantage.
The marketing and sale of insurance products in India has largely been driven by agents. However, this scenario is fast changing, says the CII-EY study. India’s internet user base has surpassed that of developed countries such as the US and Japan, and Brazil. The number of mobile phone users in the country has crossed the 1-billion mark, including 125 million smartphone users. As a result, the medium of sale is increasingly shifting online. “Data analytics will be a key tool used by insurers of the future to increase customer segmentation and offer tailored products,” says the report.
Getting personal It’s not as if the players in the business have not taken note of the developments. The report cites several examples: IndiaFirst Life Insurance issues over-the-counter policies in 30 minutes after it receives data on its servers. HDFC Life’s Cancer Care is a customisable niche product that can be entirely purchased online. Bharti AXA partnered with Vymo to launch its lead management solution. Max Bupa Health Insurance recently partnered with Vizury Engage, a data and marketing platform, to segment users based on data-backed insights and target them with personalised engagements.
Cigna TTK’s ProActiv Living Program has online health and wellness initiatives. The programme helps customers understand their health through check-ups and targeted online health assessment, and incentives are in the form of health and wellness discounts. Customers can use the points they earn by participating in these initiatives to either increase their benefits or reduce their premium. ICICI Lombard enables its customers to pay renewal premium through Paytm wallets and Bajaj Allianz has over 350 virtual offices operating pan India.
Even on the government’s side, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) can be subscribed to via an SMS. They take into consideration banking KYC and auto-debit payment from customers’ bank account.
De-jargonise But industry players agree more needs to be done. “The need of the hour is to simplify insurance, help consumers understand what they are buying and to de-jargonise it,” says Pradeep Pandey, CMO, Future Generali. His organisation has started using design to simplify. For instance, the new policy document uses visual design and iconography styles, information more relevant to the customers is mentioned upfront (such as nominee details, amount covered for, what does the policy not cover, and so on). The company has also started inserting a voice chip in the online ULIP policy document which helps customers know what is covered in the policy even without even reading it.
“It’s no longer enough to just have a digital capability. To compete in the digital world, you need to be a digital enterprise,” says Sanjay Tripathy, senior executive vice-president, marketing, analytics, digital and e-commerce at HDFC Life. To create a customer-led digitally enabled organisation, companies have to move beyond treating digital as a silo within the organisation. “It has to be an omni-channel integration,” says Tripathy. He adds that organisations could take other measures including using predictive analytics to anticipate and understand customer needs better, focus more on robotics automation, create a continuous improvement and learning culture, learn from other industries such as e-commerce and invest in the right talent which understands the digital ecosystem. As for agents such as Roy, they need to figure out how they can adapt to the new rules of the game.