Insurance Industry Witnessing Customer Pull For The First Time: Alok Bansal

Insurance has traditionally been a push-based industry as consumers have bought it more as a tax-benefit product rather than buying it for protection against the 3Ds — death, disease and disability. But, the post-Covid world has brought in a mind-shift change. For the first time, the insurance industry is seeing pull-based customers as more and more people are realising the importance of having an insurance cover.

“Insurance has always been a physical touch sales process. It is not an individual decision but a household decision. Historically, it's made by the male patriarch of the family. A family friend or a relative used to visit the house and speak to the senior-most person of your family and tell the advantages of the product. So, people ended up buying the product on the basis of the trust on the agent,” Alok Bansal, Chief Financial Officer and Co-Founder, Policybazaar said during a YourStory video interview with Shradha Sharma.

According to Bansal, insurance as a product in itself is complicated. A lot of people don’t know what they are selling. They are told a few points by companies to sell to a customer. If the motivation of the customer is not a long-term investment, a lot of these plans won’t work.

In India, insurance has been severely under-penetrated. India's spends on healthcare is around $250-300 billion and 8-10% of GDP is composed of healthcare. Of this, only $5-6 billion is spent on health insurance. Still, 98% of people are doing out-of-pocket expenses.

However, in the last few years, the attitude of the consumer towards insurance has changed which is due to many reasons. A joint family setup has moved to a nuclear family setup especially in metro cities. Migration from rural to urban areas has been on the rise.

“A person who is starting a family and a career at 25-28 years of age, has to do financial planning on his own. They don’t want to take a decision blindly and want to research. Policybazaar has become a starting point for research. Secondly, they want to have a similar experience in terms of buying and the whole transaction process,” said Bansal.

“Their expectation is set by Zomato, Flipkart, Makemytrip. If you can’t match up to that expectation, the customer will walk away. This is the first time the industry has access to a pull customer,” added Bansal.

He said, when a business has a pull customer and there is no scope of gaming the system. Then, there is a lot of scope of product innovation.

“Till date, the customer has been buying what has been created for India, not for him specifically. Product innovation happens fast in a pull channel. It gives you the right data. The customer is tech-savvy too. So, we have a lot of scope for tech innovation like video inspection, tele underwriting etc,” Bansal said.

Bansal said that Policybazaar has always been clear about what it is trying to build since the very beginning. “Why are we passionate about protection products? It's not because it's a great opportunity and we want to tap the market. It's because protection products touch people’s lives. There is a large middle class in India who don’t have a solution for such a basic thing. Insurance is very core for a family,” he added.

In the last 12 years, Policybazaar has been educating and raising awareness among the consumers around the need to have insurance as a protection tool. Bansal said that the demand for protection products has increased significantly amidst the pandemic. The company has also been receiving great support from its health insurance partners in issuing policies though telemedicals.

“Overall, we will be growing at 40-45% in this quarter vs same quarter, a year ago. For health and term life products, growth might be around 60%. All this growth comes with the same cost input. Cost input for last year and this year hasn't changed,” added Bansal.