There Is High Amount Of Research For Protection Category Products In The Country says Yashish Dahiya

Covid-19 has become the defining moment for the life insurance industry in India which has been stagnating in terms of the percentage of Gross Domestic Product (GDP). Customers are now doing more online research for protection products in India surpassing other countries.

“If you look at online research, India is one of the few countries in the world where there is a very high level of research for products like life, health, and term insurance. You would be very surprised that India is the only country in the world out of the large countries that I know of from the data, where the number of requests for term and health insurance is actually about 1.5-2 times the number of requests for car insurance,” said Yashish Dahiya, Co-Founder and Group CEO, Policybazaar at Business Standard’s Unlock BFSI 2.0 webinar titled ‘Insurance, insured and safe’.

“If you look at Europe or the United States, it’s largely car insurance research. But now the research that customers are doing for protection is extremely heartening. The customer is willing to engage, he is taking more sum insured and the industry has a very important role to play increasingly,” added Dahiya. Dahiya is of the view that life insurance penetration should be measured in terms of the sum insured rather than premium because that is the amount insurers pay to the family when the policyholder dies.

“We have to measure life insurance penetration as a percentage of sum assured and not just premium. In the last ten years, we have doubled our sum insured as a percentage of GDP. The industry is clearly heading in the right direction as we are covering more customers,” said Dahiya. Dahiya also said that 60-70% y-o-y growth is happening in the health and term insurance business in India.

According to Dahiya, there has been a significant growth of digital in the health and term insurance business.
“Digital has become 15-20% of the health insurance business and almost half of term insurance business. Digital is playing a very vital role in the growth of sum assured in India,” added Dahiya. Though, he said that a lot of processes in the digital industry are still evolving because it’s a five years old industry that is fairly young.

“The health insurance industry has learned that there is no advantage of a physical medical and a telephonic conversation with old medical documents is better. In life insurance, almost 20% of cases are going without physical medicals than pre-Covid,” he added.

The industry will move towards consumer-centric from distributor-centric
Gradually, the industry will move towards being more consumer-centric rather than distributor centric in the next 3-4 years. “A lot of players are pushing much harder than earlier in terms of improving the onboarding process in the last six months. Digital onboarding has shifted by 20% in the insurance industry which is a big enough shift,” said Dahiya. According to Dahiya, because of digital, transparency is coming in and customer activation is going to grow.

“Self-help is going to grow. The industry will move more towards being consumer-centric than distributor centric. The industry has been very distributor centric historically. Over the next 3-4 years, the industry will be far more consumer-centric as consumer demand starts to become part of the industry,” said Dahiya. He also said that he is hearing a lot of conversations from consumers around affordability and hence monthly payment mode is becoming far more important.

“The self-employed section of the population is poorly hit due to Covid-19. As an industry, we need to think in that direction because they usually don't have good documentation of income,” added Dahiya. He also said that medicals are still a challenge and documentation of e-KYC and ease of onboarding need to be improved. Insurance is becoming a more competitive industry.

Consumer preference trends
Dahiya said that Coronavirus coverage specific products which include Corona Kavach and Rakshak policies have done very well on Policybazaar’s platform. “Large numbers of transactions are happening for those products. However, a significant premium is still coming from term insurance,” he said. “Shift from Unit Linked Investment Products to Long Term Guarantee Products is very clear. Demand for annuity and deferred annuity is there. It is still difficult to conclude online because those are large investments. We are thinking through the right mechanism to fulfill demand,” said Dahiya.