By Manan Vyas
India’s life insurance industry has been growing at a steady pace. Over FY12-18, new business premium has grown at a CAGR of over 14%. Despite this, life insurance penetration in India remains low, at 2.76% as of 2017.
We recently got the opportunity to sit down with Anjali Malhotra, the Chief Customer, Marketing and Digital office at Aviva Life Insurance, to get her thoughts on where India’s insurance industry is headed. The text below encapsulates her thoughts on the industry.
Thoughts on low penetration
The low life insurance penetration in India also indicates that the industry has a lot of headroom for growth. Low financial literacy has played a role in keeping penetration rates lower. Moreover, people are wary of complex financial products. The industry shoulders some of the blame for creating complex products. There has been a trust deficit among consumers who are not clear on what they are buying and who they are buying for. As a result, life insurance has thus far been a push category as opposed to a pull category.
Thoughts on the shift to online
While the industry has begun a shift to online sales, it is not completely online yet. Term products, for instance, have been a focus for the online channel. However, even today, online is a form of ‘assisted purchase’. Customers are often walked through the process with assistance on the phone. Therefore, the industry hasn’t completely moved to a pure online purchase, which is a move that the industry needs to make.
How the industry is moving online
To pull customers online, there is a lot of focus on the customer’s buying journey, and on simplifying it as much as possible. Interfaces are being redesigned to become more intuitive. Being able to pre-fill as much data as possible to make the buying journey smoother, for instance.
Role of Content
Focus on consumer education is a priority for the industry. There is focus on creating educational content that can help customers understand the industry better. There is a lot of scope to make people more aware. Text and video content both have a significant role to play.
Millennials are significant for the industry
The large millennial population will cause a shift in the industry. The industry will adapt to deliver solutions differently to this demographic. Aviva’s financial literacy survey, ‘Plan India Plan’ revealed that millennials are more financial savvy than their parents. We see them as being more open to adopting insurance. Millennials are driving the shift from push to pull based selling by taking initiative to conduct research independently and reach out to insurance companies via the online channel. The growth in term insurance is also partially driven by the millennial demographic.
Next generation digital
The next generation of consumers have made it clear that they like to consume content online, which has encouraged companies to adapt accordingly. Companies are looking at news ways to engage with customers, beyond just a static website. Aviva Life, for instance, has an AI-enabled chatbot on their website. Using Natural Language Processing, the chatbot has a conversation with the user in which it tries to obtain information about the specific user’s needs, and recommend the right product accordingly. Aviva is also an early adopter on the Amazon Alexa platform, where it released a skill that focuses on consumer education around insurance jargon.
On critical illness plans
The cost of healthcare is rising rapidly. Medical inflation, at 12.5%, outpaces income growth. People need to be better prepared. As a result, the life insurance industry is also focused on helping people tackle critical illnesses that can be a drain on the finances. Lifestyle led diseases are becoming more prevalent in India. Specifically, India is known as the cardiovascular disease capital of the world. 80% of the cost of such treatments is still out of pocket. There is a need for consumers to understand that they need a critical illness plan in addition to their normal plan. This awareness is still missing.
Ecosystem of services
To gain consumer trust and become a one-stop destination, there is a move to offer a greater range of services. For instance, Aviva offers an online will-writing service that can help create a clear legacy while preventing disputes from reaching civil courts. Similarly, the company also created an online portal focused on children, and on helping parents identify their child’s inherent talents, nurture them and plan for their financial future.
In conclusion, India’s demographic shift, digitalisation and the ‘financialisation’ of savings are expected to be some of the key trends that will define the life insurance industry in India moving forward.
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