Life Insurance Has Traditionally Been Known To Be Rigid and Inflexible. That May Now Be Changing

Jun 22, 2018 | 7 months ago | Read Time: 4 minutes | By Manan Vyas

The Indian life insurance industry hasn’t traditionally been very easy to deal with. Ask anyone a few years ago and they will associate getting life insurance with spending hours on the phone trying to decipher a complex jargon of policy terms which despite trying numerous times would fail to make any sense. However, with the disruption of technology and digital development affecting a slew of traditional and technical industries, the life insurance sector isn’t far behind. The system which was once known to be rigid and inflexible thanks to big data analytics, user dashboards, and the Internet of Things (IoT) has evolved into a user-friendly system of ensuring financial prudence and security.

Company's Overall Innovative Portfolio

Changing preferences

A study conducted by consulting and audit firm PricewaterhouseCoopers titled Life Insurance 2020:Competing for a Future, illustrated that while in countries such as India and China while the traditional model of selling life insurance whereby, users buy policies through intermediaries who receive a commision from the sale from the provider still exists, customers are signalling a demand for a different system.

An increasing number of customers are now turning to their social and peer groups to seek advice and reviews about life insurance policies, and want to have the option to have a self-serving insurance platform, thereby eliminating the role of intermediaries or agents.

Additionally, customers in India have become increasingly confident about buying and researching insurance policies on the web, making it rudimentary for life insurance providers to develop virtual networks that allow customers to get advice via multi-channel platforms for sales, comparison and any other assistance.

Retail e-commerce sales in India from 2016 to 2022 (in million U.S. dollars)

Retail E-Commerce Sales In India

The travel industry in India saw a similar change a few years ago, where now the traditional model of a travel agency has been completely replaced by online players, where customers can see and compare ticket/hotel prices and make informed choices.

You evolve, I evolve

While certainly majority of the growth in the life insurance market is fueled by the preferences of customers and to meet their changing needs, there is a huge push for life insurance providers to adopt digital mediums and technological changes of cloud computing, customer delivery cycle automation and sensory tracking to be more efficient and productive.

You don’t have to be a computing or business genius to know the plethora of advantages offered by cloud computing. Life insurance companies are switching to cloud databases to convert their fixed costs into variable while increasing profitability, this offers customers a huge advantage: hassle free paperwork. For instance, a simple task of changing your address on your policy document used to take weeks not to count the invaluable hours you spent on the phone or in your insurer’s office. With the revolution of cloud computing the need to do so has disappeared, easing the customers worries tenfold.

Digital population in India as of January 2018 (in millions)

Digital population in India as of January 2018

Furthermore, the digital revolution in the life insurance sector doesn’t end with cloud computing and an online database, in fact, the availability of an online database is merely a stepping stone which provides companies with a goldmine of digital information about customer behavior and risks. Market research firm, Kantar IMRB reveals that by next month the number of internet users in India will reach the 500 million mark, proving that the there are no boundaries in the digital sphere and the possibility of expansion is endless. Given such a huge market, along with the digitization of the insurance database companies have a great opportunity to employ big data analytics to predict and understand customer tastes, preferences and needs. How will that be beneficial to you? It will allow companies to offer you tailored services and products without you even having to tell them what you want.

It is important to note that the development of the technology in the life insurance sector is not limited to the rural population. In fact, technology and the increased availability of internet in rural areas has allowed life insurance companies to develop and provide products and policies especially catered to the rural market, with low premium and high coverage being a priority in the sector.

The insurance industry in India certainly has huge potential to grow. According to the data provided by the 2019 Economic Survey, insurance penetration in the nation was only 3.49% for 2016-2017, much lower than the world average of 6.2% and even lower than other emerging economies such as China with 4.77%. However, the insurance density in India has been increasing over the years, and given the growing middle class and emphasis on financial protection, the industry has a goldmine of development. Given the digital explosion in the industry, the terms rigid and inflexible can hardly be applicable anymore, and customers along with insurers are very likely to benefit from this changing environment and market.

Share of Public and Private Sector In Life Insurance

 


Calculate premium for your Term Plan

  • Y N
    • Annual Income
    • Sum Assured
    • Select Cover Upto Age
    • Name
    • Mobile
    • Email ID
Your Annual Premium for Aegon Life iTerm Insurance Plan
Prev
Digital Transformation Digital Transformation Is Changing The Insurance Industry: Here’s How It Will Benefit You
Next
A Complete Guide to Filling ITR 1 Form

RELATED ARTICLES