Internet penetration in India has almost doubled in the last four years, making it the fourth largest user base in the world. Penetration levels could nearly triple by 2015, reaching out to around 19% of the entire population. The scorching pace of increase in usership has fueled e-commerce which has increased from Rs20,000 crore in 2009 to Rs50,000 crore. Financial services accounted for over 30% of non-travel e-commerce. Insurance related commerce is a major contributor at 40% of financial services online.
At over 100 million total Internet users, India is expected to witness exponential growth in digital-based services. Some 46 million users today access Internet through their mobile phones. The further expansion of broadband services coupled with a widening of geographical footprint into next tier towns presents a large opportunity for insurance players.
The online insurance category is evolving at a rapid pace and this is being primarily driven by increasing category comfort among consumers. The resultant increasing propensity to buy life insurance products online is a changing mix skewed towards simple, easy-to-buy and protection-oriented products.
Over 90% of the online life insurance category is accounted for by pure term products,, underlining“protection” — the raison d'etre of the insurance category. This is truly the platform in the life insurance category that creates customer pull, is self-initiated and allows for exercise of customer choice. While the category suffers somewhat from the maxim “insurance is sold, not bought”, the online insurance platform has been democratised through the web to generate awareness, build familiarity and educate customers about the benefits of insurance.
Experts have identified certain factors that drive the online insurance category. Understanding them is necessary for any insurers to ride the new opportunity.
Access: The online term proposition is an example of making life insurance available to the mass segment of customers. For instance, Bharti Axa Life’slatest online term product is available across all towns in India. Even in cases where the risk cover opted for by the customer necessitates a medical check-up, this option is also available across 950 towns. Current experience of insurance companies suggests that more than 50% of the business is generated from non-metro locations. The online platform is highly scaleable and is a viable operating model for financial inclusion. It is poised to expand further as awareness and category comfort builds in.
Affordability: Given the profile of the online customer and the lower costs of direct distribution online, the customer stands to benefit by way of lower affordable premium rates. The industry as a whole has passed on the benefits of lower fixed expenses and mortality risk in the online channel to customers at large. A compelling evidence of customer pull is the significantly low lapses in rates experienced by insurance companies that have had an online term play for the past few years. This is also aided by the fact that the disclosures are much more comprehensive on account of active interest shown by the customer himself during the self-declaration process.
Convenience: A simple user interface that allows for seamless navigation during the online product purchase process is a key driver towards creating category comfort. Insurance companies have invested in best-in-class user interface to ensure that customers are able to calculate premium, fill up the proposal form and complete payment in a matter of few minutes.
Service proposition: Online products bundled with relevant service benefits will go a long way towards category expansion. For instance, Bharti Axa Life’s latest online term product ‘eProtect’ has a unique service feature called “Family Care” benefit wherein, in case of the unfortunate event of death of the policyholder, the nominee will get a sum of Rs1 lakh within 48 hours of claim intimation. This is to ensure that at times of distress, family members are not further burdened through procedural delays.
Dedicated customer care personnel who have undergone extensive training on the online medium are also available to ensure that customer queries may be resolved at the earliest. Besides, insurers also offer the Tele-Assist option as part of the ‘Buy Online’ process, in case prospective customers need assistance at any stage.
The online channel requires a fundamentally different approach to category creation. Traffic to the insurer’s website is generated through a combination of organic and paid-for search, web aggregators and direct campaigns. The performance-oriented metrics that are at the core of this medium allows for optimisation at various levels, to make it viable in the long run. As the companies make continued efforts in the areas of product design, technology and service infrastructure, the online medium will only gain unbridled momentum in the coming years.
The writer is MD & CEO of
Bharti Axa Life Insurance.
Views are personal
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