by Prashant Tripathy
The advent of a new year always comes with promise, and 2019 has the potential to be a very promising year for life insurance in India. The worldâ€™s fastest growing large economy with a burgeoning pool of customers, strong macro-economic factors and a robust financial ecosystem make the ideal backdrop to take the life insurance sector to the next level.
The traditional Indian family has undergone a significant evolution over the last few years. The expectations of young customers from service providers are pushing companies across sectors to work smarter, deliver faster and engage better to not only be preferred but to be loved by this set.
The governmentâ€™s drive towards digitalisation and a cashless economy has seen in the last few years a steady movement from physical assets such as property and gold, towards financial assets. Adding further impetus, is the heightened awareness around insurance in general, thanks to government schemes such as Aayushman Bharat for health insurance, Pradhan Mantri Jiwan Jyoti Bima Yojana (PMJJBY) for life insurance, Pradhan Mantri Suraksha Bima Yojana for accidental death and disability insurance and the Atal Pension Scheme for retirement planning. This is moving the country towards a culture of securing the future of one and oneâ€™s family, which is the most fundamental job of life insurance.
As an industry, there has never been a greater digital drive to harness the power of data and analytics, to digitise the customerâ€™s journey and to enable the life insurance seller to work smarter and more efficiently. Moving way ahead of just B2C or e-commerce, today the life insurance sector is weaving on digital looms to integrate the online and the offline and create a beautiful fabric of seamless customer experience.
From expanding distribution networks, identifying individual customer needs, simplifying documentation and underwriting processes and aiding agent advisors with sound advice based on sophisticated analytics, AI and machine learning, the industry is best poised now to revolutionise its processes through digital interventions.
On the retail front, life insurers are innovating to reach out to customers at their fingertips and reduce time to issue a policy. I see a great scope going ahead on taking these conversations going and meaningfully engaging with customers through the tenure of their policies, so as to drive persistency ratios further upward.
So howâ€™s this reset moment going to manifest itself for the industry? Despite a steady expected growth of 12-15% CAGR growth for the sector over the last couple of years, we still see life insurance penetration standing only at 2.72%, as against a global average of 3.47%. What the industry will see going ahead, is in my belief the holy trinity of life insurance: protection power, consultative selling stars and digital delight.
We continue to be one of the most underinsured countries and the â€śprotection gapâ€ť as per some estimates is at `489 trillion. The industry sum assured grew by 36% CAGR between 2001-10, however, the same grew at only 22% CAGR between 2010-18. This points to the enormous headroom to further protect the country, and I believe many insurers will be focusing on increasing their share of protection and educating customers on the need to protect oneâ€™s family through life insurance.
The agent advisor has globally been the support pillar to any life insurer. In the coming months I would expect to see an Agent 2.0, digitally enabled, more efficient and smarter in approach. The role of the agent advisor will undergo a change from merely being a seller of life insurance to being a financial portfolio manager, backed with the power of deep data analytics and equipped with the tools to save time, costs and increase efficiency.
Digital delight is what I believe will be the outcome of all the above. A frictionless journey for a customer from prospecting to purchase to service and finally to claims settlement is what will delight the customer. This will only be possible when the all three elements of the trinity work in tandem and synergize to take the industry to the next level.
The writer is managing director and CEO, Max Life Insurance