Is it not disconcerting to find that the Indian insurance industry particularly the general insurance has failed to- make headway despite its long presence?
The kind of ripple it was expected to create following liberalization and opening up of the industry is neither to be seen nor felt. The general insurance penetration to GDP is low abysmally. It is only 0.60%. The density of premium(per capital spending) is also significantly low.
The life insurance industry, in contrast, fared reasonably better in the same period. Its penetration rose to 4.1 % from 1.2% in 2000. The density of life insurance premium made a significant stride in the same period. It rose to Rs. 1510 from mere Rs. 280 in 2000. India even lags far behind the Asia standard( in general insurance) in penetration which is 1.6%. Japan and Malaysia are far ahead with 2.20% & 1.70% penetration respectively. Even China is better placed with 1% penetration. The other financial services sector also witnessed rapid growth. The consumer loan is today pegged at 10.9% of the GDP.
It was merely 1.9% in 1995-96. The mutual fund contributed 7.7% to the GDP in 2005-06 whereas it was only 5.1% in 1995-96. It is hard to find why the general insurance business failed to grow at the desired level despite many favorable factors- the most important being the growing size of the Indian middle class with high disposable income. The young population with high income-generating capacity is another high – high enough to be left alone. But unfortunately precisely that what has happened in India.
The general insurance products are still unsought products among the common mass and precious little effort has been made to make it a sought after product. The awareness level is very low. To a common man on the street- even if he or she knows about insurance, it means LIC. If the general insurance penetration is low in India – it is because of the low penetration in the retail segment. From household goods to all other costly possessions or anything that reflect the rapidly changing lifestyle of a common man is most often uninsured. Even if something is insured, it is largely due to statutory compulsion.
Most people have come to realize the importance of precious life -thanks to the revolutionary efforts of Baba Ramdev. The Pranayam has caught the fancy of common people in India and more and more people are becoming health conscious and yet health insurance has not become the talking point among the same mass. It still is a virgin area- largely unexplored. It has the potential of becoming an Indian folklore. Something is missing when it comes to propagating insurance in India.
In India, insurance, it appears somehow could not become part of our culture-the the conglomeration of beliefs, values, and customs that in some way or the other influence our behavior including our buying behavior. Values are beliefs that are few but influence behavior most. They decide which behavior is culturally permissible and which is not. One such belief that rules their mind is that they believe in fate. In other words, they are a fatalist. They believe what is destined cannot be changed. This mindset needs to be looked at – and probed by insurance marketers.
Many old values have given place to new values in keeping with the changing requirements and social transition. The transition in value needs to be probed and capitalized on to take the gains of insurance to the common mass. It has sadly eluded them.
Over the years, it appears that insurers have failed to create any worthwhile image for themselves. Just think about the kind of image Burnol or Dettol create when you have a burn or a wound. If they are around, you are immensely relieved. Can any general insurance product create any such image among its users? Harpic changed the way our toilets look today. It has become an imperative household item today. What kind of image it creates in our mind -clean, stain-free and germ-free toilets.
The most recent example is the Delhi Metropolitan Railway. It changed the face of Delhi. Some of the images it creates with which the commuters associate themselves-it is hassle-free, reliable and very slick. The analogy used above to drive home the idea that general insurance products too have to create some images with which consumers can associate themselves.
An insurer pays a PA claim of 5 laces to the wife a deceased in just about three months. The wife of the deceased has not got any money either from the employer of her husband or from the life insurance company or any other source. Yet the general insurer could not highlight this huge service or gain to create a favorable image for itself.
It is said that marketing is all about imagery. It is an era of the brand where mere products don’t sell in the market. But what does a consumer look like in a brand? He is looking for the image associated with the brand. A consumer would buy a brand only when the image it creates matches his/her core need. Therefore the image a brand creates need to be aligned with the core need. An insured often looks for certain things from an insurer- The most important thing is empathy.
This is possible only when the insurer tries to understand the problems of a policyholder by putting himself in the position of the policyholder and then starts realizing the problems- that the policyholder has to undergo. If he does so, he would certainly elevate the quality of service enormously. Another thing that a policyholder requires is a certainty- whether the policyholder and the insurer think in the same way . while negotiating for the policy. Does the policy encompass the mutual intentions of both parties? A ‘no’ would cause great heartburn afterward.
Another important thing which the insured seeks is dependability- how dependable an insurer is in the hour of need. Here the insurer has to emerge as a deep brand. What kind of relationship the insurer wants to build with the insured – possibly a savior in the crisis. This needs to be translated not only as a functional value but also as a symbolic value. If an insurer wants to find space in the consumer’s mind, it has to strive hard for making insurance a part of our culture- that is- it must form part of our belief and value. If this is achieved – insurance can also become a sought after product in days to come.
By Abhijeet K. Chattoraj, MBA, FIII, PGDHRM, Published in The Insurance Times, September 2008
