Q. How do you foresee future of Life insurance market in India in terms of individual demand for various products?
Life insurance has gained significant importance and momentum in the last two years when the uncertainty of life became starkly visible. The coverage for life and health have become crucial for the financial protection of the family. In future, it is going to be roti, kapda, makaanaur insurance! Life Insurance would be an integral part of everyone’s life. Going by the growth projections, the life insurance industry is expected to increase at a CAGR of 5.3% between 2019 and 2023.
India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1.0%. Insurance reach is still low in India with overall insurance penetration (premiums as % of GDP) was 4.2% in FY21, emulating that it remains a hugely underserved market.
But the bright part is that it is riding on the increased awareness levels, digitized payments, web aggregators, and professional services rendered by advisors/ brokers. This way an ecosystem has been created which will provide a substantial push for life insurance in the near future. The growth story will continue…
Q. With your long and illustrious insurance background, do you think individual customers still think of Life insurance as an investment avenue or they have matured to buy it as a protection product?
Going by my long experience in the Insurance industry, insurance is perceived in a very different manner than it should be. According to me, Insurance should be pure insurance that should come into play in the event of death of the insurer, when the family needs utmost security. There are pure protection plans like term plans. But nowadays we have many insurance products bundled with investment options (ULIPs – High return potential product or endowment plans) which give returns in the lifetime. After all, people need money in their life too to fulfil several obligations. These two serve completely different objectives so whichever plan you opt for, you should take an informed decision. To understand the benefits of both, one should consider his liabilities and study risk profile too.
Q. There is a stiff competition in the non-life insurance market. Can we say we have more competitive pricing rather than risk pricing? Do you think there must be a base tariff pricing for all products?
Indeed, the non-life insurance market in India has been witnessing growth, lately because of innovative products covering miscellaneous risks associated with the current market scenario. It’s a fact that the health care and automobile industry drive this growth as we have seen during the pandemic which proved to be a game-changer for the industry. Innovative products, technological intervention, ease of digital payments, widespread reach, and competitive pricing have made this industry fiercely competitive in recent years. Still, its reach remains questionable, hence there should be uniformity of rates across the board so that customers are benefitted. I propose a base tariff for all the products and add-on features should be spelled out. Currently, customers are buying cheap policies and getting a raw deal as they are not aware of its fine points.
Q. In which kind of products do you visualize good growth in the coming years?
As I mentioned earlier, the insurance sector is poised for a big leap forward and almost all segments are going to witness robust growth like health, motor (E vehicles, etc.) assets, businesses, factories, etc. As we see Motor insurance accounted for 34.1% of the non-life insurance premiums earned, followed by health insurance at 29.5%, in FY21. Post-Covid, along with health, there has been rising demand for personal mobility preferences which will lead to a shift in vehicle market, hence growth for motor insurance.
The growth may be attributed to the concerted efforts of industry players, advisors, brokers, web aggregators, insuretec, and customers. In terms of the size of the insurance industry in India, the share of life insurance in total premiums in India is 74.94% and the share of the non-life premium is 25.06% (2019-20), so there is big room for growth.
Q. Do you think are we doing enough in terms of policy holders’ education and awareness.
There is never enough when it comes to investor education which includes Insurance too. Insurance as a subject generates enough curiosity and lots of questions and myths, which needs to be addressed. IRDA runs a campaign that aims to create awareness about the need for insurance amongst the general public as well as policyholders who need to know about their protection coverage, rights, and duties about insurable interest, assignment, nomination needs, claim settlement, surrender value and other terms and conditions of the policies.
Insurance companies, regulators, Advisors, Brokers, Web aggregators, Insuretech, mainstream media and social media, all have a role to play in spreading awareness about insurance and propagating the importance of the right policy. If all make joint efforts, the awareness will spread, which is the need of the hour.
Q. What is your experience of customer demand for insurance products through Insurance advisor’s vis-a-vis online purchases through policy aggregators?
Ideally, whichever is the mode, insurance should be bought and sold. Now, preference is certainly shifting in favour of digital buying along with digital interaction with advisors on various platforms. With millennials being the prominent customers, this trend is likely to become even stronger.
However, the scenario is slightly challenging for Advisors/ brokers owing to product commoditization, new client acquisition, meeting client needs, and new technologies. Advisors can overcome these and be in synch with the times by effectively using social media channels which provides an unprecedented opportunity to advisors for client engagement and also holds the potential to attract new customers. Advisors who embrace digital and continue to adapt to the changing technologies will thrive in the future and those who don’t will become invisible in the future. Insurance products are complex hence advisor’s role will always be relevant.
It is going to be co-existence!
Q. Please tell us about your new Insurance broking venture and your future plans.
Insurance4life, has been in existence since 1963 and has been recently renamed Shrigoda insurance4life. We are on our way to expand pan India footprints. We recently opened offices in Mumbai and New Delhi expanding our reach with innovative products, competitive pricing, and excellent after-sales service. We want to take out the pain of claims of our customers, as over a period we have acquired expertise in the field. In the future, we want to be the market leader with our numbers, premiums, customers, and overall services. While rendering all this, we will not forget our corporate social responsibility and will do our best for society.
Q. How has been a demand for health insurance products post covid.
COVID 19 outbreak provided a sort of reality check for people who believed that only others fall ill or if they fall ill, their savings will come in handy. The myth was broken and now people have realized the importance of health insurance with wide coverage. It is no longer an alternative but a necessity. This transformed these perceptions by giving a reality check to uninsured people, we are witnessing people have started buying a health insurance plan, so health insurance is showing good traction Post Covid 19.
Q. Any other development you would like to share.
There are talks of Insurers hiking their premiums, which is bound to create a flutter in the current scenario. People are just coming to terms with the pandemic subsiding and life returning to normalcy. The scenario is changing, though for the better, still there is a lot of catching up that needs to be done, financially, emotionally, and medically. The revision in premiums will certainly make a dent in their pockets, which will not work in anybody’s favour.
