Insurance industry players go online — reluctantly
(The views expressed in this column are the author’s own and do not represent those of Reuters)
From the year 2000 onwards, the Indian insurance industry saw a number of private players entering through the gates thrown open by the government. Public sector player LIC had already gained an edge by being a pioneer in the life insurance space. With an army of agents, LIC was way ahead of these latecomers and found itself settled comfortably.
It was evident that LIC relied heavily on its strong agent base. The latecomers, in their struggle to make a mark in the newly opened insurance market, followed suit. It was a herculean task for these private players to ape the insurance giant and more than a decade later, they still find themselves striving to gain substantial market share.
Getting exceptionally good agents on board, training them, retaining existing agents has been a constant struggle faced by the industry as a whole. The industry also explored other distribution channels like brokers, corporate agents and bancassurance but is still constantly being haunted by profitability issues.
PRODUCT SIMPLIFICATION AND DESIGN
For starters, companies must focus on designing simple and easy-to-understand products. Some policies that exist in the markets today are so complex that even a fairly financially literate person would not be able to fully understand it. For some strange reason, instead of working on designing simpler products, the industry has and continues to depend on intermediaries to sell their complicated products. This activity is self-defeating and extremely expensive. The innovations, if any at all, are trips to Paris instead of Colombo or Goa, for the top-performing intermediary. Wait for a couple of years and we could see incentives like a trip on Richard Branson’s space flight.
A century ago someone said that Insurance is “Sold” and not “Bought”. It is a “Push Product” and not a “Pull Product”. Design a complicated and opaque product and make it available only through limited expensive channels and yes, it will always be a “Push Product”.
So what products do we need — Very Simple, Easy to Understand, Easy to Explain & Easy to Buy.
Coming to the Easy to Buy part — going by industry reports, an online term policy is now sold once every 8 minutes. And consumers are now getting covers of a crore rupees and more — something unthinkable a few years ago. Having said this, taking an offline product and making it available on the company’s website, does not truly make it an online plan. These products need to be specifically designed for the online mode.
The process and the interface should be designed in such a way that it is extremely easy to understand and to buy. The user interface should be customer-friendly and the payment process should be smooth in order to entice customers to transact online. It should only take a few minutes for potential buyers to sail through the entire process leading to final sales.
The online platform can be a very powerful tool as it is now being increasingly embraced by a large section of society and is not only restricted to the young. It might just be the solution to the very expensive alternatives that are being tried currently. All it takes is a smart, aggressive player who turns the tables to make it a success — which seems to the norm in most industries these days. I am way too skeptical to buy a product from a person who knows less about it than me and would rather make my own decision. For me, the days of push-marketing are over.
(Write to the author at firstname.lastname@example.org)