Author: Naval Goel, Founder & CEO, PolicyX
The online insurance industry in India is witnessing a phenomenal level of growth for the past few years. Indians were already aware of the online platform to fulfill their educational and banking needs until sometime ago. When it came to investments, fixed deposits and mutual funds were the most preferred purchases. On insurance front, people started relying on internet to research about the kinds of products. However, with each passing year, digital insurance industry gradually expanded its footprints in India. And therefore, online mode is not limited to just research and life insurance comparison.
In today’s scenario, Indians are no more afraid to purchase online protection policies. They buy, renew, make payment of premium online and even avail post-purchase services.
Going back in time, insurance sector started to penetrate the digital platform in the year 2005. Everything began with the concept of online comparison and research of insurance policies and this was made possible due to some web aggregators.
Web aggregators provided extra comfort to buyers by letting them compare policy online. Though, it was never easy to persuade researchers to buy policies through online mode. Nevertheless, transparency and safe payment gateways influenced more than half of the researchers and appealed them to make a purchase. Insurers also recognised the imprint online mode had made on the minds of consumers and therefore they initiated to promote online term insurance quotes and policies. In 2010-11, most of the insurers started selling online. And at present, insurers have made online mode a priority in their distribution strategy. Though, many insurers are still focusing on term plans, but a few of them have moved ahead beyond term and car policies.
What future holds for digital insurance sector?
Interesting fact explored in reports states quite significantly that previously large amount of sales came through metros and tier 1 cities. However, now people from even the mid-level cities like Indore, Jaipur, Lucknow and Surat and other tier II and tier III cities are interested in buying.
There were around 165 million internet users in India in 2014. This figure has reached around 200 million this year. Online purchase of policies has increased from 2 per cent to 200 per cent in just two years. Looking at this, the growth rate of the online industry in the years coming ahead is expected to be in three digits.
If a report from management consulting firm like BCG is to be believed, digital insurance will skyrocket to Rs 15,000 crore by year 2020.
This research implies that the industry is slated to enjoy a growth of 2000 per cent in the next five years. Wondering how? Well, it has been estimated that online sales contribute around Rs 700 crore to the total turnover of the industry altogether.
If this number is projected to reach Rs 15,000 crore, then the industry is going to multiply its online sales 20 times. That’s an amazing inference!
India is going digital in a massive way. Recently Prime Minister Narendra Modi launched the ‘Digital India’ campaign. Insurance industry in India will not be an exception.
More and more people are coming under the ambit of e-commerce and this trend will continue moving northwards. With the government of India itself supporting digitisation, the level of trust will go up. So, there is no looking back for a sunshine industry like insurance, which is already experiencing a phenomenal growth.
As per the BCG report, life segment garners almost 45 per cent of the total online insurance market. Vehicle protection is the second largest segment contributing Rs 250 crore to the total sales of Rs 700 crore. The other segments such as health and travel secure the remaining piece of the cake.
The digital impact
As per industry research and analyses, it is said that in the 2-3 years, three out of every four insurance purchase decisions will be influenced by digital channels of sales and marketing.
That’s an astounding number. It simply demonstrates the power of digital media and its growing role in the insurance sector in India.
Are digital insurance and online insurance different?
There is a thin line which makes a big difference. Digital is an overarching structure and online insurance sales is a part of it. Digital insurance also encompasses use of digital technology to not just promote the services but also to enhance the overall customer experience. It is also about efficiency and setting up systems and processes.
Online sales, is though a tangible aspect and an insurer can quantify the impact of its online marketing efforts.
What about consumer interests?
When it comes to the Internet, Google is one of the most credible force. Recently, this search engine giant conducted a study to analyse consumer trends over online platforms and found that since 2008, a number of people have been searching for life and health insurance policy comparison and related information online. This trend has grown by 450 per cent. The general insurance industry rather witnessed a cumulative growth rate of 600 per cent in the past five years.
These numbers reflect the magnitude of digital insurance in India and act as a testimony to the success of online channels.
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