Insurance penetration in India as a % of GDP is in the lower single digits and stacks at less than half of the global average. As a nation, we got off to a late start in opening up the sector, with the first private players licenced only in the year 2000. Mr Sanjay Tripathy, Founder of Agiliolabs who was the CMO at HDFC Life Insurance for well over a decade recalled that insurers’ focus in the early days was on corporates and they lacked the consumer mindset – an evolution that he’d started see at the young but fast growing mobile telephony industry. For the consumer, the insurance agent brought up the image of a briefcase carrying, middle aged man who sold complex homogeneous plans; you really hoped you ever had to file for a claim! But the companies had a lot of marketing money to spend, so discovery certainly became easier and (offline) distribution far more widespread.
Fast forward 20 years and Mr Bhargava Dasgupta, CEO of ICICI Lombard, is offering products as innovative and single-event as insurance for organ donors and pay-as-you-drive based vehicle insurance. The insured expect more DIY products to meet their specific needs, with quick interfaces and the ability to settle claims in a contactless manner. And insurance companies are rising to the occasion.
The innovation and disruption in insurance that can truly bring protection to the next billion Indians has been long coming. There are many factors that have accelerated this trend including mass adoption of digital, a proliferation of startups that are co-creating products and platforms to address the variety of needs for the larger base of the population and larger insurers partnering with a myriad of out of the box distributors. One such startup is Toffee insurance - a new age insurtech company that burns its torch for gig economy workers (80% of their customer base) and people across demographics and cities; their message to the youth is to live their life and leave the worry to them. Toffee is selling insurance products that are bite sized and contextual, such as protection against dengue and to cover for backpack theft/damage to millennials. They work with major insurers to co-create these innovative products and build partnerships with digital centric platforms/network to enable easy distribution to segments that are not well covered by or do not prefer offline channels.
The COVID pandemic has certainly brought a change in consumers’ attitude towards insurance, as people at the grassroot level are realizing how vulnerable they are to any calamity, big or small. While even large players like ICICI Lombard has seen 30% growth in health insurance policies in the first half of this fiscal, young companies like Toffee, with a focus on new-to-insurance segments, has seen customer inquiries for traditional protection products increase 5-10x over the past 6 months! Rohan Kumar, Toffee’s Cofounder, believes that in terms of consumer awareness and behaviour, COVID has done in a few months what a decade of marketing programs were unable to accomplish and believes it will lead to a paradigm shift for the ecosystem.
At ICICI Lombard, Mr Dasgupta is experimenting with sachet pricing across categories of insurance to penetrate and protect customers in lower-income segments and those beyond Tier I cities; a Rs 0.60 policy with IRCTC and a Rs 2.00 policy bundled with an hour long Ola ride are interesting examples of products being offered by players today. He recognizes that health insurance for this customer has been way lower in priority than say asset or crop or even life insurance, even though health emergencies are what often push them into poverty. While he believes that the Ayushman Bharat initiative should be a major catalyst in establishing coverage for this segment, he is also actively supporting small ticket/sachet products that offer limited coverage for specific needs/events. For him, the key to unlocking this segment is to be able to provide end-to-end digital capability, since scalability and low cost of distribution and servicing will be the pillars for insurers to establish an attractive business model; he emphasized that this meant that organizations would need to build fully digital internal processes, including for underwriting and claims management, rather than just having a digital customer interface. What has also catapulted the growth of the sachet insurance market is the development of a robust payments ecosystem, which has enabled plug-in of a seamless fintech layer integrated into several apps and e-commerce platforms.
On the challenges and missed opportunities, Mr Dasgupta is also quick to note that our health insurance segment remains significantly underdeveloped. It doesn’t cover the entire gamut of healthcare spends. The regulation of the network of healthcare professionals is not adequately robust, so there is significant malpractice. Insurance product manufacturers have to take into account fraud, waste and abuse. ICICI Lombard’s digital OPD solution will, in addition to improving customer experience, also enable better tracking and data insights to better address these issues. The offer for free telehealth services and fully digital and cashless health insurance to B2B and B2B2C customers (via the app) introduced at the onset of the pandemic reflected in 3x jump in teleconsultation and lower claims.
Mr Tripathy sees a future where the customer’s healthcare journey will be in the nature of a continuum of care anchored on a digital platform. Only a few, large ticket products will need touch. He believes that since many large distributors of products have already reached the bottom of the pyramid, new companies with fresh product offerings can piggyback on these. Services such as financial and health underwriting have already been built into products and a startup solving for either is better positioned for success.
The consumer mindset towards protection is transforming rapidly. Effective partnerships between incumbents, agile startups with innovative solutions and regulatory support can bring the market to the near one billion Indians that have not accessed insurance to cover for their myriad needs. As Mr Tripathy likes to call it, insurance can have its ‘Jio moment’ too. Where it is accessible to all. And protects the next billion Indians.
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