 "Internet-influenced insurance sales to touch Rs 400k crore by 2020: Study")
About three of every four insurance policies sold by 2020 would be influenced by digital channels during pre-purchase, purchase or renewal stages, according to a report by Boston Consulting Group (BCG) and Google India.
The report, “Digital@Insurance-20X By 2020”, said not only would insurance sales from online channels grow 20 times from today by 2020, but overall internet-influenced sales would touch Rs 3,00,000-4,00,000 crore.
The study said traditional ways of selling insurance were becoming less sustainable. Traditional business models are being challenged by the emergence of trends such as lesser relevance of physical footprint, mobile internet, analytics, social platforms and disruptive players.
“As insurers seek new avenues to grow profitably, they have a unique opportunity to embrace and benefit from the digital wave, which also addresses many key issues that plague the offline world today. We estimate that digital adoption could result in potential savings of 15-20 per cent of total costs in the case of life insurance and 20-30 per cent in the case of non-life, thereby showing the path towards profitability for the industry,” said Alpesh Shah, a BCG senior partner and director, and also the author of the report.
Vikas Agnihotri, industry director, BFSI, Travel Google India, said while online purchases represent a small component of insurance activity in India today, the overall influence of internet on insurance product purchase in India was already six times and growing rapidly.
“Insurance companies in India are still lagging behind the consumers and have not invested enough to create digital assets to engage the mature consumers online. Our studies have shown that two out of three users researching for a financial product ended up changing their mind about the brand or the product during their pre-purchase period,” he said.
The report said online term life plans and travel insurance had already picked up substantially in the last few years. Though better pricing is a key reason for buying online, convenience and increased transparency are critical factors as well. The inefficiency of digital assets has led to emergence of online insurance aggregators that have seen a four-time growth in the value of life insurance premiums and a seven-time growth in the value of health insurance.
According to the report, motor insurance sales that were relatively small in 2011-12 have also gone up four times within the last year itself. However, it said insurers need to realise that just like many other industries, they would need to undergo extensive changes in the way business would be carried out in the digital age.
The report, “Digital@Insurance-20X By 2020”, said not only would insurance sales from online channels grow 20 times from today by 2020, but overall internet-influenced sales would touch Rs 3,00,000-4,00,000 crore.
The study said traditional ways of selling insurance were becoming less sustainable. Traditional business models are being challenged by the emergence of trends such as lesser relevance of physical footprint, mobile internet, analytics, social platforms and disruptive players.
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Vikas Agnihotri, industry director, BFSI, Travel Google India, said while online purchases represent a small component of insurance activity in India today, the overall influence of internet on insurance product purchase in India was already six times and growing rapidly.
“Insurance companies in India are still lagging behind the consumers and have not invested enough to create digital assets to engage the mature consumers online. Our studies have shown that two out of three users researching for a financial product ended up changing their mind about the brand or the product during their pre-purchase period,” he said.
The report said online term life plans and travel insurance had already picked up substantially in the last few years. Though better pricing is a key reason for buying online, convenience and increased transparency are critical factors as well. The inefficiency of digital assets has led to emergence of online insurance aggregators that have seen a four-time growth in the value of life insurance premiums and a seven-time growth in the value of health insurance.
According to the report, motor insurance sales that were relatively small in 2011-12 have also gone up four times within the last year itself. However, it said insurers need to realise that just like many other industries, they would need to undergo extensive changes in the way business would be carried out in the digital age.