Insurance takes on a new cover

Ever since InsurTechs set a digital footprint in the insurance industry, technology has greatly equalised barriers and accelerated the crucial metric of penetration. Traditionally, insurance has been perceived to run on a feet-on-street kind of model. But the advent of digitisation has made the consumer’s journey a lot easier and is propelling a more holistic view of long-term value creation. 

While this transition continues to transform insurance, stakeholders view this as an opportunity to provide consumers with the best of both worlds. New-age insurance is about marrying tech with tradition — the “phygital model”. While digitisation has changed the insurance landscape by reducing the friction points, the industry is also tapping the potential of the human touch to cater to every kind of consumer effectively.

Historically, the insurance sector has functioned on the physical model through offline agents, banks or offices until online channels brought about a paradigm shift. Customers are inclined towards availing the benefits of a hybrid model now. This physical-digital convergence especially caters to customers who have so far solely relied on offline channels. An end-to-end digital journey is still the preferred choice of those who have already shifted to online channels.

However, the “phygital model” is helping a huge share of offline customers as well with the online transition. This way, the online initiation of the customer journey can just as easily culminate in an offline purchase. Already, the model has gained significant prominence and accounts for around 10 per cent in the industry.

Within the industry, there are some interesting trends in the adoption of this model. If we talk about investment-cum-insurance products, like ULIPs or guaranteed return plans, it’s mostly the younger consumer base that opts for an absolute online purchase or online research and offline purchase. If we talk about health or life insurance, the younger segment prefers an end-to-end digital journey, whereas the older set is comfortable with an online-offline outcross.

This trend is not just limited to buying — the growing demand for this model has expanded to claims assistance as well. Identifying the need for the human touch in claims assistance, the insurance ecosystem has made it possible for consumers to have their concerns addressed at physical stores in several cities. While the adoption is higher in tier-I cities, consumers in smaller cities buying insurance offline are also now warming up to the hybrid model.  

Online channels have demonstrated exponential growth over the last few years, especially after the pandemic. Enabling the last-mile offline distribution makes it possible to offer the customer multiple touch-points and facilitate the purchase from the comfort and safety of one’s home. This shift draws a parallel from other industries as well, like health care, where people now prefer an online consultation first before they consult a specialist in person.

Talking about insurance, implementation of the point-of-sale person not only acts merely at the point of sale, but also as the customer’s point of contact. Also, if an agent wants to become a part of the distribution process, they can easily sign up and do so. This, in turn, helps grow the B2B as well as B2C arm of the insurance ecosystem. Digitisation across the value chain is empowering consumers with easy discovery, research, assistance and purchase. Offline channels are further strengthening this conversion capability by serving every kind of consumer.

The key factor behind the popularity of the phygital model is bridging the trust deficit. This holds especially true for the potential consumers of remote areas, still getting acquainted with the digital processes. Unifying digital with physical helps make the entire process digitised yet empathetic. InsurTechs have now enabled a life-like experience with integrations like video interactions and screen-sharing devices that make the customer’s journey contactless yet interactive. However, if they choose the last-mile offline medium for purchase, this is where the “phygital model” sets in, making it a completely personalised experience.

The writer is Chief Executive Officer of PolicyBazaar