Unlock BFSI 2.0: From push, insurance has become a 'nudge product'

While the Covid-19 pandemic has wreaked havoc across sectors, life insurers feel this black swan event has resulted in the bolstering of demand for insurance products, be it in protection, health, guaranteed return segment or others. From being a push product, insurance has become a “nudge product” due to the uncertainties.

During the Business Standard webinar, moderated by Consulting Editor Tamal Bandyopadhyay, leading minds of the life insurance industry seemed to agree that the current situation has led customers to be more aware of insurance. And while demand for insurance, especially protection products, has gone go up, affordability is an issue.

“Any pandemic like this will immediately increase awareness among customers. We do see a lot of interest. This will be a defining moment,” said N S Kannan, MD & CEO, ICICI Prudential Life Insurance.

While the industry saw its new business premium decline substantially in Q1FY21, since July, business has seen an uptick, led by the state-owned insurance behemoth, the Life Insurance Corporation (LIC).

 

“Ever since the pandemic started, we have lost a lot of business. Having said that, our figures for July look like July 2019, and for August, it will be similar to last year. Apart from April and half of May, we have come remarkably well,” said Mahesh Kumar Sharma, MD & CEO, SBI Life Insurance.

 

“Looking at China and Hong Kong, the demand for insurance products will go up after Covid. This is really showing up,” added Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance. He said while demand was not a problem, there were bottlenecks on the supply side. “In terms of customers buying insurance, we were down 34 per cent in April. This is getting better. In July, we were at minus 3 per cent."

 

 

“There is very high level of research for term insurance. The number of request for health insurance is 1.5-2 times of car insurance in India. Also, there is 60 per cent year-on-year growth in health and term insurance,” said Yashish Dahiya, CEO & Co-Founder, PolicyBazaar.com.

He went on to add that while Covid-19 has increased demand, it has impacted affordability. “The self-employed section of the country is strongly hit. They are struggling. Usually, this group does not have very good documentation of income,” he said.

Agreeing with others, LIC MD TC Suseel Kumar added that this is indeed a defining moment for the sector. “When there is uncertainty, people tend to invest good money on annuities. Our annuities business is really picking up and giving us good volumes,” he said.

“If we waste a pandemic, we have only ourselves to blame,” added Vibha Padalkar, MD & CEO, HDFC Life. “I am hopeful behavioural patterns, especially of youngsters, will change. Young people will no longer see life cover as an expense, but a necessity.”

Meanwhile, about the proposed initial public offering (IPO) of LIC, Kumar said, “IPO is a story that will take some more time to fully unfold. From LIC’s side, maybe we will have some more regulation to comply with, maybe we will have some more disclosures.” He added, “The intention is to get it done in this fiscal year, but I am not sure if it will happen or not.”