Ulips will grow as Indians have faith in stock mkts: PolicyBazaar.com CEO

Singh spoke about the major trends that dominated the insurance space in 2024 and the trends to look forward to in the new year

With the onset of the new year, SARBVIR SINGH, chief executive officer of PolicyBazaar.com, spoke to Aathira Varier about the major trends that dominated the insurance space in 2024 and the trends to look forward to in the new year. Edited excerpts:

 

What has been the major trend in the health insurance segment in 2024? 

In 2024, the relevance of health insurance on the consumer side became quite well-established. However, there were concerns about affordability. While the sum insured went up, there were also price increases. This has manifested itself, at least on our platform, with the number of people buying policies every month increasing. It used to be a small portion, but this year, we have seen a very significant increase in monthly mode policies. Meanwhile, the claim size has also gone up. There have been concerns about the percentage of claims being paid and the actual amounts that policyholders are receiving.

 

Is the growth in retail health insurance being driven more by increased sum assured, or is the overall pie expanding?

I sense that the overall market pie is increasing, although not dramatically. Over the past four years, we’ve been around the 52-53 million mark. However, I believe that gradually, the pie is growing.

 

One key focus for both the industry and platforms like PolicyBazaar is the development of more affordable products. The future of health insurance will likely be more collaborative, with hospitals, insurance companies, and customers all working together to ensure the sector continues moving in a meaningful direction.

 

How do you see the demand for pure protection products in 2025? 

Term insurance rates have increased slightly over the past few years, but it remains very affordable in India compared to global standards. Currently, term insurance is a great bargain in India, though it may not be as well-understood. While the health insurance market is seeing both growing awareness and market expansion, the same cannot be said for term insurance, particularly on the retail side.

 

That being said, term insurance has traditionally offered good products for the salaried class. A major change, however, has occurred concerning the self-employed segment. Previously, self-employed individuals faced challenges in accessing suitable products. Now, there are several products from all insurers, up to Rs 1 crore, where you don’t need financial documentation. Other surrogates have helped popularise term insurance in the self-employed segment. Non-resident Indians have also started buying term insurance in India, as it is cheaper here.

 

One area that is gaining prominence and will continue to grow in importance is retirement and pension planning. I believe retirement and pension solutions are set to become a major part of the future landscape. Within our savings business, two key areas stand out: children’s savings and retirement/pension planning.

 

How do you see the performance of guaranteed products, given that interest rates and yields have come down?

Guaranteed products are not performing as well anymore for two main reasons. First, yields have come down, and second, there have been recent changes to surrender values. As a result, the Indian consumer is currently not as interested in guaranteed products of any kind. Even fixed deposits are struggling to attract interest. Instead, we’re seeing a growing focus on unit-linked insurance plans (Ulips).

 

As the market is coming off highs, do you expect the attractiveness of Ulips to continue? 

For us, Ulips will continue to grow, although their attractiveness has decreased slightly due to corrections in the equity market. We are growing at the same rate as we were earlier, but the absolute amount is still continuing to be higher than it was. I believe that, at some level, the Indian consumer has a lot of faith in the stock markets right now.

 

What are your plans for your health subsidiary? 

The health subsidiary has just been incorporated, and there’s still a long way to go. The core idea is that health insurance needs a more economical alternative. One of the biggest challenges lies with hospitals, as they operate on a pay-per-use or pay-per-service model, where they charge for each treatment. This creates a conflict of interest between the hospital, the payer, and the insurer.

 

Hospitals aim to maximise revenue from the patient, while insurance companies seek to control costs. To address this, we plan to invest in a business model known as the hospital management organisation model. The broader objective is to shift from a per-transaction approach to one based on a per-customer model.

 

How will Bima Sugam impact your business? 

Bima Sugam has not been launched yet, but based on what I understand, it has the potential to create an ecosystem similar to the ‘Unified Payments Interface moment’, establishing interlinkages across various services. Ultimately, Bima Sugam aims to standardise the backend infrastructure for the insurance industry.

 

Currently, PolicyBazaar has to integrate with various government utilities, such as know-your-customer and other processes. The idea behind Bima Sugam is to create a robust backend system that connects all insurance companies, integrates claims processes, and links to publicly available data, such as the India Stack. These are the critical elements we believe are necessary to advance the insurance sector.