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Insurance companies are revisiting their product distribution strategies, in order to spruce by the sale of their policies. Combi or combination products, which include sale of life and health product packaged together; and mallassurance (insurance policy sale through malls) are being re-examined to ensure that sales spike up.
The insurance regulator had earlier allowed insurance companies to sell combi products of life plus health products, so that the penetration of insurance can be increased. Insurance penetration is presently below 5%. Here, one life company would tie-up with a non-life company to sell the product.
In its health insurance regulations, Insurance Regulatory and Development Authority (Irda) had said that the combi product shall be the combination of Pure Term Life Insurance cover offered by life insurance companies and Health Insurance cover offered by non-life insurance companies/standalone health insurance companies.
Companies, though have begun sale of these products, they admit that the product sales have not been as per their expectation. Manoj Jain, CEO of Shriram Life Insurance had recently told in an interview to Business Standard that while they have a combi product with a standalone health insurer, the product has not been doing well.
“While people buy the product, they either do not renew it or if they do, they only renew the health insurance part of the product. This leads to the policy getting lapsed,” he explained.
Other insurers, who were planning to launch this product, are now making a re-think. The chief executive of a large public general insurer, who was exploring tie-ups with life insurers to offer a life plus health insurance, said that the market is still not ready for the product.
“We came to understand from customers that they are not comfortable buying this product, since they find it a little complex. Hence, we will only launch a product after taking customer feedback. The policy not just needs to be simple, but also an attractive packaged cover for the customer,” said the official.
Another segment where insurers are working on is sale through shopping areas. Mallassurance or sale of products through shopping malls was an innovative strategy adopted by Future Generali India Insurance for both life and general insurance products. However, company officials said that big-ticket policies are not getting sold through the platform.
K G Krishnamoorthy Rao, MD & CEO of Future Generali India Insurance said, “Mallassurance is still in its initial stages. We have been able to sell only small ticket policies, since for large ticket products, a customer needs to spend a longer time to understand the policy.”
However, he added that the data collected from selling these low-ticker products is now being used to up-sell their life insurance products. Rao also said that they expect to improve the distribution through this model in the near future, when there is better awareness of this structure.
Insurance penetration in India, which surged consistently till 2009, slipped in the consecutive second year and stood at 4.1 in 2011, compared to 5.1% in 2010. The measure of insurance penetration and density reflects the level of development of insurance sector in a country and is measured as the percentage of insurance premium to gross domestic product.
