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Karan Chopra, head, retail sales, HDFC Ergo General Insurance Company, says one in every seven, or 14 per cent, of private car insurance policies are renewed online. However, of all insurance policies sold by the company, only three per cent are bought or renewed online.
He says this is partly because more effort is required for a sales process, while renewal is easier online. That is why customers who buy through an agent or banks also prefer to renew online.
Among the policies sold online, those for motor, health, term life insurance and personal accident covers sold more than traditional plans, for which the consumer might require some help from an agent.
A recent report by The Boston Consulting Group and Google said the percentage of customers purchasing insurance policies online had gone up steadily over last year. Health insurance buyers had increased from 13 per cent in 2012 to 19 per cent; motor insurance also went up from 13 per cent in 2012 to 16 per cent. Still, the share of digital sales continues to be low, at only two per cent, the report said.
Yet, the potential savings in total costs with life insurance was 15-20 per cent, it said; with non-life, 20-30 per cent.
When to buy online
Yashish Dahiya, chief executive officer (CEO), Policybazaar.com, says buying insurance online makes sense for a consumer, irrespective of age or product - purchasing online is cheaper and more transparent than offline. However, an exception can be in special cases or if the consumer is in a high age bracket.
For instance, if you are less than 25 years of age and have no dependents, then it is very easy to buy any plan online. But if above 45 years, buying a term plan or health insurance online could be more difficult. Such customers are usually considered riskier by companies due to their age or because they might have some ailments. Hence, chances of the policy getting rejected are higher. Or, such customers may be charged a higher premium. So, if you are in such a category, it is advisable to take the help of an agent. Who can then advise you on how much premium you can afford, given your age and income, and which company to choose from, depending on the exclusions and diseases covered.
"An online policy is meant for those who are internet-savvy and can do some research and purchase on their own. It is for those not needing assistance,'' says Harshal Shah, director-marketing at AEGON Religare Life Insurance.
Dahiya agrees an agent might do all your paperwork and all you need do is sign. But there can be major cases of misrepresentation, affecting your chances of claiming. "It is just a perception that insurance requires assistance from an agent. Individuals can very much do this by themselves. It just requires a little time and consideration on their part," he says.
Sometimes, you might need an agent's help when there is a break in a policy and you need to revive it. If, for instance, you have missed paying your life insurance policy's premium and the policy has lapsed. Sometimes, the company may ask you to undergo a medical test again when you want to revive the policy. In such cases, you might need an agent's help.
"Most policies sold through intermediaries like policybazaar come under online but some processes cannot be conducted online. An example is a case when there is a break in insurance policy. These are offline processes and in such scenarios, we assist by connecting the customer with the particular insurance company and help them go through the process," says Dahiya.
Online help
Policybazaar offers assistance to customers via phone calls, live chats or emails. These are in the form of helping them understand their insurance needs, the features of the products available, the best options and the documentation.
Dahiya says in terms of service, people might not trust online platforms because of the seeming lack of human interface. This is a perception and is being battled. Insurers are also placing dedicated desks for servicing consumers buying online.
Shah of Aegon Religare says, "Agents give advice and that is useful for complex products. For simple online products, where the value proposition is clear, the decision is largely the customer's. Having said that, they sometimes do need clarifications and we have assistance channels like 'tele-assist' or 'click2call', email assistance that is available for quick support. We are also ensuring customers get the real statistics around claims and get reviews from other buyers of the products."
With online retailing of insurance gaining momentum, more and more companies are trying to bring out innovative products. They are attempting to make products consumer-centric and convenient to buy through logistical advances at the back-end, like seamless integration with banks, ironing out underwriting processes and so on.
Rituraj Bhattacharya, head - market management, Bajaj Allianz Life Insurance, says while term plans are more popular than other products online, there has been an increase in the number of enquiries by customers for other products as well, in terms of participating and non-participating products. Bajaj Allianz Life , for instance, offers its recently launched traditional plans with a guarantee element like Save Assure and Invest Assure in the online channel.
To help customers decide the right sum assured or the right policy term, Bajaj Allianz offers facilities like live chat to discuss product queries on the spot and 24x7 call centre assistance to guide the customer through the website and buying process. To help customers fill the proposal form, the company also has on its website simple infographics, a list of frequently asked questions and benefit illustrations.
For communicating with customers, apart from email, companies also use digital tools such as Facebook and Twitter.
Segment-specific
Companies are also launching products exclusively for the online space. For instance, Aviva Life Insurance has five products exclusively developed for the online channel, catering to protection, health and investment needs, says Rishi Piparaiya, director, marketing & direct sales.
"Over the past two years, we have launched products for critical illness and term plans with return of premium products, all of which have been well received. Last year, we also launched an online term plan with deferred payouts, a first in the industry for the online space. We recently launched an online Ulip (unit-linked insurance plan),'' he says.
Aviva has an assistance team to help the customer through the process, using tools and channels like online real-time chat, callback options and emails. "The advantage of buying online is increased convenience, lower cost and no middleman involved. The customer can carefully assess his/her needs, compare the products at a comparison website and buy the product. Customers who buy policies online are aware and make need-based purchases; therefore, the persistency rate for policies bought online is much higher than the ones bought offline," says Piparaiya. "In fact, over 95 per cent of our customers who bought the policies online renew it year after year."
Saving in cost
There is a massive cost difference for consumers buying insurance policies online and offline, says Dahiya. A simple term insurance policy from Aviva bought online for a 29-years-old male non-smoker will cost Rs 6,694. The same policy if bought through offline channels can cost Rs 9,157. Even for the company, online channels are a huge savings, as there are no agents or intermediaries involved. Their cost is the investment made in the online channels and technology. Aviva's Shah says online policies can be up to 50 per cent cheaper.
So, if you are net-savvy and willing to do a bit of research, there is no reason why you should not buy insurance policies online, with assistance available online, too.
