India is on the threshold of a digital revolution. The internet has become an integral part of the changing lifestyle of the country’s urban population. With an increasing number of people relying on the Net for their purchase needs, India has witnessed incredible growth in e-commerce over the past few years. The growing acceptance of online payments and increasing penetration of internet-enabled devices are some of the key factors driving e-commerce in India today.

Further, with its vision of a ‘digital India’ the Government is laying the necessary groundwork to spur e-commerce. As e-commerce gains momentum in India, the power of digitisation has begun to reflect on the life insurance segment as well. However, the impact on the life insurance sector has been gradual as compared with other industries. A recent Nielsen survey, ‘Digital Natives on Protecting Life’ raises some startling facts for the insurance industry. For instance, only 19 per cent of the survey respondents chose online buying as a preferred mode of immediate purchase of their insurance policies, although 82 per cent of them were aware of the existence of such an option. On a brighter note, around half the survey respondents expressed their willingness to try online purchase of policies in the future.

Making it mandatory The Nielsen survey reveals that the upsurge in online purchase will be driven by cost competitiveness, quick turnaround, flexibility to compare options and lesser reliance on agents, among other factors. Today, life insurance is among the most searched financial products — 58 per cent of the survey participants or their household members searched online for information on life coverage policies. Further, 84 per cent of the respondents searched over the internet prior to their last purchase. Also, there is a significant proliferation of the internet in other life-insurance related activities such as payment of policy renewal premium and accessing policy information such as NAV and premium payment receipts.

On the regulatory front, the Insurance Regulatory and Development Authority has been steadily formulating an enabling landscape for the digitisation of the Indian life insurance industry. In 2013, it launched the pilot phase of the insurance repository system to enable policy holders to keep insurance policies in electronic format and undertake online modifications and revisions. It is expected that the digitisation of life insurance policies will be made mandatory in the near future for some customer segments. Such initiatives are definitely movements in the right direction.

Additionally, while facilitating regulations to popularise online sales of life insurance policies is important, it is equally vital for insurance players to focus on impediments that prevent customers from making such online purchases. To put the scenario into perspective, while 76 per cent of the Nielsen survey respondents did embark on an online purchase journey, only 20 per cent of them actually bought the life insurance online. Reservations about the credibility of the process, especially among the older customers, limited information, lack of transparency and unclear purchase instructions are some of the factors that hold up customers from actually making the online purchase.

In order to encourage e-commerce in the industry, insurance players need to redefine their approach towards online selling. They have to work hard to assuage their customers’ notions of the unreliability of online sales by providing trust-led customer support and efficient processes.

Striking a fine balance in simplifying the online literature and complying with the regulator’s guidelines is essential to serve the needs of all stakeholders.

Also, taking a cue from other financial services counterparts, insurance players can initiate online educative initiatives to enhance the general levels of understanding among the public and build trust. Further, customers should repeatedly be assured that the company representatives are never more than a call away to cater to their needs.

The success of e-commerce in the life insurance industry is essential for its penetration in the context of rapidly growing, increasingly web-versed population. This success will immensely benefit all the stakeholders across the life insurance value chain.

However, life insurance players need to ensure that the progression towards the trend is smooth, trust-led and beneficial for its customers.

(Anisha Motwani is Director & Chief Marketing Officer, Max Life Insurance)

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