Business Standard: March, 2014
Mumbai: About three out of every four insurance policies sold by 2020 would be influenced by digital channels during either the pre-purchase stage, purchase or renewal stages, according to a new report by Boston Consulting Group (BCG) and Google India. This report, Digital@Insurance-20X By 2020, said that not only will insurance sales from online channels grow 20x from today by 2020, but overall Internet influenced sales would be Rs 300-400k crore.
"As insurers seek new avenues to grow profitably, they have a unique opportunity to embrace and benefit from the digital wave, which also addresses many key issues that plague the offline world today. We estimate that digital adoption could result in potential savings of 15-20% of total costs in the case of life insurance and 20-30 per cent in the case of non life, thereby showing the path towards profitability for the industry", said Alpesh Shah, a BCG Senior Partner and Director also the author of the report.
The study said that the old ways of selling insurance are, over time becoming less sustainable. Traditional business models are being challenged by the emergence of trends such as lesser relevance of physical footprint, mobile internet, analytics, social platforms and disruptive players.
Vikas Agnihotri, Industry Director, BFSI, Travel Google India said that while online purchases represent a small component of Insurance activity in India today, the overall influence of Internet on Insurance product purchase in India is already 6x and growing rapidly. "Insurance companies in India are still lagging behind the consumers and have not invested enough to create digital assets to engage the mature consumers online. Our studies have shown that 2 out of 3 users researching for a financial product ended up changing their mind about the brand or the product during their pre-purchase period," he said.
The report said that online term life plans and travel insurance have already picked up substantially in the last few years. Though better pricing is a key reason for buying online, convenience and increased transparency are critical factors as well. The inefficiency of digital assets has led to emergence of online insurance aggregators that have seen a 4x growth in the value of life insurance premiums and a 7x growth in the value of health insurance.
According to the report, motor insurance sales that were relatively small in 2011-12 have also gone up four times within the last year itself. However it said that Insurers need to realize that just like many other industries, they will need to undergo extensive changes in the way business will be carried out in the digital age.