More than half (55%) of Indian customers still prefer to buy insurance products from agents/brokers, with the conversion rate from the online mode standing at just around 4%, according to a survey by the international professional services firm PwC.
Insurance is still a push business and is considered as a complex product for which customers rely on face-to-face interaction for a better understanding of the product’s features and pricing.
The survey findings are published in a report entitled Competing in a new age of insurance: How India is adopting emerging technologies, released jointly by PwC and the Confederation of Indian Industry.
Further analysis was conducted to identify the dimensions that influence customers to engage with a particular mode. On average, convenience appears to be the primary reason, with 41% of the respondents choosing a particular mode of insurance purchase based on it. Direct approach by an agent comes next with 20% of the respondents selecting it.
Source of information
In general, feedback matters a lot with respect to not just getting recurring business but also converting prospects into customers. The survey also revealed that word of mouth is a significant channel (27% of the respondents) for spreading information crucial to purchase planning.
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Digital modes (47%) are the most preferred and reliable channels leveraged to seek authentic information and verify the information received from other sources, including family, friends or agents. Also, online aggregators (20%) are becoming an integral part of the value chain, and their preference score is almost on par with that of company websites as a valuable source of information.
Communication channel for existing insurance
Customers still consider agents (32%) as the preferred medium for any kind of communication on their existing policy, even after the purchase of insurance; the next preferred channel is the company website (20%). This indicates the importance of human touch in the Indian insurance ecosystem even in the digital era. Although aggregators are becoming an integral part of the entire value chain, their role is minimal once the customer graduates to the next phase of insurance servicing.
Read also: A New Industry Model for InsurTech - McKinsey
Emerging technology (such as chatbots) has already started picking up as the customer’s first point of contact. It has the potential to expand to multiple phases of customer engagement. Though smartphone adoption in India has grown at a rate of 19.43% during the period 2015–18 and is expected to grow by 7.80% by 2022, in the case of insurance, the adoption of apps is still at a nascent stage. This can be attributed to limited awareness and lack of simple versions.
- Although customers are more open towards digital media, they still expect human interaction for critical communication. The key trends are:
- For product-like insurance, customers still prefer active human interaction to understand the nuances of all the phases, especially at the pre-purchase and claim.
- The role of digital is comparatively higher than that of the agent/broker during purchase and service.
- Interestingly, 41% of customers would prefer human interaction over the online mode while planning a purchase.
- Assistant/chatbots are the preferred interaction medium only during the service period.
Digital and social media behaviour of insurance customers
Social media adoption is growing across geographies, age groups and mindsets. Customers in general are impacted by social media on a daily basis and these channels can’t be neglected by any businesses today. The key uses of social media which are relevant for insurance providers are:
i. Opinion matters most while planning to engage with the insurer
- As per the survey results, around 44% of customers prefer to seek the opinions of others while choosing an insurance product.
- 67% of customers prefer to leverage aggregators/ online platforms which enable them to make calculated and informed decisions by comparing products.
ii. Limited customer engagement on social media
- Social media penetration in India is quite extensive, with 55% of active Internet users having a social media presence.
- Approximately 17% customers are using social media to stay up to date with the latest trends. Further, 5% actively engages in discussion on topics of interest on social media, while 70% have never participated in such discussions.
iii. Limited word of mouth on digital platforms
- An interesting finding from our survey was that 70% of customers have never shared their positive or negative experiences related to an insurance product. However, one-third of them would like to do so in future.
Likelihood of switching to another insurance provider
When asked about the satisfaction level with their existing insurance provider, a majority of customers seem satisfied and are not likely to switch their insurance policy in the near future.
Approximately five out of 10 customers are satisfied with their current insurer, while three out of 10 customers are neutral. Approximately two out of 10 are looking to discontinue their current insurer and switch to another. This level of stability might be attributed to the non-occurrence of critical stages like claim for most of the respondents.
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