Gradual economic recovery has resulted in industries across sectors regaining consumer and investor trust, spurring measured growth. In a highly competitive industry that is not traditionally known for innovation, changes in demographic and product preferences, technology and business models are creating significant new opportunities for insurance companies to defend market share and grow their revenue.
Today, consumers are relooking their priorities when purchasing an insurance policy. In order to address the new-age requirements, insurers are exploring innovative solutions to offer holistic services including personal wellbeing and health, which is fuelling industry transformation. The growth in digital technologies is also accelerating development of these services and expanding access to a wider consumer base.
The pandemic has also encouraged brands to become conscious of their environmental, social and governance (ESG) impact and drive sustainable business practices. In fact, a brand’s ESG goals are an important part of the consumer’s selection criteria and insurance brands are no exception to this trend. Insurers must pivot their strategy for growth by focusing on four key factors – product innovation, ESG footprint, driving technological capabilities and prioritising health and wellness.
Rethinking insurance products to serve under-protected segments
Over the last two decades, the Indian insurance industry has undergone significant shifts, moving from selling investment products to talking about the assurance of a secured future and from solely relying on traditional savings products, insurers have become more focused on driving innovative customised products catering to the evolving consumer needs.
For instance, today there are insurance plans specifically for gig workers who do not have access to group coverage. Commonly, customised term life insurance plans are best suited for freelancers who may not have a steady income. Insurance companies are now coming up with pay-as-you-go or monthly subscription based short term insurance policies that can be changed or cancelled at any time depending on the user’s preferences. Similarly, micro insurance taps into a large market potential among low-income people for expansion of comprehensive financial protection.
Insurers that focus on innovative solutions tailored to these segments' specific requirements will find new value and revenue streams
Growing focus on health and wellness offerings
Life insurance has a critical role to play in improving the quality of policyholders’ lives. This involves going a step further and contributing to their health upkeep by integrating solutions that encourage consumers to prioritize personal wellness.
Connected wellness offerings in life insurance are poised to become more relevant and sought after by consumers. Max Life’s India Protection Quotient 4.0 survey revealed that 49% of respondents are seeking health and fitness benefits among a range of holistic services expected from insurers today.
As with any consumer-centric offering, life insurers need to recognise that most consumers think short-term and demand instant gratification. While health and wellness results take time to manifest physically, it is important that life insurers weave in existing benefits, rewards and incentives in their connected wellness offerings to keep the customer motivated.
For instance, Max Life has designed a ‘Max Fit Program’, a wellness app that incentivises customers to improve their personal health through premium discounts on their life insurance policy. Simply put, connected wellness features will help insurers link and bundle number of digital devices, wearables, apps, phones, with sophisticated analytics systems. This will help life insurers encourage policyholders to lead healthy and fit lifestyles.
Leveraging new data sources and technologies to arrive at applicable insights
Today, consumer behaviour and awareness has evolved to encompass the idea of personalisation and on-demand products and services. To rapidly adapt to a future more aligned with the current expectations, life insurers must become more innovative and take policy personalisation and customisation to a new level while enhancing the digital footprint of insurance penetration.
Technological advances such as artificial intelligence (AI) and the internet of things (IoT) are not only helping expedite policy buying and claims settlement processes but are also bringing together historical and behavioural data to offer better underwriting, pricing and risk management services. The growing consumer need for personalisation and tailored communication is also being efficiently addressed by building IoT capabilities into the insurance systems. This will help in a widespread adoption amongst varied demographics in the coming times and enable insurers to achieve consumer centricity, growth and profitability in the long run.
Creating an ESG-focused roadmap
Decarbonising the economy is a pressing issue as it is changing all policy, corporate and investment decisions. ESG is no longer viewed as adjacent to the business but is core to business operations today. A sound ESG strategy and roadmap for impacting society and environment positively affects brand reputation, valuation and perception. ESG compliance also helps access to technical, financial and human capital.
Insurers can promote the ESG agenda and drive towards sustainability through their own operations and business activities. Promoting diversity and inclusion, reducing greenhouse gases (GHGs), managing climate related risks and supporting communities via charitable work are just some key areas which enhance the brand reputation and the companies’ genuine ESG credentials. Not only will these ESG-focused activities reduce costs in the long-run, they will also offer an opportunity to attract the growing market of ESG-minded consumers whilst also having the capability to facilitate positive financial returns on investments.
Recent trends including heightened consumer expectations, new market entrants and niche players, significant demographic shifts, and advances in technology, have created an important window of opportunity for innovative insurers to act now. Given the significant challenges insurance companies face today, it is important for insurers to think seriously about transforming their companies’ business models to better understand and become more relevant to their customers. By leveraging these key touchpoints, brands can usher in a new vision for life insurance – one that is relevant, inclusive and transformative.
An industry veteran in the financial services sector for nearly three decades, V. Viswanand is deputy managing director at Max Life Insurance and a member of the board.
Under his belt, he is responsible for distribution, including proprietary channels, bancassurance and third-party business, institutional sales, business development and distribution operations.
He steers the strategic direction and growth of the company and leads the Max Skill First training partnership as well as the procurement and facilities functions.
He played an instrumental role in not only propelling the company to emerge as the industry leader in customer retention, claims paid ratio and customer loyalty but also had led the company’s wins in several global and national accolades in quality and technology, including the coveted gold medal at ASQ, USA and RBNQA.