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Traditional insurance channels are embracing technology now, said Vibha Padalkar, MD & CEO of HDFC Life Insurance.mint
Traditional insurance channels are embracing technology now, said Vibha Padalkar, MD & CEO of HDFC Life Insurance.mint

Virus rewrites the rules for India’s life insurance sector

Pandemic has forced companies to digital modes of distribution and offer new products

MUMBAI : India’s life insurance industry, which has been traditionally dependent on physical distribution through agencies and bancassurance, is shifting its focus to digital modes of distribution while augmenting product offerings on digital platforms and selling more protection-oriented policies as it seeks to arrest the steady fall in premium earnings.

For the June quarter, private life insurers’ new business premium plunged 19.17% year-on-year (y-o-y) to 12,805.42 crore. For state-run Life Insurance Corp. of India, new business premium fell 18.45% y-o-y to 36,530.02 crore in the June quarter.

The four-month-long lockdown induced by the covid-19 pandemic is changing the insurance landscape in India on two key fronts.

First, since customers have become more precarious about their financial condition, they are looking at protection-oriented products and guaranteed return plans. Second, since face-to-face meetings between customers and individual agents or bank officials have stopped due to social distancing norms, insurers have started selling more products through websites, and distributors have started interacting with existing and prospective customers through digital and telephonic mode, either for pitching new sales or for servicing and settling claims.

“The innate need to conserve cash cannot be under-estimated," Vibha Padalkar, managing director & CEO of HDFC Life Insurance Co. Ltd, said at Mint’s Pivot or Perish webinar.

“Our approach was that covid-19 is here to stay and we have to live with it. From March itself (when the lockdown began), we are ramping up our digital offerings…This is truly the inflection point for the industry in terms of opportunities as customers have started realizing the importance of buying insurance," said Padalkar.

Traditional channels such as agency channel and broker are embracing technology now, said Padalkar.

For private life insurers, 45-50% of sales come from equity-linked products, which are typically riskier than traditional plans. This trend is now changing with customers now rushing for pure term assurance covers and protection-oriented plans.

“In March, when the lockdown began, our run-rate fell to 20% of its average. But now all are in recovery mode. We worked on digital sales quite a lot, we had to gear up for collections through digital mode. Our June quarter sales have been brought to similar levels like last year due to our efforts. All companies are now focusing on building their digitization capabilities," said Prashant Tripathy, MD and CEO of Max Life Insurance Co. Ltd.

The non-life sector too, which is now gearing up to meet increased demand for health insurance, has seen digitization drive on full throttle.

ICICI Lombard General Insurance Co. Ltd.’s managing director and CEO, Bhargav Dasgupta said, “One of the challenges was to gear up for contact-less claims service during the lockdown. Digital was anyway a tool to look at the future, but with the latest crisis the whole paradigm has got accelerated. Consumers would now want different products and services. We have started homecare products as we feel that now more customers would be opting for treatment from home rather than going to the hospital. We are providing this product on a cashless basis."

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