Only about 1% buy health plans from web aggregators3 min read . Updated: 20 Feb 2019, 07:15 AM IST
- More than half of the health insurance policies being bought by consumers are sold by individual agents
- Complexity of health insurance products, consumer anxiety that in case of a claim, they could need the assistance of an agent are the reasons for this behaviour
Though a large number of people looking to buy an insurance policy visit web aggregators to research about the products, only about 3% actually end up buying a policy through them, according to data for 2017-18 published in the annual report of the Insurance and Regulatory and Development Authority of India (Irdai). In terms of the number of total health policies sold by insurance companies, the number of people buying them through web aggregators is only about 1%. More than half of the health policies being bought by consumers are sold by individual agents, and another major chunk is sold through direct selling channels of insurance companies and through banks.
According to insurance experts, the reasons for this behaviour are the complexity of health insurance products and consumer anxiety that in case of a claim, they could need the assistance of an agent to get the claim approved.
Complexity of policies
The conversion of people visiting web platforms into buyers depends on the complexity of the product, said Mahavir Chopra, director, health, life and travel insurance, Coverfox.com. “For car insurance, the conversion will be in the range of 60-70%. This is due to a better rate that a customer gets online, convenience of buying online and understanding of the processes involved in case of claims. Similarly, people buying term plan will also have a higher online buying share," he said.
However, that is not the case with health insurance. Nikhil Apte, chief product officer, product factory (health insurance), Royal Sundaram General Insurance, said that health insurance is an area that is still very complex for many people. “Typical consumer behaviour is to just compare prices and get quotations for different sums assured from different insurers through the web aggregators. Subsequently, they use this information to negotiate with other channels like bank representatives or distribution agents," he said.
But unlike e-commerce where there are steep discounts on online purchases, in health insurance, there are none. “Though there is no commission for a policy bought online, there is still almost equal cost in the form of buying leads and operations like explaining the nuances of the policy to a customer through tele-calling," said Apte. So, as there is no differential pricing, there is no price incentive for consumers to buy health insurance policies online.
Lack of understanding about health insurance products leads to anxiety about claims getting rejected. “As the product is not well understood, the claims also appear to be tricky. In this situation, customers do not want to take the ownership in case of a claim, and want to transfer the ownership to the agent. It is like saying that I will buy what you suggest me to buy and I will approach you only in case of a claim," Chopra said.
But is the agent who sells you a policy able to get a claim approved? Chopra said that though very few, there are some good brokers and agents who understand the products very well and are able to help out customers at the time of claims.
Apte, on the other hand, said that the perception that an insurance agent can get a claim approved is invalid. “All companies ensure that once the policy is bought by a customer, all the servicing is done by us and the sales channel support is not required. In fact, we are also educating the distribution channels to not bother themselves with the servicing aspects," he said. Also, there is major information asymmetry between agents or brokers and customers, Chopra said. “Almost 8 of every 10 health insurance buyers are not aware of the two-year waiting period in health insurance. Hence, they buy the policy purely on the basis of the trust that they have on the agent," he said. A waiting period is the period when specific treatments are not covered under health insurance.
What should you do?
As a customer, you will certainly look for the best deal in terms of pricing as well as servicing. So do your research. You should also make sure you understand all the exclusions in the policy. If the prices are not significantly different, it then depends on your comfort with a particular buying channel, whether it’s a web aggregator or an agent.
However, be truthful about the information you share with the insurance company in terms of pre-existing diseases or other questions asked by the insurer. Insurance companies and experts say that many claims get rejected due to non-disclosure of facts at the time of buying a policy.