Opinion | Getting insured at mom-and-pop stores can help

When policies are relatively straightforward, too much hand-holding isn’t required

The Indian insurance industry is the 15th-largest in the world in terms of premium volume, along with written gross premiums of $94.48 billion in FY18. With growing awareness and innovation, along with opted distribution channels, the industry is bound to see its ascent by 2020. According to a recent PWC report, around 55% of customers prioritize buying an insurance first-hand, through brokers and agents.

However, a downfall of customer touchpoints via traditional methods reflects the need for innovation in the insurance industry. To resolve the issue and to introduce new-day advancements, the insurtech industry is actively working to meet the changing needs of customers. Shortly, customers will find neighbourhood stores in every corner of the country offering insurance policies. New regulations from the Insurance Regulatory and Development Authority of India (Irdai), as well as new products and startups in the insurance space, are helping insurance penetrate markets that are untouched as yet. Three concepts are propelling this: simpler policies and processes, the right product at the right price, and a great degree of trust and familiarity with local merchants. Given that the penetration of insurance is low in India, these measures can bring a powerful tool of risk management to the uninsured population.

Simple policies, simple process

For the Indian consumer, the current offering doesn’t have context, which is why it is such a hard sell. “Why do I need this", “I don’t have major health risks", and “This doesn’t affect me" are the first thoughts. However, there are specific risks. And it is especially important that this under-served independent group begins to think about financial stability and wealth creation.

Simple insurance policies make sense and introduce people to financial planning without neglecting their income and lifestyle requirements. When policies are relatively straightforward, for example, a mobile screen damage policy, there isn’t too much hand-holding required—no optional additions, no complex exclusions, no arcane terminology has to be explained. In which case, a neighbourhood dealer selling mobile phones can offer the policy along with the phone.

In this case, buying a policy is just like buying a physical case to protect your phone and will cost about the same amount too. For a busy shopkeeper handling two to three customers at a time, a self-explanatory policy that is easy to purchase (no lengthy forms, for example) is non-negotiable.

Right product at the right price

Demand for financial security and savings will rapidly increase and with the level of insurance adoption today, it will become imperative to honour consumer demand for solutions that are accessible, affordable and relevant. For a customer in a bicycle shop who is about to pay for the bike, it often comes as a pleasant surprise that he or she can also buy insurance as a protection against theft and damage of the cycle. Similarly, it would be convenient to be reminded to buy home insurance when taking out a credit card to make a big payment on appliances or furniture. Offering insurance at the relevant shop is a helpful reminder at the right time and place to get covered at a small fraction of the cost of the product.

Trust and familiarity

Insurance has an unfortunate reputation of putting numerous hurdles and hassles that slow the claims process. Having a familiar face to deal with at the time of claims can make all the difference. The shopkeepers turn into micro-influencers who present the policy packaged with the product, which not only gets immediate attention of the customer but also makes buying policy more relevant for them. For several products such as eyeglass repair insurance, the shopkeeper is equipped to file the claim and deal directly with the insurer to get reimbursed. The customer has to simply bring the broken product to the dealer and pick it up when it’s ready.

In many ways, like with bicycle, backpack and mobile insurance, insurtech startups can provide a scaffolding of sorts to give the population a taste of what insurance can be at its best.

Rohan Kumar is CEO and co-founder, Toffee Insurance