Home >Opinion >Columns >The line between health and wellness and insurance solutions will blur

The year 2001 marked the liberalization of the Indian life insurance sector. While life insurance per se started in India in 1818, most of the 23 private life insurance firms that we have today came into existence in 2001. The Insurance Regulatory and Development Authority of India (Irdai) was incorporated in 2000 and soon after, it opened the doors to include private companies and started to invite applications with an intent to serve a severely under-penetrated market. Many domestic companies went into partnership with experienced international companies to offer insurance solutions to Indian customers.

The initial years saw a flurry of activity and several players entered the market. The regulator established the framework for fair practices and development of the industry. However, in the first decade, the private life insurance industry did not do enough to ‘listen’ to the consumer and identify specific needs. The focus was on new sales, not necessarily the right sales.

Today, customer engagement has undergone a massive change with the consumer placed right at the centre of all business and growth strategies. Companies are cognizant of the fact that the same consumer gets serviced by different industries right where he or she is, via mobile technology, catering to his or her unique needs and conveniences. With extensive exposure and doorstep service, there has been a seismic shift in consumer expectation and engagement. Consequently, companies have moved from UI (user interface) to UX (user experience).

This has driven all-round innovation, especially in the past few years. Today, the entire sales and service cycle is possible online with back-end digitization and distributor enablement. Digital prospecting, customer on-boarding, consistency in customer experience through automation and digi-enabled data insights used for marketing and underwriting are some of the enhancements that have led to process simplicity and improved user experience.

Over the past few years, channels of distribution have been opened up to include micro insurance agents, insurance marketing firms and, more recently in 2017, web aggregators too. Irdai has also been making necessary amendments to product guidelines from time to time to enable flexibility in product designs and thus offer more choices and flexibility.

The life insurance sector employs 2.7 lakh people and collected 5.72 trillion of premiums in FY20. For the same period, the industry had paid benefits worth 3.56 trillion to policyholders.

The sector protects people from the risk of early mortality, or the risk of outliving resources in retirement years by offering term covers and annuity plans. These form the very core of life insurance. Bundled solutions that take care of both protection and enable savings—both guaranteed and otherwise—and protection against critical illness and disability are the new comprehensive solutions on the block. A consumer sentiment survey conducted by BCG in 2020 indicated growing awareness around the need for protection, health and wellness. According to the survey, more than 50% respondents showed growing interest in protection solutions and more than 60% were inclined to invest more in health and wellness solutions. As per 2019 data, India is the diabetic capital of the world and also accounts for 60% of the world’s cardiovascular diseases. New propositions that enable customers to track and manage their health and get rewards on reduced premiums and other associated benefits are gaining ground in other markets and will soon be a reality in India as well.

In this third decade of the private sector, the line between health and wellness and insurance solutions will blur. This will mark a paradigm shift in how insurance is done in India and will lead to higher penetration. Not only will it help consumers lead healthier, longer lives, but will eventually also reduce the burden on the state by contributing to a healthier society.

Naveen Tahilyani is MD and CEO, Tata AIA Life Insurance.

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