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E-insurance: Watch Out for the Mousetrap

Chandralekha Mukerji   Delhi     Print Edition: August 2011

It is easy, quick, convenient and, in all possibility, will cost you less. That's why, online insurance purchase has all the ingredients to become an instant hit with today's technology-savvy generation who prefer to do things through the click of the mouse.

The trend of buying online insurance policies is slowly and steadily growing in India. Gone are the days when you would had to visit the insurer's office, or fix an appointment with the insurance agent or a broker to buy a policy.

Today, the entire gamut of insurance products, be it health, motor, travel and life covers, all are available for you on the net. In fact, some insurance companies, such as AEGON Religare, ICICI Prudential, Metlife, etc, are now offering exclusive online term plan, which are not available at their branches or with their agents.

Apart from insurance companies directly selling their products through their websites, there are online life and general insurance product aggregating websites such as Bimadeals.com, Policy-bazaar.com, Insurancepandit.com, etc., which hawk insurance plans and help compare products under the same category. These sites make it easier for you to know your options and make an informed decision when purchasing a cover.

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While, at first look, online policies may seem to be a win-win proposal for both the insurer as well as the customer, it has its own limitations. Here, we try to look at both sides of the coin.

THE E-ADVANTAGE

E-insurance plans are proving to be value for money products, with regard to both charges and premium. "The biggest benefit is that you can do an overall comparison of features and prices across various companies, know the pros and cons and then buy the policy that suits you the best," says Akshay Mehrotra, chief marketing officer, policybazaar.com.

"The online platform also brings down the distribution costs and allows customers to buy directly, thereby cutting out the distributor's margin," adds Mehrotra. Moreover, if the entire process is carried in the virtual world, the costs can be further reduced.

Variation in Value: Online and Offline insurance policy
"If a good percentage of the business comes from the online channel, the insurer can easily cut down on the infrastructure costs," says Girish Batra, chairman and managing director, NetAmbit. Customers can also look for reviews and comments posted by other users, get in touch with existing users and obtain first-hand genuine information about the services of the insurer, which usually will be missing when buying from any other channel.

Moreover, the maximum size of the online covers are often larger than their offline versions. "Insurers believe that people having access to internet are generally from financially well-off families and have better access to healthcare facilities. So, they offer higher life covers online and go beyond the maximum age limit that they fix for their offline plans," says Batra. For instance, if a company offers a maximum age limit of 70 years in their offline plans, it is possible that the same company would offer a maximum age limit of 75 years in their online plans. "In addition, chances are that you wouldn't be asked to go for a health check when buying online," adds Batra.

THE HITCHES

While, theoretically, the online facility looks good, there are a few drawbacks of the e-distribution channel. The insurance plans available on the net are mostly pre-set. That means, only the simple vanilla versions of the policies, which can't be modified to suit individual needs, would be available to you. So, it won't be possible to customise a plan to suit your special requirements or negotiate your premium with the insurer.

Also, a majority of exclusive online term plans will not have the option to select riders, such as accidental disability benefit, critical illness or premium waiver covers. So, in case you had planned to bundle these products, it won't be available in an online sale. You will have to shell out extra for these protections.

Taking the case of Metlife Insurance, if you decide to buy their offline term insurance product, Met Suraksha Plus, it will give you an option to add riders like critical illness cover and additional accidental death cover which are available to you at a nominal rate. On the other hand, if you choose to buy their online term policy, MetProtect, it would have cost you less, however, the critical illness cover or for that matter any rider option would not be available with this plan.

When buying an e-policy, customers fill up the application form themselves, thereby, reducing the chances of mistake or a case of being mis-sold by a distributor. On the other hand, removing the intermediary can be disadvantageous for some.

The absence of an agent may not really help customers who depend on them to choose the right policy. Therefore, it is a good option only for the financially well-informed customers, who are sure about what they want to purchase.

"Insurance companies still don't have a solid online claim processing mechanism. So, in case you want to file a claim, you will have to directly get in touch with your insurer or take the old route of contacting an agent," says S K Sethi, vice president, Insurance Foundation of India.

If you are going through an insurance aggregator site, make sure the information provided by them is up- to-date. "Customers should ensure that they aren't mis-guided by faulty information provided on the comparison sites. One should visit the company's website and cross-check the information," says Batra.

Like with any other e-transactions, there are some precautions you should take while buying online policies. Check for the websites security certificate (SSL) to verify that the site is legitimate and can encode files safely.

"The customer should always keep a screenshot of the transaction page, especially the page that shows you have made the payment. Lest there is any mis-communication or denial on part of the insurer, the customer should have some proof of the successful transaction," suggests Batra.

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