For Greater Relief

Chandralekha Mukerji        Print Edition: November 2011

Five years ago, when Money Today launched, there were 16 life and 14 general insurers . Today, there are 24 players each. However, the penetration level is still low. With large untapped market, insurers are innovating fast. Chandralekha Mukerji takes a look at some emerging industry trends and how they will benefit you.

New insurance trends
Product Innovation
You may be buying the same washing powder brand your parents used but packaging and the product must have changed over the years to suit your lifestyle.

In insurance, too, products have evolved with changing customer needs. However, the industry can still do a lot more. Life expectancy is rising and so is the cost of basic amenities like health care and education.

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"Going forward, insurers will lay more emphasis on customer-centricity and management of risk through different life stages. Distribution channels with access to captive customers will do better. The strategic differentiators will include a well-trained and productive sales force, brand awareness, focus on customer satisfaction and customer engagement," says Ajay Srinivasan, chief executive, financial services, Aditya Birla Group.

"With customers seeking higher customisation, innovation is one of the best strategies to increase market share. This also leads to more efficiency as companies are able to maintain lower unit costs, offer better services and generate higher sales," says Kanchana TK, executive director, Vantage Insurance Brokers and Risk Advisors.

New insurance trends
Tech Support
Online presence has become indispensable. It enables customers to buy products at convenience and get their needs serviced easily. However, insurers believe that this channel has a lot of potential which hasn't been exploited yet and will play a vital role in enhancing the intermediation efficiency in the coming days.

"This is a start. We feel the online channel will grow in prominence to cater to an increasingly internet-savvy audience," says Sandeep Bakhshi, MD & CEO, ICICI Prudential Life Insurance.

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Another proposed advancement is dematerialising insurance policies. "This will be significant as customers will be able to operate accounts in a manner similar to capital market accounts. More important, as life insurance is long -term in nature, this will eliminate the need to protect policy documents from damage," says Bakhshi.

New insurance trends
Viable Pricing
In a deregulated market, getting the price tag right can be a challenge. "In some products, pricing is ambiguous. For instance, in auto insurance, the approach is underdeveloped. The premium is primarily governed by the type of vehicle (commercial or personal) and its written-down value," says Girish Batra, MD, NetAmbit. However, insurers are taking a leaf out of developed countries' books and trying risk-based pricing.

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"Insurers are moving away from uniform tariff to dynamic pricing, which includes variables such as fuel type, city, model, etc. Concepts such as pay-as-you-drive, which distinguishes extensively driven vehicles from others, are being introduced," says K N Murali, head-motor vertical, Bharti AXA General Insurance. Other products may also see this change. So, you will have to pay according to your risk profile and won't be clubbed under broad categories.

New insurance trends
Consolidation
Attracted by the growth potential, new players are expected to enter this crowded market. This may result in mergers and acquisitions. "Increasing competition, the limit on foreign investment and the downturn in equity markets have impacted small private sector insurers. They may consider consolidation with large players," says Kanchana TK. This will result in fewer but stronger players and healthy competition, with increased focus on service and retention.

Also, insurers are expected to get listed in the coming years. They will have to be more transparent with numbers, helping you choose a financially sound firm. "Usually, customers are indifferent to the insurer's financial performance and are guided by price alone. Going forward, the financial strength of the insurer will become important," says Hemant Kaul, MD & CEO, Bajaj Allianz General Insurance.

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