Mumbai: Amidst the festivities of Christmas and New Year, we all are getting ready to bid goodbye to 2019 and welcome 2020. From the life insurance industry’s point of view, the stakeholders would hope for another great year after a marvellous 2019. And here we take a look at what the current year meant for the life insurance industry.
In 2019, for the first time the overall size of the protection business for the industry went up. Life insurers focused on unique need- based plans, expanded its protection solutions bouquet and in turn the share of protection went up in their business.
Insurance Regulatory and Development Authority of India‘s (IRDAI) changes in product guidelines was a huge step towards customer centricity. Product guidelines like extending the revival period to five years, early term surrender pay, partial withdrawal in pension products aimed at increasing penetration, maintaining persistency, offering more choices and liquidity to policyholders made life insurance products more attractive and friendlier.
Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance said, “This year is set to offer a mix of opportunities and challenges, where the economy was turbulent and industries were struggling for growth, the life insurance industry remained resilient and continued to generate growth at the rate of 15-16 per cent. Also, for the first time the overall size of the protection business for the industry went up. Protection being the fundamental proposition of the sector, the growth augured well both for the customers and the industry”.
The industry also took several steps to create awareness amongst the people and the latest collaborative effort (Sabse Pehle Life Insurance awareness campaign by IRDAI) of the life insurance industry witnessed significant reduction in complaints and more women and customers from Tier 2 and 3 cities purchased life insurance.
Tarun Chugh, MD & CEO, Bajaj Allianz Life, “The steps our regulator took towards ensuring more transparency for customers, along with opening up innovation for the industry (sandboxing) will come together in the new year to benefit customers with more value-added and simple products. 2019 was also a lot about digitisation across all service aspects within the industry”.
Another significant milestone for the life insurance industry this year was the IRDAI annual report highlighting how the share of women has increased to 36 per cent in the number of policies and 37 per cent in the first year premium in 2018-19, as compared to 32 per cent on both the counts in 2017-18.
Ashish Kumar Srivastava, MD & CEO, PNB MetLife India Insurance told, “The fundamentals underlying household savings are expected to help sustain growth in 2020, however, the sentiments will be impacted if India’s economic growth continues to be slow. The year 2019 saw the sector witness higher profits and business expansion by selling products that promise competitive guaranteed returns. However, a reversal in the interest rate cycle may hamper growth for the sector”.
Life insurance industry also witnessed a massive shift in the consumer self-service ratio. Insurance companies enabled host of services (from a premium notice, to policy statement, to premium payment) on their website like enhanced Chatbot features, services through WhatsApp, which were aimed at providing convenience and instant gratification through real-time service to the customers.
There has also been a constant rise in the new age customers opting for online insurance policies and companies focusing on the segment. These statistics are a clear indicator of the changing landscape of the life insurance industry in India.
The direct business across the industry went up, which is a good sign as it allows the insurance companies to offer interesting online products benefitting the customers. Another milestone was the introduction of the product suitability theme which will unfold in 2020 and will be something to look forward to.
Challenges for 2020
According to industry experts, the needs of the customer are changing and life insurance companies need to adapt and enhance their capabilities to meet them. Innovation and focus on the customer, along with regulatory push will be key to ensure that India’s life insurance industry is successful and future-ready.
With increasing life expectancy, understanding and awareness, the need for pure protection plans will further increase. Retirement planning and pension products are likely to emerge as the next big segment. There will also be the need for legacy planning, which like other developed nations will catch up in India too.