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Industry Report: Online Insurance Purchase Culminates into Loyal and Long-Term Clientele
- DetailsWritten by PolicyBazaar -
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Modified 16 November 2015
A merely 1% of digital contribution towards the total health insurance revenue is rapidly climbing the popularity charts. Reduced commission costs and better savings are the compelling reasons for driving customers to purchase an insurance policy from the mobile and Internet platform.
For insurers, the foray into digital operations is an effort towards acquiring loyal and permanent customers. Latest market study reveals, customers who prefer the online mode of purchasing motor and health insurance continue to remain faithful in the consecutive policy years.
Although insurers sold merely 1.73 lakh insurance policies via the Internet in 2013-14, but industry experts believe that soon the graph will witness a sharp incline.
Mr. Yashish Dahiya, CEO & Co-Founder, Policybazaar.com said, “Currently, 4% of retail health policies are sold online as compared to 2% sold in the last year.”
Mr. Pankaj Oberoi, Chief Distribution Officer, Bharti AXA General Insurance, commented, “Today, people are acknowledging the power of online purchase as it empowers them to select products tailor-made for their different life stage needs. They can easily conduct a survey and make comparisons to arrive at a viable decision in a quick succession of time. Additionally, they can renew their policy in a simpler and faster way.”
Mr. T.A. Ramalingam, Chief Distribution Officer, Bajaj Allianz General Insurance, says, “The mode of digital sales is spreading like wildfire, earlier it was limited to motor insurance policies, but today there is a significant increase in online renewals of health insurance policies.” He further emphasized, “Customers who purchased online two-wheeler insurance are more likely to renew their policy online because it is cheaper and faster. We experienced a 10% increase in two-wheelers online renewals as compared to offline renewals.”
Mr. Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard General Insurance, said, "People who purchase our products online prefer to transact with us on long-term basis. In terms of retention, we have seen a 35% increase in customers who have online purchased their health insurance policy and renewed it in the second year as compared to the traditional shopping. Many customers fail to renew their offline policy, if the agent does not follow up and collect renewal cheque, although they lose out on the no-claims bonus."
Upcoming and established health insurance companies are today witnessing a speedy increase in renewals online.
According to Bharti AXA General Insurance officials, “Our experience indicates that 50% of customers, who buy motor insurance via online mode, renew it in the consecutive years. Meanwhile, our health insurance segment has witnessed 80% improvement in customer retention, with policies being renewed from second year onwards.”
Mr. Sandeep Patel, MD and CEO of Cigna TTK Health Insurance says, “Our company has gained considerable number of loyal customers, as they have renewed their policy online. We are delighted to announce that 60% of our existing clients renewed their policies online in the current year, and we are experiencing a heavy traffic online, with 3.5 times increase in the last year.”
Ms. Anika Agarwal, Head- Marketing, Max Bupa said, “In the previous year we recorded a 32% jump from 20% in fiscal 2013-14 in the online sales. Our online sales have recorded 80% growth, while our renewals saw 70% growth in the same year.”
Policybazaar.com data resources reveal that over 60% of consumers renew their policies in the 61st month, if they have purchased it online, as compared to 30% of consumers who renewed it in 13th month, if they bought a policy via an agent. The report further reveals that policy sold online witnessed a 20% increase in customer retention, as compared to the offline sales. Due to the ease of tracking policy status including renewals and cancellation online, people are opting for the Internet mode.
“Online purchase reduces the errors of feeding the wrong data by the insurers, since the customer will fill up the policy documents,” commented Patel of Cigna TTK Health Insurance.
In an effort to retain their customers and encouraging renewals, insurers are offering great discounts and speedy processes.
For instance, CignaTTK offers up to 50% discounts on direct purchase via company's website. Moreover, they offer a speedy renewal process via their prominent “Renew Now” tab.
Meanwhile, Bharti AXA General Insurance offers lucrative renewal rates to retain their customers.
CignaTTK has prominently placed a tab on its website, which leads the customers through. Max Bupa is getting a mobile app ready for launch this year to strengthen the reach of its three-step renewal process offered through the website presently.
Bajaj Allianz General Insurance offers convenient renewal option for its two-wheeler policyholders via the “Renewal on SMS" service.
However, industry experts emphasize, insurers must educate their customers well, as people will terminate their policy easily if the T&C are not explained well in the initial phase, and all marketing gimmicks will be sidelined.
“Renewal rates are bound to improve and expand for all insurers who are selling their policies online, but they must make an extra effort to educate their customers on their products, else losing them to their competitors will be easy,” said Dahiya, CEO & Co-founder, Policybazaar.com
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