Before and After Covid – 2021 Was A Redefining Era for Life insurance

The Covid 19 pandemic has been a cataclysmic event, one that has fundamentally changed people’s beliefs and behaviours. It made potential risks to human life and business starkly visible, forcing the entire civilisation and economies to reorient their way of living.

A key change that occurred was the noticeable shift in how people interact with money, which in turn redefined the insurance sector. The best among us, who always shied away from life insurance equipped with the excuse ‘this will never happen to me,’ were jolted to the reality of ‘anything can happen.’ The pandemic made people relook at their lives through a new lens and compelled them to financially secure important life events, build alternate avenues for income, and plan for contingencies.

Minimalism became the way of life, as people moved away from consumption for the sake of luxury to consumption for the sake of financial security of individual dreams and aspirations. Preserving wellbeing and supporting the community became mainstream, which in turn made life insurance advisory a lucrative employment opportunity. The insurance sector added significant number of advisors in the year gone, supported by an improvement in pride and dignity of the role.

As we progress through the pandemic and new variants threaten to disrupt economic activity again, here are the trends we expect to impact the life insurance sector in 2022.

a) Protection will be top priority for customers:

Customers will look at protection in a holistic manner and seek to understand life aspirations that require financial security. With the threat of Omicron looming large, people will consider creating an alternate source of income, preparing contingency funds, and facilitating economic continuity for their loved ones. Life insurance solutions will play a huge role in enabling these customer needs.

b) Wider segment of customers

There has been a noticeable shift in who and how life insurance solutions are being consumed. While the traditional buyers of insurance continue to consider the instrument, the younger millennial generation is also seeing the value of life insurance in their financial portfolios. We have seen a 30-40% increase in buying by those in the age group of 20-30 years. For the risk averse individual, insurance solutions are also offering a safer way of accumulating wealth as opposed to other financial products like Fixed Deposits, etc. This trend will continue going into the new year.

c) Scaling up investments in new-age technologies:

Life insurers will continue investing in new-age technology to leverage AI, Cloud, Data analytics and more to bring agility, scalability, and ease of operations. While the sector has considerably automated its processes like elimination of paperwork, insurers will continue to work on building a fully digitized business to improve productivity and profitability.

d) Data Analytics and Protection will be paramount:

Life insurers will work on enhancing their capabilities around data collection, analytics, and protection to offer hyper-personalized solutions and a delightful customer experience. Data will play a pivotal role in helping insurers in better understanding customer personas and identifying newer risks. A granular understanding of customers will enable insurers to provide a sophisticated experience to the customers.

e) Multi-channel capabilities:

Organizations will continue building a seamless and integrated multi-channel experience to customers to drive business growth. As a larger population becomes aware of life insurance and the business opportunity expands, insurers will look to expand their reach through existing and new strategic partnerships. The sector will also continue to be among the largest employment generators in 2022 as it looks to maximise its reach through advisors.

f) Product centricity to customer centricity:

While the sector has been on the journey to customer centricity, the digital ecosystem has opened more opportunities to make existing processes agile to evolve with the changing customer expectations. One key element that the sector will work towards is grooming distribution partners to shift to holistic advisory approach instead of a product-specific one. The regulator has also pivoted their guidance to the sector, in line with this increasing digital adoption in India, promoting need-based selling.

g) Product innovation

Modernizing their legacy systems, life insurers are putting a higher emphasis on product innovation. The goal is to provide enhanced customer experience by creating personalized solutions throughout the customer lifecycle including the onboarding and after-sales services. The personalized solutions will account for each customer’s profile and attempt to customize the applicable premium as per the risk profile. Data will play a pivotal role in making that aspiration a reality and machine learning/artificial intelligence can help in taking personalization to the next level with the help of robust analytical tools required to use the data available from multiple sources.

As we gear up for 2022, I am optimistic that the sector will continue to grow at a robust pace in the immediate term and post a double-digit growth by the end of the ongoing financial year.

(By Anup Seth, Chief Distribution Officer, Edelweiss Tokio Life Insurance)

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