By Sylvester Carvalho, Lead – Product, Riskcovry
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed setting up Bima Sugam, a direct-to-customer platform where insurers will sell insurance products to customers online. This online-aggregator business is expected to disrupt the insurance distribution business in India and is in line with the regulator wanting to digitise insurance distribution and level out the playing field for all insurers online.
Expected to go live in January 2023, the platform will be a one-stop shop for all insurance-related needs for a customer and will have products across Life, General and Health insurance. Along with policy issuance, customers will be able to raise service and claim requests as well through the portal.
With insurance products always being complex in their nature, customers traditionally have their apprehensions and an innate distrust towards insurance because of fear of mis-selling and incorrect understanding of policy terms and conditions. With a centralised platform for policy sale, customers would intrinsically feel more at ease purchasing insurance from Bima Sugam.
With technology hopefully cutting out distributor margins, the benefit should pass to customers in the form of cheaper premiums. Premiums on the Bima Sugam platform for Life Insurance should be 25 per cent lesser and General Insurance should be 10-15 per cent lesser. Additionally, IRDA may also provide further discounts for the policies purchased from the platform. Further, since agents and IMDs will also be using this platform, there will be a natural increase in the market competitiveness, giving customers an advantage on premiums.
With digital processes with hopefully lesser manual intervention, renewal processes should be seamless for the policies, without the hassles of physical paperwork.
It’s important to note that while the platform may disrupt distribution in a huge way, a large section of customers will still need help from offline modes of distribution like agents, banks and last mile financial inclusion partners.
It remains unsaid that with the low penetration of insurance in India, this is a move in the right direction as the biggest advantage will be convenience of all services available on a single screen backed by the trust of a government agency.