There has been a remarkable shift in customers’ perception of Life Insurance (LI) since the Covid-19 pandemic. The change in perception has also led to an increase in demand for Life Insurance products. In a snap poll by Benori Knowledge, 91% of the respondents said they feel it is essential to buy life insurance policies after Covid-19. Earlier, LI was mostly seen as a way of investment but now it is being increasingly considered as protection.
“Customer perception towards life insurance has changed tremendously. People have become more aware after the pandemic. Life insurance coverage has become much more important. Our survey showed that after the pandemic, 91% of the respondents feel that life insurance is extremely important,” said Ashish Gupta, Co-Founder and CEO of Benori Knowledge, a custom research and analytics solutions provider.
“Awareness in tier 2 and below cities have also increased where penetration is very low as they have also faced the brunt of loss of protection with many families losing their main breadwinners. So the pandemic basically acted as an eye-opener for the people to re-think and re-assess their financial planning. The overall perception of life insurance products is seeing a shift to a nudge product rather than a push product,” he added.
Benori Knowledge released a report on ‘Changing Face of Life Insurance Industry’ on Thursday (25th August 2022). It says the Life insurance sector has grown at a CAGR of 11% from 2017-2022 and is estimated to grow at a CAGR of 9% in the next 5 years. The private sector market share has increased significantly from 28% in 2017 to 38% in 2022. At the same time, Life Insurance penetration in India climbed to 3.2% in December 2021, making India the 10th largest life insurance market globally.
In demand Life Insurance Products
Talking about the Life Insurance products that are likely to be in demand in India in the next five years, Gupta told FE PF Desk, “Non-Par Protection products like Term Insurance are fast becoming popular products and are expected to continue to be for the next few years. This trend is the result of the shock delivered by COVID-19 pandemic. Life Insurers, who are trying to expand into the hinterland, are most likely to find a bigger market for non-par products.”
“ The most popular channel in life insurance bancassurance is also invested in Non-par products. Products which offer flexibility to consumers according to their needs, like a combination of two or more products, or products that cater to a particular life event, are going to drive the market in the next 5 years,” he added.
What LI providers should do
In view of the rising demand for LI products, Gupta said that insurers should provide faster onboarding with fast-tracked underwriting. This can be achieved by digitizing underwriting and integrating platforms with systems like Aadhar, IIB etc. for assessing customer profiles to fast-track the onboarding process.
He also said that there is a need for quick claim settlement processes. “Life insurance policy information and paperwork should be made easier to understand; especially if the insurer wants to expand to rural areas where the knowledge base is not so strong.”