The awareness around life insurance and protection still continues to be low in India and it is mostly seen as a ‘push’ product than a ‘pull’ product, except for a small protection segment. However, slowly but surely, Indian customers are becoming ready for disruptive technologies that are making its way into the Indian financial space, including insurance. For instance, the uptake of e-wallets like Paytm has been phenomenal, the online selling of general insurance products like travel and car policies has seen a strong growth and simple-to-understand life insurance products like term plans seem to be the next growth area, says Martijn De Jong, Chief Digital Officer at Aegon Life Insurance. In an exclusive interview with Sanjeev Sinha, Jong talks about the growth challenges being faced by the insurance industry and shares his business outlook. Excerpts:
With so many companies in the insurance sector now opting for IPOs, what is your outlook on the sector?
Notwithstanding the valuations, which are a function of stock market dynamics, the insurance sector has surely yielded tremendous interests of investors in recent past. Life insurance companies are a direct play of shift of household savings from physical to financial assets and also fulfilling of huge protection gap in India. We think the life insurance sector is structurally positive and will continue to do well.
What do you think are the growth challenges being faced by the industry currently?
Giving below are some of the growth challenges in the industry currently:
# The awareness around life insurance and protection continues to be low and it is still mostly seen as a ‘push’ product than a ‘pull’ product, except for a small protection segment.
# The industry continues to be ‘distribution led’ instead of ‘customer led’ which inhibits exponential growth in relevant areas, specifically protection. Traditional distribution channels including Bancassurance and Agency continue to dominate.
# Considering the distribution push in savings insurance with over 98% to 99% of the retail premium coming from savings insurance, the growth is being pushed in the ‘savings insurance’ segment whereas the huge latent demand in protection continues to remain untapped, limiting the industry pie.
# The purchase and service journeys need further simplification to reduce the friction in the processes which can help better conversion and reduce the customer drop-outs from the process, even after evincing interest.
Have you seen any change in the consumer behavior with regard to life insurance buying?
Initially because of traditional insurance companies, people had a mental conditioning in our country to opt for insurance plans which had saving component build within. However, after private insurance companies entered India and started reaching consumers directly using digital channels, they introduced pure term insurance plans. After a lot of awareness campaigns and a long gestation period, consumers are now opening up to purchasing online insurance as they are realizing it to be more cost effective and easily accessible in terms of purchase.
If we are targeting the youth for our pure protection plans, then the fact that more than 90% of youngsters today use smart phones and are tech savvy makes it all the more easy and possible. This increases the probability of reaching out to our target audience through effective marketing techniques be it through PR, branding or social media campaigns.
Do you find that the Indian customers are ready for disruptive technologies that are slowly making its way into the Indian financial space, namely insurance?
Absolutely, and we are already seeing a number of key examples in the Indian financial sector. The uptake of e-wallets like Paytm has been phenomenal, the online selling of general insurance products like travel and motor / car has seen a strong growth and we are expecting that simple-to-understand life insurance products like term plans are the next growth area.
Aegon Life Insurance made a strategic shift about a year ago. How has this one-year journey been?
Very exciting and promising. We focused heavily on areas like analytics, ML/ AI, digital marketing, technology, customer insights and providing the best digital Customer Experience (CX). Those investments will build a superior insights in customers and product offerings that we expect will provide a competitive advantage.
What are the digital initiatives that you have spearheaded that have helped this digital transformation?
First of all it’s starting with the people. In order to give the company a first quick digital make-over, we have hired a number of new people coming from digital industries like e-commerce, online travel, data analytics and telecom. We then introduced both new ways of working for all employees centered around agile working methods and design thinking and online collaboration tools as Yammer and Slack. The key focus of the digital initiatives we started is centered on making the digital purchase process frictionless (using AI to reduce the questions being asked and remove the need for a medical in certain cases), customer insights (via advanced data analytics), new products for digital consumers and optimized targeting.
The e-commerce route is still not tapped in India. How do you think can life insurers best leverage this channel in India?
By providing a frictionless and superior customer experience. That’s the reason we focused heavily on both.
With so much talk about artificial intelligence, has Aegon Life Insurance dabbled in this space? If yes, what are the projects you are working on?
Aegon Life is investing significantly in developing advanced Machine Learning and Artificial Intelligence capabilities. One of the key areas we are working on is to use AI to automatically underwrite policies based on the information that customers provide. Customers can expect instant policy issuance decisions in the near future and also significantly reduced medical tests to be done. Longer term, we are working towards instant policy issuance based on customer’s publicly available information. AI-based underwriting is also able to identify risks much better and we can therefore offer customers better premium rates.
We are also using AI to automate processes and reduce costs, the benefit of which can be passed on to customers. We are making significant advances in automating digital marketing processes. Soon to be released is a chatbot that will help customers through the journey of buying a policy. It will help customers decide which policy to buy and how much life cover they need. It will also further help them fill in details to get a quote and then buy a policy.
India is both severely un-insured and underinsured. How do you believe digital can help address this problem?
Digital can come in many forms and shapes and due to the diversity of the Indian consumer market, we will need different digital solutions for different customer segments. So, for smaller cities and villages where underinsurance is a particular challenge, we can think of solutions around assisted e-commerce with POS providers. For larger cities, we expect to see close cooperation with digital partners to provide customer-specific information and solutions for their customers. This approach will lead to a better understanding of what life insurances can offer to customers and how it will help the customer plan a better financial future in all circumstances.