In life insurance, one-on-one interaction is still an integral part of the sales process even for term assurance and guaranteed return plans
By Nirjhar Majumdar
The insurance sector is poised for a digital transformation in marketing, underwriting and processing of claims. More and more policies are being sold online. Services are being made available in self-service mode on customer portals. Payments of renewal premiums are also being made via digital medium in increasing numbers. This is not just because of a pandemic situation forcing people to opt for digital channels. This is primarily because digital channels are keeping operational costs of insurers low and customer experience high. After all, it is the experience that matters more than just “insurance cover”. Under such circumstances, the question is what the role of insurance agents can be in this digital era.
Insurance agents can still play a very crucial role both in the area of customer acquisition and customer retention. Insurance in general and life insurance, in particular, is not properly understood by most Indians even now. Digital marketing, insuretech and artificial intelligence (AI) can go a long way in increasing insurance penetration. But these alone cannot cut the ice. In life insurance, one-on-one interaction is still an integral part of the sales process in India even in the simplest of products like term assurance and guaranteed return plans.
Insurance agents can play an important role in improving insurance penetration of the country by increasing the persistency level. In fact, 61-month persistency ratios for almost all insurers are languishing well below 50% while the global benchmark in 65%. This is a sad commentary on the state of the industry.
AI and Machine Learning (ML) enabled Retention Analytics can help insurers in getting many warning signals before policies actually lapse or get surrendered.
Most agents have a habit of keeping contact only with the customers they consider “valuable”. The fact is all customers are valuable and the values increase with the increase in the age of customers, because life insurance needs manifest properly only when a person is clear about the financial responsibilities he has to shoulder in life. Agents should spend more time catering to the localised needs. Many policies lapse because their agents have been terminated or have even left the industry. Some customers have unresolved issues with their agents.
Insurers should give top priority in taking care of such customers, at least in the near term. Insurers should devote as much time in retaining customers as they devote in acquiring customers. Better persistency means better solvency ratio and availability of much higher investable money for investment. That can fetch better returns for the customers. Although life insurance is not the right vehicle to make profits on “investments”, in our country, people will continue to look for returns for some more time. Better engagement is required to convey the message of life insurance.
That cannot happen only through digital channels. Insurance agents can play a critical role in positioning life insurance properly in the financial market. For that, a new brand of agents may have to be developed. The agents are supposed to review the life insurance needs from time to time on the basis of the changing profiles of customers.
AI based technology can identify people who can be true representatives of the insurers. The insurers have to pick them up from the market and groom them well. These youths can be the insurance agents of tomorrow. New generation youths will probably have multiple careers at a time. Some of them are sure to find passion in selling insurance. These agents will be more proficient in acquiring customers, retaining them and meeting their various insurance needs during the entire life cycle of the policies.
The writer is assistant secretary, Kolkata Audit Centre, LIC of India