At a time when many may delay payment of renewal premiums, insurers need to check if they are happy with their policies
The business of insurers is down for obvious reasons. The agents find it difficult to meet the prospects. Banks have much lower footfalls of customers at their offices. Digital channels constitute only a tiny portion of total insurance sales.
People with modest incomes are hesitant to part with their hard-earned money for buying more insurance. What can insurers do to keep insurance relevant in the minds of the public?
Connecting with customers
Since new business proposals are few and servicing requests are also much lower, insurers should focus on activities that can go a long way in cementing relationship with customers. In each operational unit, insurers can set up teams dedicated to this function only. They should contact customers who had bought policies in the last five years. The objective can be to see how happy the customers are with the insurance products, post-sales servicing and the customer sensitivity shown by insurance employees.
As most policy lapses and surrenders occur during the initial years of the policies, insurers have to check the willingness of customers to keep the policies in force. This can be one of the most important functions of life insurers at the moment, especially since people may contemplate delaying payment of renewal premiums. Persistency position is already grim for most insurers. According to Insurance Regulatory and Development Authority of India’s (Irdai) Insurance Handbook, the 61-month persistency ratio is above 50% only for four life insurers (including LIC of India). Mostly, insurers are maintaining the ratio at the level of 30-40%. That means, only about 40% of the policies are continued beyond five years out of an average term of 15 years.
For maintaining better solvency margin and garnering greater resources for investment, insurers need to focus more on getting renewal premiums in addition to running after new business. The present Covid situation gives insurers a rare opportunity to spend some quality time with customers over phone or even through mails. A few questions should be asked upfront. Are customers happy with the products they have and the quality of servicing? What kind of products and services can address their needs the most?
Customers’ feedback & grievances
The answers can prove to be critical in developing better products, distribution strategies and brand building measures. The Irdai’s 2018-19 annual report shows that the number of customer grievances as registered in the IGMS was 1,63,264 for life insurers and 42,761 for general insurers. Although most of the grievances were resolved, insurers still do not know whether the customers are happy with the “resolution” of grievances. For life insurers, the areas which contributed the maximum grievances are unfair business practices (30%), policy servicing (28%) and claims (17%).
For general insurers, the areas contributing the maximum of grievances are claims (62%) and policy related issues (16%). Unfair business practices mostly include mis-selling and unethical selling of insurance policies. Now, some observers can say that when the number of policies run in crores, these numbers are but minor percentage figures. But, very few customers bother to register grievances and very few are actually aware of grievance redressal machineries of the industry. So, the actual number of grievances can really be lot more and insurers can wish away that only at the cost of their own perils.
If the insurers (and especially the life insurers) can engage with their customers properly at this hour, the incidence of policy lapses and surrenders can really fall. The customers will get to know that the insurer really values the relationship. Indian customers are never too demanding. They have only to be given a patient hearing and solutions can automatically emerge.
Perhaps, policy conditions need to be explained more clearly. Pre-issuance verification calls can do wonders in curbing mis-selling. Claim settlement process needs to be taken to its logical end much faster. The insurers are handling many new-age customers with higher level of customer expectations. But that does not mean that the customers are now unreasonable and rigid on their positions. They only need to be managed better and all insurers now have some time to listen to them more patiently and empathetically.
The writer is assistant secretary, Kolkata Audit Centre, LIC of India. All views expressed here are personal