On the back of the success of sachet products, insurance companies and intermediaries are innovating faster by leveraging technological advancements.
By Nimit Bavishi
When we think about insurance we think about life, health and motor insurance policies. Such policies are long term investments and provide a broad spectrum of cover. The premium for a term insurance policy can range between Rs. 5,000 – Rs. 15,000 per annum for a cover of around Rs. 1 crore and a comprehensive motor insurance policy can cost around Rs. 10,000 per annum. Insurance being a service is intangible in nature and the benefits of such insurances cannot be felt until a customer’s circumstances change in the future.
The millennial generation with its seize the day attitude prioritizes experiences and demands instant gratification from the products and services it purchases. Investing in long term services such as traditional insurance products, therefore, doesn’t appeal to this generation. Insurance companies have started taking cognizance of this fact and are leveraging technology to bring about innovative insurance products that have a small ticket size and whose benefits can be felt in real-time.
Sachet insurance products have a small ticket size with premiums as low as Rs. 10 and provide one-time cover. Fitness insurance is one such sachet product which offers coverage for injuries while working out or while playing sports. Insurance providers have also started providing cover for events, one such product is marathoner’s insurance which covers injuries during a marathon or the cost incurred in case the event gets cancelled due to unforeseen circumstances.
Another innovative product is insurance for spectacles which covers against accidental breakage of new spectacles at a premium of just Rs. 75 per annum. From renter’s insurance to monsoon cover which provides cover for vector-borne ailments such as malaria and dengue, buyers today have a plethora options to choose from and can decide on the appropriate cover based on their unique needs.
Context-based insurance products have taken the market by storm with various individuals opting for plans that cater to their needs. It is envisaged that the trend of need-based products will continue to grow with insurance companies innovating new covers and bringing them into the fold. To maintain sustainable growth and to make sure that the products reach the desired target audience, insurers and intermediaries have started partnering with service providers to form mutually beneficial relationships. For event-based insurances, an insurance company can partner with the online ticketing platform while for spectacle insurance, insurance providers are tying up with opticians.
On the back of the success of sachet products, insurance companies and intermediaries are innovating faster by leveraging technological advancements such as machine learning, artificial intelligence and big data analytics. Early adopters in the industry are trying to implement such technology to bring about innovative products and to improve service quality by leaps and bounds. Big-data analytics and Ai provide valuable insights into consumer behaviour and help insurance providers understand which products cater to the market’s needs are thus more relevant.
Machine learning and Ai can also be used to settle insurance claims more efficiently with minimum human intervention. Insurance intermediaries have been immensely successful at doing this by innovating faster than market to cause disruption in the industry.
In India, millennials account for nearly half the working-age populace, naturally driving its consumer market. From a personal finance perspective, such context-based products make sense for millennials as the meaning of investing has changed. A large portion of their finance is dedicated to travelling and new experiences such as eating out or adventure sports. Covering such experiences and activities with products that provide one-time financial cover with a small-ticket size seems ideal. Context-based coverages can also act as complementary covers to full-blown insurance coverages.
(The author is Co-Founder & Head of Networks, Symbo India Insurance Broking)