Price Waterhouse Coopers (PWC) recently published a report titled COVID-19: Impact on the Indian Insurance Industry (PWC, June 2020). Reproducing below some of the observations in that Report, with respect to life insurance sector.
Term Insurance
The Report says that while there may be an increase in the demand for online term insurance, the increased demand will be subject to the reluctance that people may have with respect to medical underwriting that higher sum assured policies require. Further unstable cash availability (due to drop in incomes, and loss of jobs), may also restrict purchase of higher sum assured term insurance.
Long term savings products
Guaranteed/semi-guaranteed return products, as with traditional endowment, look more attractive, according to the Report, under the current circumstances. The issue here is that face-to-face meetings, which are essential to close a sale, may not be possible. Further people may start valuing short term liquidity more than long term financial needs. People may consider it more important to have money in the form of cash or short term deposits, rather than lock it up in a long term insurance contract.
Investment linked insurance products (ULIPs)
The Report does not see much demand for ULIPs. The volatility in the share markets, which according to the Report may keep most investors away from ULIPs.
Overall assessment of PWC
The Report says that overall even though there is an increased interest in insurance, this may not result in increased sales, unless there is an increase in analytics-led customer segmentation and more selective medical underwriting. That is to say, life insurance companies should use the data they have through data analytics for more focused customer segmentation. Medical underwriting norms should also be changed for cashing in on the growing interest to buy life insurance.
Need of the hour – customer engagement
Sometime back I had written on the need for customer engagement. As the PWC Report correctly identifies, the inability to conduct face-to-face meetings with customers will make a big impact on the sales of life insurance. But this situation will not remain forever. It can reasonably be expected that new cases of the virus will soon peak and life will slowly come back to normal.
It is for the life insurance companies and perhaps the regulator to deal with issues such as data analytics and medical underwriting, As members of the field force we do what is in our hands. We have to prepare ourselves for that period – when things start getting normal. It may take 1 month or 6 months for normalcy to return, we do not know. But the big question is: Are we as agents, development officers, branch managers, etc. prepared for the market immediately post COVID-19?
Travel on the Customer’s Internet Highway
The period of lock down and social distancing and rising cases every day, is best utilized in training and in customer engagement. As I had mentioned in my previous blog article (Need of the Hour – Customer Engagement) this is the period to engage your customers using the power of the internet or at least through video calling. Engage you customers with meaningful conversations, so that you are in their minds, when the time becomes ripe for field visits. Sitting at home, the customer is on the internet highway, you too should be there – the customer’s internet highway, not yours.
Sell Risks Not Returns
Returns Are Uncertain, Risks Are Certain