“Simplify insurance jargon; it’s too complex.”

Life and health insurance products are still not very widely used. The penetration rate is less than 5%, according to the Insurance Regulatory and Development Authority (IRDA). There are 26–27 insurance firms in the market, although only five–six are considered to be the major participants.

To what extent does society need insurance?

Insurance is not a product that can be replaced. It is superior than all other banking and financial products. If life insurance plans are marketed similarly to home loans—that is, in a way that encourages borrowers to continue making disciplined monthly payments until they ultimately own the asset—they may reach a larger audience. A comparable drive toward insurance may spur further expansion in the insurance industry. Consider it this way: if you pay off your home loan and all of your EMIs, your house becomes yours. Consider life insurance policies as building a long-term corpus in a similar way. Your corpus is free after your premium is paid. Insurance is a necessary component of society, not a bad thing. Healthcare costs are a substantial contributor to personal bankruptcy, particularly in cases of serious illness.

Which market share do you now hold?

Right now, we own a 7.5-8% market share. The market share held by Life Insurance Corporation of India (LIC) is significant. We now have 8 crore policyholders, including individuals and organizations.

You believe that simplifying the insurance products is really necessary. Why, in your opinion, is it significant?

Complex things cannot be made larger. Make things simpler. We have often seen that consumers are hesitant to purchase insurance due to its complexity. Sometimes the product is so intricate that buyers feel uneasy about the purchase they are making. It’s no secret that consumers avoid complicated items. Therefore, it is essential that the procedure be made less complicated and more straightforward so that clients may purchase plans independently. Undoubtedly, there is demand; yet, if that is the case, why is the penetration rate so low? It’s an inquiry that requires reflection.

The procedures need to be streamlined. The product need to be designed such that the general public may grasp it with ease. For instance, we have attempted to make a 30-second illustrative video. The concept is that you should be able to sum up a product’s key features in 30 seconds or less so that customers understand what they’re receiving. In order to ensure that our partners do not overlook anything crucial, we are also forwarding these movies to them.

So, in less than 30 seconds, your items can be comprehended by anyone?

Such items are already available from us, and we have films that will explain everything to you in under 30 seconds. Distributors, our agents, and direct consumers will get these. We even mail policies to consumers after they have been sold, explaining that these are the advantages you will get. The buyer has to understand what they are purchasing. To put it simply, this is our approach to product strategy.

And what about the fancy terms used in policies?

The insurance business uses so much language that clients are unable to grasp what we, as insurers, are attempting to explain to them. The regulatory body, IRDA, has formed a group to tackle the task of explaining the technical terms. The goal is to swap out complicated terminology with easier-to-understand ones for policyholders.

Which items are in high demand within the industry?

When discussing the life insurance market, guaranteed policies are in high demand and account for around 30% of total sales. Annuities and semi-guaranteed products are also doing well. Because of the strong performance of the stock market, unit linked insurance plans, or ULIPs, have also become more popular. Their share of overall sales is from 30 to 32 percent. About 11%–12% would be made up of protection items.

How do you envision distribution models in this era of digitization?

In general, the market offers four different kinds of distribution models. The first is the strongest model and is similar to LIC, which is an agent-based distribution network. The agent is someone you know in the neighborhood, you can trust them, and they are readily accessible. They offer you advise beyond anything else. However, there isn’t any institutional assistance in the form of portfolio monitoring, CRM, etc. We’ve developed an app that functions similarly to Amazon. The following day, we release the policy. If it isn’t issued, you may follow the guidelines to find out which documents are needed and what you should and shouldn’t purchase.

The second approach is bancassurance, in which the insurance is sold by the bank. Fifty percent of revenues are generated by our agency and workers, with the remaining fifteen percent coming from ICICI Bank. 15% of sales come via channels like other banks, with the remaining 85% coming from distributors like Bajaj Capital and other digital distributors.

E-commerce companies and payment applications have a lot of promise, in our opinion. They own a vast amount of consumer-related data. However, they are unsure about how to handle it. India has not yet mastered this model. It may be revolutionary if we use analytics to distribute the data together with user-generated content. We are able to tailor the product to the customer’s risk tolerance by knowing it.

The topic of raising policy surrender values is also being discussed.

You do not even get the money within the first two years. You then get thirty percent of the premium, and throughout the following five to ten years, you receive ninety percent. Even so, the client isn’t able to get the whole amount. Though there can be a life insurance company’s explanation, why is this the case? There will be rules on this soon, but they are currently up for debate. In order to stimulate demand for goods, it envisions a greater surrender value for non-linked products to the policyholder. These modifications will need adjusting the product and the distribution system.

We at ICICI Prudential have eliminated surrender charges on pension plan-related products. In the industry, we are the only ones who have introduced this. This is the first in India, and maybe the world as well. Since the product is beneficial to the client in any case, we offered it before the guidelines.

You also mentioned an insurance bureau, similar to CIBIL, which is a credit information firm.

It needs to be made more efficient, but it is there. This industry lacks databases and shares very little of them. Like crude oil, data has to be refined. The bureau’s strengthening might be crucial to gaining new clients since it will let us to find out how many policies a certain client has. Second, because early claims frauds are common, the industry can identify the locations where frauds occur. Thirdly, in specific locations with promise, the insurer will get knowledge about the micro market. Fourthly, it will assist in determining the micro market’s quality and durability, as well as the manner and motivation behind the claims.

Finally, we will have direct knowledge of the health infrastructure if we have the health data. The death rate decreases when that is reinforced. In summary, the bureau will consider each person’s unique policy history. It might function as a rating agency along the same lines as CIBIL.