‘Demand for protection products on the rise’

Covid-19 has come as a blessing in disguise for the insurance sector, as consumers are more aware now and keen to protect themselves against the uncertainty that the pandemic may throw up. Insurance has become a nudge product from a push product, said the best minds of the life insurance sector during a webinar organised by Business Standard. They said they were seeing increased demand for protection products. While new business premium of insurers was down in the first quarter of the current financial year, compared to the same period last year, trends in July and August have been encouraging for them. While demand has picked up, affordability is still a big issue for the sector, they said. Insurers have also consciously changed the way the sector used to function prior to the pandemic, as they have moved on to completely digitised process of on-boarding, servicing clients, and settling claims.

While the Covid-19 pandemic has wreaked havoc across sectors, life insurers feel this black swan event has resulted in the bolstering of demand for insurance products, be it in protection, health, guaranteed return segment or others. From being a push product, insurance has become a “nudge product” due to the uncertainties.

During the Business Standard webinar, moderated by Consulting Editor Tamal Bandyopadhyay, leading minds of the life insurance industry seemed to agree that the current situation has led customers to be more aware of insurance. And while demand for insurance, especially protection products, has gone go up, affordability is an issue.

“Any pandemic like this will immediately increase awareness among customers. We do see a lot of interest. This will be a defining moment,” said N S Kannan, MD & CEO, ICICI Prudential Life Insurance.

While the industry saw its new business premium decline substantially in Q1FY21, since July, business has seen an uptick, led by the state-owned insurance behemoth, the Life Insurance Corporation (LIC).

“Ever since the pandemic started, we have lost a lot of business. Having said that, our figures for July look like July 2019, and for August, it will be similar to last year. Apart from April and half of May, we have come remarkably well,” said Mahesh Kumar Sharma, MD & CEO, SBI Life Insurance.

“Looking at China and Hong Kong, the demand for insurance products will go up after Covid. This is really showing up,” added Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance. He said while demand was not a problem, there were bottlenecks on the supply side. “In terms of customers buying insurance, we were down 34 per cent in April. This is getting better. In July, we were at minus 3 per cent."

“There is very high level of research for term insurance. The number of request for health insurance is 1.5-2 times of car insurance in India. Also, there is 60 per cent year-on-year growth in health and term insurance,” said Yashish Dahiya, CEO & Co-founder, Policybazaar.com.

He went on to add that while Covid-19 has increased demand, it has impacted affordability. “The self-employed section of the country is strongly hit. They are struggling. Usually, this group does not have very good documentation of income,” he said.

Agreeing with others, LIC MD TC Suseel Kumar added that this is indeed a defining moment for the sector. “When there is uncertainty, people tend to invest good money on annuities. Our annuities business is really picking up and giving us good volumes,” he said.

“If we waste a pandemic, we have only ourselves to blame,” added Vibha Padalkar, MD & CEO, HDFC Life. “I am hopeful behavioural patterns, especially of youngsters, will change. Young people will no longer see life cover as an expense, but a necessity.”

Meanwhile, about the proposed initial public offering (IPO) of LIC, Kumar said, “IPO is a story that will take some more time to fully unfold. From LIC’S side, maybe we will have some more regulation to comply with, maybe we will have some more disclosures.” He added, “The intention is to get it done in this fiscal year, but I am not sure if it will happen or not.”

IPO IS A STORY WHICH WILL TAKE SOME MORE TIME TO FULLY UNFOLD.

TC SUSEEL KUMAR MD, Life Insurance Corporation

IF WE WASTE A PANDEMIC, WE HAVE ONLY OURSELVES TO BLAME. I AM HOPEFUL BEHAVIOURAL PATTERNS, ESPECIALLY OF YOUNGSTERS, WILL CHANGE. YOUNG PEOPLE WILL NO LONGER SEE LIFE COVER AS AN EXPENSE, BUT NECESSITY. VIBHA PADALKAR MD & CEO, HDFC Life

WE DON’T THINK HUMAN INTERVENTION WILL DISAPPEAR. WE THINK HUMAN ELEMENT WILL REMAIN IMPORTANT. WE DON'T HAVE ANY PLANS OF REDUCING THE NUMBER OF BRANCHES OR REDUCING PEOPLE. MAHESH KUMAR SHARMA MD & CEO, SBI Life Insurance

IF INDUSTRY MOVES FROM PUSHTO-NUDGE-TO-PULL OVER TIME, THAT WILL BE A BIG POSITIVE.

NS KANNAN MD & CEO, ICICI Prudential Life Insurance

THERE IS A SIGNIFICANT SHIFT IN THE PRODUCT LANDSCAPE FOR THE SECTOR. A REMARKABLE SHIFT IS ON THE TERM SIDE. ULIP PRODUCT HAS BECOME LOT MORE CONSERVATIVE IN ITS PROPORTION AND IS COMING DOWN.

TARUN CHUGH MD & CEO, Bajaj Allianz Life Insurance

WE HAVE DOUBLED OUR SUM INSURED AS PERCENTAGE OF GDP. WE ARE HEADING IN THE RIGHT DIRECTION. THERE IS HIGH AMOUNT OF RESEARCH FOR PROTECTION CATEGORY PRODUCTS IN THE COUNTRY. YASHISH DAHIYA CEO, Policybazaar