The changing rules of insurance

Insurance is a dynamic sector, where the rules are constantly evolving. A few decades ago, the focus was primarily on the protective aspect alone. I remember when customer expectations revolved around getting a decent life cover. But now, a new generation has come along.

Millennials dominate the customer base in the insurance industry and generation Z is also quickly stepping in. Add to that the pandemic-induced developments, and we now have a user base that is more aware of the uncertainty that’s associated with life in general.

Covid-19 has put insurance in the spotlight, making people realize the importance of securing their future in the midst of all the uncertainty that surrounds us.

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With these new developments, the rules are naturally changing. Amidst this changing insurance landscape, insurers find that as they revisit customer profiles, the two top requirements now are- flexibility and liquidity, in addition to protection.

Liquidity in insurance

On the one hand, liquidity is important, particularly in uncertain times like these. Having the freedom to access invested funds can certainly be a morale booster for many customers.

But on the other, liquidity goes against the basic principle of insurance – which is to ensure that your funds remain invested for the long term where your protective cover remains intact. How do insurers reconcile these two aspects? How do you ensure that customers enjoy the advantage of liquidity without making them compromise on their long-term goals?

One way to go about this is to decode what today’s consumers are looking for. For instance, I’ve noticed that consumers consider products that offer the option of regular incomes (like a monthly income plan) as preferred options to meet their liquidity needs. So, insurers are able to focus more on developing and personalising these kinds of income plans.

The other way of providing liquidity to customers is by offering them to take a loan against their policy. This product feature helps individuals meet their liquidity needs without surrendering their policy or taking on the hassle of applying for a loan or other kinds of debt. Such personalised offerings go a long way in making consumers feel satisfied about having their liquidity needs met.

Flexibility in insurance

Life insurance customers have evolved to seek more elements of flexibility in their plans. The privilege of having options is something that the new-age consumer actively seeks out. More specifically, customers want flexible and personalised products and features that give them all the benefits without requiring them to be chained down.

For instance, flexible premium payment is one feature many customers prefer, since it gives them the advantage of choosing the frequency that’s most convenient to them. Flexibility in services is also equally vital, particularly in the new normal, where customers may enjoy the flexibility to rely on virtual interactions and digital solutions instead of physical options.

In this regard, digital tools like video calling, chatbots, WhatsApp services and online applications enhance the level of flexibility associated with traditional insurance services.

A final word

Even before the pandemic, the insurance sector was consistently evolving. Digital solutions were being developed to work alongside physical and conventional processes. Covid-19 has accelerated the process, pushing consumer preferences in newer directions and encouraging insurers to adopt a digital-first and customer-first approach.

If things progress along these lines, then it’s highly likely that the success stories of tomorrow in the insurance industry will belong to those insurers who can keep track of changing consumer expectations and provide a range of innovative and flexible services and products.

As insurers, our focus is to be a part of that success story by adapting to evolving customer expectations quickly and dynamically.

(The writer is Chief Agency Officer, Bajaj Allianz Life)