JOIN USInsurance sales from online channels is expected to grow 20 times by 2020, and overall Internet influenced sales would be around Rs 30,000-40,000 crore, said a report by Boston Consulting Group (BCG) and Google India.
The report title 'Digital@Insurance-20X By2020' estimates that three in every four insurance policies sold by 2020 would be influenced by digital channels during either the pre-purchase stage, purchase or renewal stages.
Digital disruption is expected to impact insurance significantly and, whether considered an opportunity or a threat, insurers need to be creative to leverage this opportunity immediately, the study noted.
The exploding popularity of smart phones and Internet has become a core part of life for many consumers across the globe and in India.
This megatrend, which has already disrupted several sectors, is set to have a huge impact on Insurance sector in India.
The old ways of selling insurance are, over time becoming less sustainable, said the report. "Insurers have a unique opportunity to embrace and benefit from the digital wave, which also addresses many key issues that plague the offline world today. We estimate that digital adoption could result in potential savings of 15-20% of total costs in the case of life insurance and 20-30 per cent in the case of non life, thereby showing the path towards profitability for the industry", said Alpesh Shah, a BCG Senior Partner and Director also the author of the report.
“While online purchases represent a small component of Insurance activity in India today, the overall influence of Internet on Insurance product purchase in India is already 6x and growing rapidly.
Insurance companies in India are still lagging behind the consumers and have not invested enough to create digital assets to engage the mature consumers online. Our studies have shown that 2 out of 3 users researching for a financial product ended up changing their mind about the brand or the product during their pre-purchase period. Internet allows companies to leverage the pull-based proposition around Insurance products, because customers are looking for the products online as suggested by the exponential growth in Insurance related search queries on Google," said Vikas Agnihotri, Industry Director, BFSI, Travel Google India.
Insurers globally have commenced their digital journey, and are reaping benefits by harnessing digital across the value chain.
Though better pricing is a key reason for buying online, convenience and increased transparency are critical factors as well.
The inefficiency of digital assets has led to emergence of online insurance aggregators that have seen a 4x growth in the value of life insurance premiums and a 7x growth in the value of health insurance.
Motor insurance sales that were relatively small in 2011-12 have also gone up four times within the last year itself.
Insurers need to realize that just like many other industries, they will need to undergo extensive changes in the way business will be carried out in the digital age.
The report leverages insights from wide array of BCG India and global initiatives, including BCG's Centre for Consumer and Customer Insights (CCCI) and captures insights gleaned from Google commissioned research and proprietary data.
The report not only highlights significant opportunities for growth through digital adoption, but also proposes a clear agenda for insurers in India to act now.