Insurance Should Be Five Clicks Away: Sandeep Ghosh

Sandeep Ghosh has spent significant years in the banking and insurance industries, industrials and FMCG. He is currently a Partner in the Financial Services Advisory practice focused on insurance. He headed the business transformation of a leading Indian private life insurance company as the MD and CEO. His past experience includes leading the commercial banking businesses for three global banks based out of Mumbai and Hong Kong. Ghosh holds a Master’s degree in Business from the Indian Institute of Management, Ahmedabad.

So, he discussed the facets of the insurance sector in an exclusive Interview with our correspondent Rajat Mishra.

1. How do you see the current Life Insurance landscape in the country?

The first thing that life insurance is predominantly positioned as an Instruments of savings and this has been the driver of insurance historically. However, protection is the primary purpose of life insurance. There are a lot of other instruments, which can give you savings, but there are no other instruments that can give you protection against loss of life, other than life insurance. So in a way, awareness and mindset of people make the primary purpose of buying a life insurance is a whole lot of historical reasons. So until that mindset changes dramatically you are not going to see life insurance penetration shift dramatically.

2. How do you see the insurance penetration in India?

In a country of three billion people, there are two parameters to measure penetration, one is the penetration as the percentage of the GDP, which is the total premium paid to the percentage of GDP and another is something called as Insurance density, which is per capita premium in US dollar, measure the insurance penetration.

If you look at both insurance penetration and its density, India lags behind many other emerging markets and this stems from the combination of factors, first and foremost is the society and people’s mindset. Second is that the life insurance companies have sold life insurance as an instrument for saving money.

Whereas the primary purpose of the life insurance is protection, savings and investment comes later. So, the first required thing is to change that awareness, attitude and behaviour of people.

3. According to you how can we raise insurance penetration in India?

Life insurance is characterised by high distribution cost and one of the factors for high distribution cost is an intermediary. For insurance penetration to rise among low income and marginal groups there should be a very simple insurance product.

So, the way the insurance products are designed, the way insurance products are delivered, also needs to change dramatically to cover a wide section of the population. So there is a need for extremely simple products delivered through extremely efficient channels. And also the second thing is that we should reduce the premium rates.

Now, when you have succeeded in raising the level of awareness and you have succeeded in product distribution and when you have succeeded in making products buying very simpler through digital and other efficient channels of distribution. You will automatically not only see increased penetration but will also see some shifts between what we call push sales and pull sales.

4. What are the emerging trends in the insurance sector?

We are seeing a lot of companies talking a lot more about protection, adopting to digital channels, we are seeing youngsters searching online about insurance and there are multiple tech-driven initiatives being taken by the companies.

5. Why insurance is still a push product?

People don’t wake up in the morning, thinking to buy a life product. It’s not a sexy product. It is a latent need and its not an obvious need fundamentally across the world. it is a product that needs to be explained. It’s not absolutely mandatory. The people are buying it via agent or broker because it is a push product and it needs an intermediary.

6. What is the various technology Interventions that you are witnessing right now?

Across the various life insurance companies, many are significantly taking tech-driven initiatives. Also, we have to understand that banks and organisations have legacies system. You can’t just throw it away and cannot go out of these legacies system overnight, it takes time.

So, every organisation is significantly spending on technology, as these are the primary requirements to change the customer experience. So there is a lot of intervention happening.

7. Why general insurance is a pull product?

Life insurance is more push, but general insurance has some pull as well. So look at the different general insurance, there are a lot of the segments that are mandatory so first and foremost there are many areas of general insurance which are mandatory, In general insurance there products are not long term. So they are simpler to understand and it’s easier to buy.

General insurance is yearly products they are not long term product. They are generally simpler to understand. In general insurance product, there is no saving as such, they are purely protective. So, that is why they are easy to understand. So if we are traveling overseas we need insurance, I am driving on the road, I need an Insurance, If I am running a factory I need to cover my self against fire, theft etc. and these policies are renewed every year. So, therefore there is a greater component of pull and it is still not 100%. So, there is some push involved, but there is a greater component of pull there.

There are large chunks of policies that are purchased online and at least at a minimum they are researched online and purchased online. So digitisation, simplification and contextualisation in general insurance are much high than in the case of life insurance. Interestingly in terms of penetration, India lags even further in General Insurance penetration in comparison to life insurance penetration. India is doing better in life insurance penetration in comparison to general insurance.

8. What are the various changes required to attract millennial for buying these products?

I think the young population is far more aware and there should be targeting of young population and making them aware.  Proper messaging should be done that insurance is not a tax saving instrument but an instrument of protection. That protection would be for your life, for your car and for your home.

As a young population is digitally savvy, the propensity to buy things online is much higher among them. So, these instruments should be clicks away and they should be made accessible and should be made such that anyone can buy after making five clicks on the phone and need not to fill five pages or multiple forms. And making these changes for sure will appeal millennial.