Life Insurance in 2020: Insurers focus on protection plans

In a year when the economy was turbulent, the life insurance industry remained resilient, generating double digit growth of 15-16%. With several positives in the product regulations, improved persistency and claims ratio, reduction in complaints and boosting awareness with the ‘Sabse Pehle Life Insurance’ campaign—the life insurance industry had a positive 2019.

Growth on the back of protection

In 2019, for the first time the overall size of the protection businesswent up. The growth augured well both for customers and the industry. Insurers focused on unique need-based plans, expanded the protection solutions bouquet and in turn, the share of protection in their business.

Diversification of savings

Increased financial awareness, turbulent markets and falling interest rates gave prominence to guaranteed life insurance solutions for people looking to conserve wealth with secured returns. While investments in the mutual fund sector took some beating, insurance investment in securities held its ground.

Product disruptions

The industry geared up for the big leap in 2019, with the regulatory changes in products leading to new possibilities and customer centricity. Product guidelines like extending the revival period to five years, early term surrender pay, partial withdrawal in pension products aimed at increasing penetration, maintaining persistency, offering more choices and liquidity. While the industry signs off on a positive note, the year ahead is set to offer a mix of opportunities and challenges.

Product suitability theme

The milestone step announced this year will unfold in 2020 and will be something to look forward to. It will address one of the biggest pain areas of the life insurance sector and will aim at setting right the customer selling process.

Future of the protection segment

With one of the biggest reinsurers changing its rates of protection plans significantly, it is set to have some bearing. Whether the protection policies for customers will become dearer or the insurance firms will have to compromise on the margins of their protection business, will ascertain the penetration and growth of the segment. Amongst the highlights of the year, this happening at the end of the year will be something to watch out for.

Technology as game-changer

In 2019, the share of the direct business went up. Besides allowing insurance companies to offer interesting online products, technology-led automation in every customer touch point—onboarding to claims servicing—improved customer experience and thereby share of the direct business. This important shift will take a leapfrog in 2020. Data analytics and insights curation with mobility and cloud computing will make processes seamless, helping the sector maintain profitability, while delivering increased customer satisfaction and world-class digital experience.

The 2020 policyholder

The year 2019 witnessed customers getting younger, becoming more knowledgeable about their needs, which reflected in the increase of the term business. 2020 will see the trend continuing. As people start living longer the need for protection will increase, also will the need for pension products and retirement solutions. Binding all these aspects, customer service and engagement will remain the key differentiator in 2020 as well. Simplifying products and the customer on-boarding process, focusing on protection products and staying customer-centric, will act as success mantras for the industry.

Source: Financial Express