On-demand plans, subscription-based payment will be new trends in insurance

The Year 2020 witnessed two big changes in the insurance sector. First, regulator Irdai allowed on-demand products, and second, policyholders were given the option to pay their premium in monthly instalments (subscription-based payment). Edelweiss General Insurance Ltd had last year launched SWITCH, which is India’s first on-demand motor insurance product, wherein the customer has to pay the premium only on the days they use the vehicle. In an interview with Mint, its chief executive officer and executive director, Shanai Ghosh, shared her views on how demand is changing in the industry and new products that the insurer is planning to launch. Edited excerpts:

What insights can you give us into consumption habits, buying pattern and preferences of millenials?

The Indian customer has always been value-conscious and covid-19 has made them even more so. They are looking to save all they can and pay only for what they are really consuming. Covid-19 has also brought in the realization, especially among millennials, that even if you are young and healthy, you will still need health insurance. Through research, we identified that one of the main reasons why young people do not buy insurance is that they feel premium paid is a loss if they don’t make a claim. Three trends that we see catching on are on-demand products, subscription-based payment models and short-term commitments in terms of premium payment.

What has been your experience with covid-19 health plans?

The industry saw tremendous off-take of the standardized corona products, especially during the period when the pandemic peaked. There has been moderation since the covid-19 numbers and the associated hospitalization went down in the country. It is early to comment on what percentage of covid-19 policyholders will migrate to comprehensive, but as an Industry it is both an opportunity and a challenge for us. We will have to proactively engage and educate customers while simultaneously ensuring that the migration process is seamless.

What kind of growth did you witness in 2020?

We are one of the fastest-growing non-life insurers with a gross direct premium income (GDPI) growth of 68% as of December against an Industry growth of around 2.5%. Our digital operating model, pricing and risk selection in our chosen product segments — retail health and private car — have ensured smooth functioning and positive business outcomes for us.

What kind of demand are you witnessing for the on-demand driver-based insurance plan? Any learning from this product that you may look to apply to other insurance plans?

SWITCH is India’s first on-demand motor insurance product, where if you don’t use it, you don’t have to pay. The response we received from consumers has been very encouraging. However, as a product under the regulatory sandbox, there is an upper limit to the amount we can sell. We have plans of extending an enhanced version to the market under the second regulatory sandbox window. We have filed Switch 2.0, which will incorporate all the learnings from the Switch 1.0 to offer customers even greater value and convenience.

We have also filed multiple on-demand products, in both health and motor, under the Irdai’s second sandbox wave.

Globally, there is a growing interest in on-demand insurance, subscription-based models and wellness integrated health insurance. We aim to invest in developing these categories by introducing digital-first products.

What will be the next innovation that will drive growth in the insurance sector?

Technology has made a clear transition from being an enabler to driving business strategy. It has helped companies cater to an increasingly digital and on-the-move customer with on-demand contextual products, services and hassle-free experiences. As we work our way towards a new normal, data and digital, will be pivotal pillars for players to stay relevant or win in the game. For continued growth, three areas I believe are critical would be: claims experience, product innovation and deeper connect with the service ecosystem.

Source: Live Mint