Soon, insurance buyers won’t have to submit any document: Satishwar Balakrishnan, Aegon Life Insurance
What does digitisation of insurance mean for the customer?
In 2019, our company decided to focus on digital enablement. Going digital is often mistaken for a direct-to-customer approach. But for us, digital means being part of an ecosystem where all the different players join hands to make the entire process smooth and harmonious for the customer. If a company creates a website and starts selling online, it will cater to a very specific clientele. But if all the processes are digitally enabled, it can help bring in more distributors and cater to a far bigger universe.
Some salesmen have tablets which they use for filling forms and submitting documents.
That is not entirely digitisation. It only converts the paperwork into a paperless process. The customer still has to upload scanned copies of documents with the application. Somebody in the backend will go through those scanned images and verify them for the application to proceed. So, while the process moved away from paper, it didn’t become fully digital. We are working on going digital along with data. The process will not require any documents at all and will make the journey swift and easy for the buyer.
So how will this work?
As I said earlier, it is not one player working alone, but the entire ecosystem working in tandem. The insurance buyer will be identified digitally, the screening (or underwriting) will be done digitally, and the confirmation will also be digital. We need an ecosystem that supports these processes, an ecosystem where a company can interact on a real-time basis. On the basis of this integration, we can say we don’t need any paperwork and can reduce the entire process to one interaction. If somebody applies for life insurance today, it usually takes 15-45 days for the policy to be issued. Our plan is to issue the policy the very next day.
We start with the PAN of the buyer. If s/he has PAN and is also CKYC (Central Know Your Customer) registered, we don’t need anything else. More than 75% of our buyers are CKYC registered. If the buyer is not CKYC registered, we give them the option to provide their Aadhaar or driving licence. Almost everybody will have these documents that will help identify them.
Apart from speeding up the process, are there any other benefits of going digital?
The biggest worry of an insurance company is fraud. Just one fraudulent claim can change the game for an insurance company because the sum assured is anywhere in the range of 500-700 times the annual premium. There are cartels that buy life insurance in the name of terminally ill or dead people. They submit forged documents to buy the insurance and then make a claim after a couple of years. Because of such people, like at any airport where everyone goes through screening only to weed out a few miscreants, insurance companies have to tighten the screening process to avoid fraudsters from buying insurance. If the ecosystem is well integrated and shares data from various sources, it can reduce the incidence of fraud to a large extent.
Even after so many years, life insurance move towards digital improve this?
Life insurance penetration is low in India because it is very difficult to discuss the possibility of death with an individual. So, while almost everybody is aware of what insurance means, very few understand its necessity. People don’t even want to think that they will die. And term insurance premium is seen as an expense. That is why the saving and investment components have been added to what is primarily a risk mitigation tool.
The urgency to buy insurance can come if the insurance company can give the right message to the individual at the right time. Data is the brain, and digital is the means of how I can reach the customer. Going digital can rope in more distributors who are not necessarily selling insurance right now. It is easier to tie up with financial services companies like banks and NBFCs because the service is more relatable. But we can also partner with other industries, such as e-commerce companies, to sell insurance. That’s one way to increase the penetration of insurance. During the first wave of Covid, we tied up with Flipkart to offer an insurance policy that covered the cost of Covid treatment. The product did very well because it served a real need at the right time.
What is unique about the new term plan from Aegon Life?
Term plans are beneficial for covering the risk of early death. They are especially necessary for people who have just started earning and have not yet accumulated enough wealth. An individual may buy life cover till the age of 65-70 years. But parallelly, one starts saving and accumulating assets. If an individual builds enough assets and meets all their life goals while still in their fifties, s/he may not need life insurance anymore. Why should one continue paying the premium for something they do not need? Our new plan allows the policyholder the option to close the plan when s/he is 54-55 years old. If the policyholder decides to close the plan at age 54-55, the entire premium paid till then is returned. So, it gives unique flexibility to the policyholder to end the plan without losing the past premiums and saving on future premiums.