Life Insurance must do some introspection for industry’s sustainable growth

The sustainability and profitable growth of any industry hinges on the value proposition that it offers to customers as well as the needs of customers it addresses. One must bear in mind that companies or corporations exist because they provide goods or services which are required by the consumers. The basic premise on which any customer purchases goods or services is with the assumption that it will satisfy certain needs. In the case of the life insurance sector, the value proposition offered to customers is an aggregate of aspects such as the quantum of protection offered, addressing the long term financial goals by enabling long term wealth creation and finally, ensuring a speedy and hassle-free claim settlement architecture that provides financial support to the family that has suffered the loss of a loved one.

As an industry that is moving into the next decade of growth, it is imperative that these critical aspects are addressed and an unflinching commitment is made to enhancing the value proposition continually. The best interests of the industry will be served only if the cumulative efforts have the best interests of customers at its core. The life insurance industry in India has undergone a major transformation over the last few years with the regulator introducing new guidelines periodically to ensure that the interests of the customers remains protected at all times. These regulations have rightly nudged industry participants to re-evaluate their solutions to have a sharper focus on providing customers with a better value proposition. The guidelines are nothing but a starting point for the Indian life insurance industry to provide customers with an ever better experience. It is now upto the industry participants to take up the mantle of presenting customers with products and services of the highest quality. A greater focus on this is definitely in the interest of the industry as building durable relationships with customers is the key to the success of any industry or enterprise. As an industry which significantly contributes towards the economic development of the country, the foundation needs to be further fortified to build a strong platform for the next phase of growth. The pillars for this will encompass providing higher levels of protection, greater transparency, prudent investment management to ensure long term risk adjusted returns and most importantly and efficient claims settlement architecture. The quintessential purpose of life insurance is to provide protection and financial security to an individual and his family in case of any eventuality. This aspect of ‘protection’ is unique to the industry and therefore it is vital for the industry to position life insurance as primarily a means of protection. Life insurance solutions in general and unit linked insurance products in particular have gained immense popularity over the last decade due to the unique convergence of protection and savings as well as flexibility they provided to customers. This has also led to life insurance solutions being perceived as investment vehicles like other assets classes. As an industry, efforts need to be made to bring the core objective of protection to the forefront, with savings and investment being secondary objectives. This gains added significance for a country such as India which lacks a robust social security system as life insurance can fill this void. Another aspect that needs to be addressed is that of creating greater transparency in every interaction with customers, be it at the time of on-boarding or providing post-sale service. Understanding requirements of customers and presenting appropriate solutions which serve their long term financial goals will help enhance customer loyalty and fortify their trust in life insurance solutions. We need to further encourage and stress upon the importance of long term behaviour on the part of customers. Only then will customers realise the real value of life insurance products. This will also ensure business sustainability and profitable growth for the industry. The quality of the distribution network will be critical going forward as an adequately trained distribution network will be able to achieve the balance between meeting customer needs and driving top-line growth. Going forward, greater transparency can be created by increased adoption of technology across our various processes as well as customer interactions. Technology has played the role of a catalyst across various industries and is poised to change the very dynamics of the insurance industry if utilised strategically. Greater usage of technology will enable us to offer better products and more efficient servicing capabilities. This will not only lead to a significant reduction in turn around times but also ensure delivery of a richer customer experience. The insurance industry has provided customers with a wide array of products which offer protection, savings and long term wealth creation. As custodians of the customers hard earned monies, the industry has a fiduciary responsibility to ensure that financial objectives of customers are met. Having an investment philosophy which will enable the fruition of the financial objectives of the customer is absolutely essential. At the same time the industry needs to ensure that the returns offered are competitive with those offered by other asset classes, albeit risk adjusted. The industry needs to bear in mind that the true value of a life insurance solution is delivered to the family of the policy holder in the unfortunate event of demise. It is at this point that the industry has to collectively ensure that the family that has suffered the loss of a loved one is hand-held and supported through the claims process. For this, a seamless claim settlement architecture needs to be in place that facilitates speedy and hassle free settlement process. Having a robust claim settlement architecture will go a long way in reinforcing the value proposition offered by the life insurance industry. Not only that, it will also aid in eliminating any lingering qualms that customers may have regarding the claim settlement abilities and intentions of life insurance companies. In my opinion, the excitement with which we collect premium cheques must be the same as when a claims cheque is paid out.
(The author is MD & CEO, ICICI Prudential Life Insurance Company Ltd)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.