Ease of on-boarding customers: LIC needs to press on the digital pedal
At a time when private life insurance companies are aggressively putting in place digital solutions for the ease of on-boarding customers, especially the millennial segment, Life Insurance Corporation of India (LIC) depends on an army of individual agents to source new business.
The state-run insurance behemoth, whose initial public offer and its mega listing is expected in mid-March, offers 35 products and six riders. Of which, only 11 individual products are sold through its website, according to the company’s DRHP. While the company’s 1.34 million individual agents source 94% of the individual new business premium, sales through its website account for around 1% of the individual new business premium. In contrast, all the 23 private insurers together source 23% of their first-year premium through individual agents and around 3% through online direct and web aggregators.
Customer engagement in digital
For private insurers, customer acquisition and sales are being driven through web and apps for providing a smooth customer experience. Though the state-owned behemoth is trying to reach out to customers, especially the millennials, through its Facebook page ‘LIC India Forever’ and virtual assistant LIC Mitra and mobile app LIC Customer, it has to take rapid strides to compete with the private sector in digital services. However, the company is seeing a growing share of policyholders paying renewal premium through its digital channels.
Ease of navigation, ease of contacting the organisation 24×7 through website/mobile app, getting doubts cleared through virtual assistant and better utilisation of artificial intelligence/machine learning are some of the key factors that drive customer engagement in the digital medium for insurance.
Abhishek Misra, CEO & principal officer of insurance brokerage firm Bonanza Insurance, says unlike motor insurance policies where policies are issued instantly, for life insurance policies additional documentation may be necessary due to underwriting requirements in some cases. “Users mainly compare term insurance policies while purchasing them online as benefits of traditional insurance plans usually vary from insurer to insurer,” he says.
Delhi-based professor Arun Nandi, who recently purchased an online term plan from a private insurer, says LIC’s app is very basic, there are no features like adding nominee, some of the features do not work and show network error. For him, convenience and ease of use of website or mobile app, online assistance to complete the transaction and some discounts are important factors for a seamless, digitised on-boarding and policy issuance process.
LIC’s dependence on traditional plans
Experts say the agents of LIC prefer to sell single premium policies instead of pure term plans as the former helps them reach business targets quickly. As term plans have much lower premiums, the commission is also low and the agents are able to convince individuals that endowment plans are better than term plans. In fact, in FY22 till September, 71.6% of the individual new business premium of LIC came from endowment or participating products. However, the private insurers are gaining market share in term plans and unit-linked insurance plans in the urban market through digital sales.
Rakesh Goyal, director, Probus Insurance, says LIC had focused on more traditional products like endowment and whole life policies among others. Private insurers have increased their digital presence in the last years and have a larger share of term life policies which are predominately sold through online channels.
Though LIC has started selling a few of the products including term plans on its online platform, in the years to come we might see a larger presence of LIC in the digital space,” he says.