80% consumers rely on personal recommendations for purchasing insurance: Study
Personal recommendation from friends and
family or a known agent is the top trigger for insurance consideration for
approx. 80% of the respondents.
Even though a fear of the unknown triggers
thoughts and conversations around insurance, eventually it is a push from
friends and family that leads one towards serious purchase consideration. A
little later in the purchase journey, while potential consumers turn to online
channels for research and comparison, a high preference for purchasing from
human agents continues to be visible across categories, according to a consumer
insights report by Policybazaar.com.
The report titled ‘How India Buys Insurance’ provides
a comprehensive view of consumer awareness, needs and frictions when it comes
to the purchase of health and life insurance, and highlights that it is
important to build trust at every touchpoint of the consumer journey.
As per the report, personal recommendation from
friends and family or a known agent is the top trigger for insurance
consideration for approx. 80% of the respondents. For 56%, a recommendation
from friends and family was the main trigger for purchasing health insurance,
while the number stood at 54% for life insurance.
Awareness and Ownership Levels for Health
InsuranceBrand familiarity is important: Apart from this, brand familiarity and vintage
seemed to play a key role in trust building. 58% and 64% respondents said that
they trust the brands they are familiar with or the brands that have been
around for a long time, both while purchasing health insurance and life
insurance, respectively.
Affordability issues and lack of product
understanding key barriers: Two key reasons that deterred the purchase
of both health and life insurance included affordability issues and difficulty
in understanding the product. While more than 40% respondents cited high
premiums as the reason for not purchasing health and life insurance, around 53%
found the products/ process difficult to understand and thus, dropped out. This
indicates a clear need for education in the category along with simpler, more
affordable options. The earlier this education starts, the easier it will be to
hit the message home.
Adopting a Physical approach: Around 80% respondents across health and life
insurance looked online for information before purchasing the policy. However,
over 85% ended up purchasing offline primarily through an agent they knew or
was recommended by friends and family.
Customer experience is paramount: Insurance as a category lacks instant
gratification and everything boils down to customer experience. In this
research as well, consumers indicated that tedious paperwork, complex processes
and the fear of claim rejection makes their faith in insurance weak. It is
imperative for the industry to ensure seamless customer experience and
technology can play a pivotal role in this process.
Early education on the importance of
insurance is key: The study also uncovers that financial prudence is
least often a trigger for insurance purchase consideration. It’s too late by
the time people realize the importance of insurance (as has been seen,
especially, in case of life insurance). We probably need to start financial
education as a life skill in school/ college. ‘Insurance is a key part of
financial management’ is the message that needs to hit home, so that all
Indians can make informed decisions and stay protected.
The convergence of online and offline mediums seems
to be the way forward for the insurance industry.
Commenting on the report, Sarbvir Singh, CEO,
Policybazaar, said, “Policybazaar’s efforts to maximize insurance penetration
are in alignment with the IRDAI’s vision of a fully insured India. In order to
achieve that objective, we need to deeply understand the changing consumer
needs. With a detailed series of face-to-face interactions, we have gone beyond
tier-I and tier-II cities in this research and also explored the perspectives
of tier-III India. We hope that the insights from our research will pave the
way for more relevant and consumer-centric solutions from the insurance
industry.”
The detailed report covers many more such insights
including triggers that lead consumers to consider purchasing health or life
insurance and barriers that hold them back. It also explores the behavioral
differences across demographic and geographical segments of consumers.
