Insurance industry has been a late participant of technology adoption from distribution perspective compared to other ecommerce platforms. However, in last few years witnessing a big thrust from both insurance and distributor side. In last few years people have become more aware about insurance and now engaging and evaluating products on their own and this is changing dynamics from push to pull. Further more and more insurers are now offering digital products, technological capabilities of Insurers have also improved over the years.
Conversion rate in Online Insurance Portals of India
While increasingly number of consumers are comparing products online, conversion rates are still very small compared other developed markets. In health insurance conversion rate is around 5% but this has almost doubled over last 2/3 years. Going forward expect more business will be done through D2C over next 10-15 either through web aggregators and Directly through Insurers. Web aggregators will have an edge as there consumers can compare price across all insurers.
Web aggregators are source of cleanest and high-quality business, it is evident from the fact that claim ratio for business sourced from web aggregators are very low compared to traditional channel. This is because of 1) lower fraud rates and 2) Insurers are able to collect high amount of data hence better underwriting and 3) Access to customers with higher income and education level
In terms of technology other insurers are not behind digital players such as Acko or Go Digit. Players like ICICILOMBARD and HDFCERGO are doing better job in term of technology adoption and have mindset like these digital players.
Insurance broker and Web aggregator are largely same except for two broad difference 1) Web aggregator cannot renewal commission and 2) Web aggregator cannot enter POS model. Broking license makes sense for players who would want to enter POS model in a big way. Offline model is very different compared to online where consumer behavior and cost of acquisition is very different. It’s a very cost heavy model and less lucrative compared to online market. However once certain size has been achieved in online channel then next step is to go to next available market like offline.
