Before and after Covid – 2021 was a redefined era for life insurance


The Covid 19 pandemic was a cataclysmic event, which fundamentally changed people’s beliefs and behaviors. This made the potential risks to human life and business clearly visible, forcing all of civilization and economies to reorient their way of life.

A key change that has taken place has been the notable shift in the way people interact with money, which in turn has redefined the insurance industry. The best of us, who have always shied away from life insurance with the “this will never happen to me” excuse, were shocked by the “anything can happen” reality. The pandemic has made people rethink their lives from a new perspective and forced them to financially secure important life events, create other sources of income, and plan for contingencies.

Minimalism became the way of life, as people moved away from consumption for luxury to consumption for the financial security of individual dreams and aspirations. Preserving well-being and supporting the community have become commonplace, which has made life insurance consulting a lucrative employment opportunity. The insurance industry has added a significant number of advisers over the past year, supported by an improvement in pride and dignity of the role.

As we move forward in the pandemic and new variants threaten to disrupt economic activity again, here are the trends that are expected to impact the life insurance industry in 2022.

a) Protection will be the top priority for clients:

Clients will look at protection holistically and seek to understand life aspirations that require financial security. With the Omicron threat looming, people will consider creating another source of income, preparing contingency funds, and facilitating economic continuity for loved ones. Life insurance solutions will play an important role in meeting customer needs.

b) Larger customer segment

There has been a noticeable change in who and how life insurance solutions are consumed. While traditional insurance buyers continue to consider the instrument, the younger millennial generation also sees the value of life insurance in their financial portfolios. We have seen a 30-40% increase in purchases by people between the ages of 20 and 30. For those risk averse, insurance solutions also offer a safer way to accumulate wealth compared to other financial products like fixed deposits etc. This trend will continue into the new year.

c) Increase investment in new era technologies:

Life insurers will continue to invest in new era technologies to leverage AI, cloud, data analytics and more to deliver agility, scalability and ease of operation. As the industry has dramatically automated processes like eliminating paperwork, insurers will continue to work towards building a fully digital business to improve productivity and profitability.

d) Data analysis and protection will be essential:

Life insurers will strive to improve their data collection, analysis and protection capabilities to deliver hyper-personalized solutions and an enjoyable customer experience. Data will play a central role in helping insurers better understand client personalities and identify emerging risks. A granular understanding of customers will enable insurers to deliver a sophisticated experience to customers.

e) Multichannel capabilities:

Organizations will continue to create a seamless and integrated multi-channel experience for customers to drive business growth. As a wider population grows aware of life insurance and business opportunities expand, insurers will seek to expand their reach through existing and new strategic partnerships. The sector will also continue to be among the biggest job generators in 2022 as it seeks to maximize its reach through advisors.

f) Product centric and customer centric:

As the industry has been on the path to customer centricity, the digital ecosystem has opened up more opportunities to make existing processes agile to evolve with changing customer expectations. A key element the industry will be working towards is preparing channel partners to shift to a holistic consulting approach instead of a product specific approach. The regulator has also shifted its focus to the industry, in line with this growing digital adoption in India, promoting needs-based selling.

g) Product innovation

By modernizing their existing systems, life insurers are placing more emphasis on product innovation. The goal is to provide an enhanced customer experience by creating personalized solutions throughout the customer lifecycle, including integration and after-sales services. Personalized solutions will take into account the profile of each client and will attempt to personalize the applicable premium according to the risk profile. Data will play a central role in making this aspiration a reality and machine learning / artificial intelligence can help take personalization to the next level using the robust analytical tools needed to use the data available from from several sources.

As we prepare for 2022, I am optimistic that the industry will continue to grow at a strong pace for the time being and post double-digit growth by the end of the current fiscal year.

(By Anup Seth, Director of Distribution, Edelweiss Tokio Life Insurance)

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