Unlocking trust: the Digital Insurance era paves way for user confidence & assurance

–Vishal Gupta, CEO of PhonePe Insurance Broking Services

In our constant pursuit of tools to enhance our financial management, trust emerges as a pivotal element in their adoption. Whether it pertains to banking, payments, or other financial products, the challenge of instilling trust precedes widespread acceptance. This trust hurdle extends beyond the realm of financial services, including categories such as e-commerce, e-ticketing, ride-sharing, and travel. However, the financial sector, particularly the intricate landscape of insurance products, faces a more formidable barrier to adoption.

According to the most recent India Brand Equity Foundation (IBEF) report, insurance penetration in India was only 4% in FY21. Specifically, life insurance penetration reached 3%, while non-life insurance penetration was merely 1%. These figures, notably modest, underscore the significant potential for expansion and growth as insurance stands unparalleled in its role of providing a safety net against unforeseen risks while simultaneously fostering the growth of investments.

Insurance can seem confusing because people don’t buy it often, it involves long-term commitments, and there are high inherent risks. This complexity leads to two common fears:

• Fear of making the wrong purchase

Take Mr. Aditya, a 35-year-old from Telangana, for example. He opted for a life insurance plan that combined investment and financial security for his family. However, two years down the line, he realises there are more suitable financial tools available for investment. A term plan, he now understands, could have provided a sufficient safety net for his family. Aditya finds himself in a state of confusion and concern regarding his future financial decision.

• Fear of not realising value when needed

Meet Mr. Rahul from Delhi, a well-earning individual who recently got married. Encouraged by his parents, he contemplates buying a traditional life insurance plan. However, the perceived expense and the distant 30-year horizon make it challenging for him to envision the actual need. Rahul also harbours concerns about the fulfilment of promises in the event of his demise or after the passage of three decades.

Both these scenarios underscore a gap in understanding and trust when it comes to insurance policies. Addressing these challenges requires united efforts from the entire insurance ecosystem, including regulators, manufacturers, and distributors. The focus should be on investing in clear communication, straightforward products, and simplified processes that encompass all dimensions of trust, including the customer’s trust in their own decision-making capabilities, rather than solely emphasising trust in the brand.

Navigating growth challenges: the crucial influence of trust

Navigating the landscape of insurance can prove to be a winding experience for users, stemming from a multitude of complexities. The inclusion of terms such as “co-payment,” “cumulative bonus,” and other industry jargon often creates a formidable barrier, rendering policy details inscrutable for many. 

The overall complexity makes it difficult to understand the offering, which in turn makes decision making very difficult. Such a scenario prompts users to place their trust in insurance agents, seeking guidance in a bid to decode the complexities. However due to multiple possible reasons, this reliance on intermediaries may not guarantee the best choice for “what is actually needed”.

The intricate nature of insurance products, coupled with the challenges of understanding them, forms the crux of the trust puzzle within the insurance sector. As users grapple with understanding hurdles and put their faith in agents, the resulting disconnect between expectations and policy coverage contributes significantly to the overarching trust conundrum in the industry.

Solving trust puzzles: the transformative role of digital platforms

Cracking the trust code in the digital realm, platforms such as PhonePe, distinguished by  their extensive scale and user reliability, play a crucial role in reshaping the landscape and strengthening user trust. Over the past decade, various domains in India, including commerce, ticketing, bills, authentication, government services (visa, passport, FASTag), micro payments, lending, and investments, have transitioned successfully to digital platforms. We posit that extending this digital evolution to the insurance sector hinges on addressing the trust puzzle and instilling confidence in customers for independent insurance transactions.

Here are some of the ways in which digital insurance partners are solving these trust puzzles among users:

• Offering unbiased advice: Digital distribution has significant advantage when it comes to efficiencies, which means digital platforms can afford to take truly “customer-first” view without having to worry about recovery of the costs incurred in advising the customer.
• Streamlined comparisons: Many digital platforms serve as marketplaces, offering transparent comparisons among various insurance providers and the standard features of their plans. This ensures customers the comfort of exploring all options without overlooking any. These platforms simplify complex terminology, present features visually, and guide customers in making informed decisions to purchase the most suitable product.
• Simplified purchase process: The purchasing process is optimised for transparency, convenience, and precision. Insurance products that traditionally took weeks in the offline world can now be purchased within minutes, thanks to digital form filling, paperless document upload, and e-KYC verifications.
• Simplified claims process: Virtual agents and round-the-clock on-call support play a crucial role in delivering last-mile comfort during emergencies. Digital platforms enable the real-time flow of information about the claim status, effectively easing the burden of financial shock.
• Access to policy documents: Since the utilisation of policy documents post-purchase is infrequent, many customers struggle to locate them during times of need. Digital platforms and e-insurance accounts make access to policies possible at any time and from anywhere easily.
• Inclusive distribution:  A significant portion of Indian consumers lacks access to insurance products and high-quality advice. Digital platforms bridge this gap by offering standardised services in remote areas, facilitating purchase, claim assistance, query resolutions, and policy modifications.
• Technology multipliers: As its proven in multiple industries, technology does really accelerate the growth in respective industries because of problems it can solve at scale for multiple use-cases and customer cohorts.

In conclusion, the future of insurance hinges on empowering customers to navigate the complex realm of insurance with confidence, facilitated by simplified products, processes, and customer experiences. As the Insurance Regulatory and Development Authority of India (IRDAI) introduces substantial changes to make insurance accessible to all, striving towards the vision of ‘Insurance for all by 2047,’ we are equally dedicated to shaping a future where individuals approach insurance effortlessly, assured by reliable information and trustworthy platforms.