In the quest to solve as much as possible the perennial and old problem of making insurance products affordable and increasing its reach to the customers in every large and small cities and of each income group, Insurance regulatory and development authority (IRDAI) has come up with new regulations and introduced new sales mechanisms like Insurance marketing firm (IMF) and point of sales person.
Even after numerous measures taken, the life insurance penetration data in financial year 2018 was 2.74 percent and the non-life penetration was 0.96 percent. Which is very less compared to other developed markets like in the United States and United Kingdom. The world average for the year 2018 stood at around 6%. Insurance penetration is the ratio of total premiums collected to the gross domestic product of the country and is considered to be a good measure for the reach and procurement of insurance policies by the people of the country.
Getting the high demand of e-commerce purchases and flourishing of the digital purchase scenario in India with the increasing number of smartphone and internet access in almost every part of the country, IRDAI has come up with regulation in the year 2017 to promote the sales of insurance by e-commerce website.
IRDAI and insurance companies in order to promote digital sales of insurance products have launched online discounts for customers purchasing insurance products over the internet, lately many insurance digital insurance companies also joined the arena whose main business model is based on online sales. Also very recently some simple pre underwritten insurance products are also being sold online by the name of toffee insurance products. We will discuss the regulation in brief in this article and will also name some large and small e-commerce websites which is currently selling or planning to sell insurance products.
IRDAI in their guideline issued in March 2017 named as Guidelines on e-commerce insurance provided a detailed guideline on insurance self-network platform (ISNP) which is basically an online portal and mobile application for which licence is granted to the applicants to sell and solicit insurance products over the internet. The commission or reward the intermediary gets for selling insurance policies online will be obviously governed by Commission regulations stipulated by IRDAI.
This guideline has a detailed account of all the process of application, operational issues, code of conduct, obligations for a party interested to use ISNP to sell insurance. All products purchased from this portal shall be in electronic form as per e insurance policies regulations 2016. A proposal form needs to be filled by the consumer over the portal only electronically and the policy will be issued without any paperwork involved once the premium decided by the insurance company is paid by the customer over the online payment gateway.
With the changing consumer behaviour, all the insurers have designed an attractive, simple and efficient online portal and mobile applications to buy a policy, renew it, file a claim track it and lot more. Direct business is beneficial for the insurers as well because the commission and other procurement costs is saved once a customer buys a policy directly from the insurers website or mobile app.
This is a win-win situation for both the consumer and the seller. The emergence and success of new digital insurance companies like Go Digit and Acko have set the standards on a different league altogether as the core of their business model is based on the selling over digital means. Popular insurance line of businesses like health and motor have become quite popular with the online means.
In contemporary times many e-commerce companies big and small have identified the opportunity to sell insurance on their portal which are already popular and used by masses to earn handsome commission income. Insurers and the regulator also knows well that this can be a great way to reach the tech savvy millennials and millions of smartphone users in every nook and corner of the country. We will list out some e commerce companies operating in India below and the types and range of products they are selling or planning to sell.
- Amazon Pay has joined hands with Acko general insurance to offer insurance for two and four wheelers. Amazon prime members will get some additional discounts on insurance premiums for purchase of the policies from the amazon portal.
- Walmart owned Flipkart has already partnered with AEGON life insurance to promote an instant life insurance policy with sum insured up to 10 lakh. The tentative premium for this product is a few hundred bucks for each lakh of sum insured. Flipkart has also been selling Corona virus specific health insurance product over its platform partnering with Go Digit and ICICI Lombard.
- Paytm a leading payment gateway and bank is also a known e-commerce player. In addition to giving a facility to pay insurance premiums for various insurers both life and non-life through its portal, it has come up with shopkeeper insurance policy with a sum insured of 3 lakhs at a premium of 399 bucks. Paytm has partnered with ICICI Lombard GIC to provide this plan which is only available to shops registered with Paytm. It has also partnered with HDFC Life insurance company limited to offer a life insurance policy.
- Other companies like Ola cabs are also promoting insurance products for their customers which are becoming quite popular.