Insurers Eye more Biz After Government Push for Online Sales

Insurance companies, which have seen digital sales constitute only a miniscule portion of overall income, expect a jump in online sales following government incentives for promoting new modes of payment after demonetization.

Private sector players also feel that they will have to explore if they need to come up with some common products for online and offline so as to provide identical products cheaper when sold online. Following the November 8-9 demonetization, the government over the weekend asked public sector insurers to provide discounts of up to 10% on the premium amount for general insurance policies and 8% in new life policies of Life Insurance Corporation sold online.

LIC sells only two policies online now a term-policy 'E-Term' and a single-premium policy Jeevan Akshay. A senior Corporation official told PTI that "even though we are yet to receive details from the government, we still believe that the move will give a push to digital sales of our two policies."

LIC could sell only 8,000 plans through its customer portal, out of the total of 2.6 crore policies sold by it last financial year, he said. Life insurers need the regulator Irdai's approval to sell online and therefore most of the products are not compatible for digital sales. So the government move will allow them to have a common product that can be sold both offline and online.

However, private sector life players, despite their technology adoption, have not developed any product that can be sold through both the modes. Private sector player SBI Life said even though it has similar products, it does not have any identical products now.  "We don't have any such common products that can be sold online now but will be exploring this option now," SBI Life chief executive Arijit Basu said.

SBI Life earned total premium of Rs 7,100 crore last year, of which merely Rs 25-30 crore came from online sales. The company sold merely 15,000 policies online out of 13 lakh it sold last year, he said, adding that "if policies are sold online, they become cheaper by 10-12%".

Largest non-life insurer New India Assurance expects the government move to help it double its online sales this year. "We believe that the government move will encourage more people to buy policies online and we hope it will result in an increase in online by over 100% in a year's time," New India chairman G Srinivasan said.

He maintained that the government move will be applicable on retail products only which include motor, health, personal accident and household segments. New India is looking at achieving 100% growth in online sales which stood at Rs 150 crore last year. "We are selling 30,000 policies every month online. Currently, our online sales are clipping at 15-20% which I expect to clock more than 100% growth now," Srinivasan said.

Among the private sector general insurers, the market leader ICICI Lombard said it has no plan to offer any additional discount to online customers as already it sells three to four products online. "We are already selling three to four retail products through our customer portal, known as E-Channel. We provide small discount for online sales. Despite so many products only 5% of our sales are online," ICICI Lombard's Sanjay Datta said.