Insurance, are targets set right?

Currently, all life insurance companies are putting their efforts on completion of targets, for the current financial year. In fact, the current year was and is really tough for most of the companies due to pandemic situation. However, looking at the improving trends in the economy and another important aspect of pandemic situation made all people think Insurance products, from a real insurance perspective than savings perspective, everyone is now trying to take advantage of the same by combining tax angel to it. May be companies will be successful in certain aspects, in achieving their targets. However, question remains, are the targets set rightly?

Having spent some time in Insurance Industry, and knowing Insurance culture of the society, one thing is understood that life insurance is always perceived by all as a savings product, then actual insurance product. Although, last few years are showing certain trends of improving term product share, which is a good sign, but whether it is really enough? Is enough time and efforts, rather resources spent on making Insurance an essential product of everyone’s life cycle? Are all stakeholders feel Insurance is an essential tool of life than a business tool? I feel, there is much gap and everyone needs to do much more, in this area. Let’s look at the following facts:

Post privatisation of insurance, all the companies have perceived, it as a great business tool and set targets accordingly. While foreign partners, saw the opportunity in Bharat, it was always based on the size of the opportunity i.e. numbers. Stiff targets were set as everyone understood that it is capital intensive business and generally break even takes a longer time. However, look at the huge opportunity in Bharat, it could be possible to shorten that timeframe. Naturally, it was then pushed to the segment, which was more savings or investment savvy and understands the number game of savings and investments. All the efforts including sales & marketing etc., were put on to maximise the sale of life insurance product as either savings or investment product, then insurance products. Obviously, the target segment got automatically selected as urban higher middle class and above.

It took good amount of time of nearly 15 years to realise it and come out of investment product approach. Some clinical correction had to be made to curb investment product flavour. Of course, the impact was not very encouraging and companies had to put lot of efforts to go back to drawing board and come up with new strategies.

If we look at the strategies, it was always based on the numbers and segment and hence products and portfolios, got selected according to the segment. Hence, it was difficult to come out of that strategy, to fill up the gap of unfavourable impact, and it became difficult to most of the companies in some way or other.

Now let’s look at another aspect. Since beginning, the rural and social obligation had been kept at a lower level. Obviously, this was due to achieve the number target, (no of policies from rural and social segments and value from higher middle class and above segment). Due to which the rural and social segment was never made part of actual insurance ambit. Due to this, general awareness of insurance products, may it be life, non-life or health, never got percolated down to this segment and the actual maximum population of Bharat got unaware of insurance.

With Financial Inclusion, now everyone will have to work on it and make it countrywide success. Technology is making great impact and with that it should percolate down rapidly. However, one need to understand that technology is the only tool. It will help reaching out at a rapid pace and to a larger set but one need to work on the actual deliverables. In a nutshell, the target needs to be correctly set w.r.t. target segment, target and required products, huge awareness campaigns, use of required technology, may be increasing the obligation goals towards rural and social segment etc. Till the time it doesn’t reach the actual audience, it will always be the number game and nothing much will happen.

Currently, many InsureTech companies are making their footprints in this direction. Right policies, processes and technology will help fasten this. However, awareness should be the focus of all.