Health insurance has overtaken motor insurance. In an interview with CNBC-TV18, Sarbvir Singh, the CEO of Policybazaar.com said the second surge of COVID-19 will keep health at the top of our minds even in the traditionally lean season starting April. Here are the excerpts of the conversation with Singh.
Q: We are speaking almost exactly a year after COVID-19 came into our lives and upended the world as we know it. Do you think today Indians are better prepared than they were last year in terms of the security needed to cope with this kind of unexpected occurrence?
A: The answer I would give is at two levels. Clearly, there is a heightened awareness about the need for insurance, both health and term insurance. I think there was a lot of anxiety and fear in the first part of the year, from March to maybe April, May, June of last year. But since then, I have to admit that we have gone back to more normal ways. So, yes, while we Indians are better prepared, I still feel that there is a lot more to go in terms of being prepared for such events.
Q: I believe that initially when COVID-19 first hit us, a lot of people started buying life insurance and term covers, and then eventually you saw the movement towards COVID insurance and health insurance. Walk us through some of the trends that emerged.
A: The year gone by, was divided for us into almost three parts of four months each. So, the first part from mid-March to maybe June, July was a period when initially people were very concerned about their mortality. We all know that insurance is good for us, but we tend not to always buy it. There is an element of procrastination that goes on. What has been found is that when there is a big event, whether it happens to someone, to your friend, to your family, then that tends to act as a trigger. So, in that sense, COVID was like a global wake up call for all consumers including Indians to buy insurance.
The first two months were more about mortality; people were more interested in buying term insurance and protecting themselves. Then as the feeling spread that this was not as much a fear of death, but probably disease where you might be hospitalised, then health insurance took centre stage. From about May to July, we saw a huge increase in health insurance.
In the next four months, the regulator introduced the concept of corona specific products. People started buying more corona specific covers and that was partly due to the price point. The corona specific covers were much cheaper than buying comprehensive health insurance. So, people started buying those. Almost 30 lakh corona policies were sold. So, that was the second phase of four months.
Towards October, November, people started getting tired of COVID maybe, and they said that it is not a huge deal and we will all survive and maybe they started buying products from e-commerce deals and things like that. So, we went through that phase. Then of course the last four months have been more normal. So, December to March is normally the big period for insurance and we have seen a good season.
Q: In FY20 you processed premiums worth Rs 3300 crores. At the end of FY21 do you see that figure go up? What happened last year in terms of the kind of premiums that people bought on PolicyBazaar.
A: The way it worked was, the first period, the first four months we were growing in excess of 50 percent. It was largely driven first by term and then by health insurance. The second four-month period was actually a little slower where we were growing only in the region of 15-20 percent. Then the last four months have again been reasonably good. Typically, we aim to grow at about 50 percent for the year. But I think this year we will end up being a little short of that 50 percent, but all being considered and if you compare it to the industry growth rates, we will be growing significantly ahead of those.
Q: India is underserved when it comes to insurance penetration. The latest IRDAI annual report says overall insurance penetration is less than 4 percent, life insurance less than 3 percent penetration. Did COVID-19 act as an accelerator in terms of people’s understanding and therefore demand for insurance products?
A: I think the answer is a definite yes from a health insurance perspective. I think this year we will probably find that health insurance will become the biggest segment in general insurance. So typically, motor insurance has always been the largest segment, but I think this year health insurance will overtake that which makes sense. We should be taking care of ourselves more than we take care of our cars. So, I think that part has happened.
On the life side, yes, initially as I said, there was an increase in awareness. But I would say, for the year, by and large, the growth would be similar to what it has been. So, every year that number as you mentioned, which comes out in the IRDAI annual report inches up a little bit and I think we will probably end up this year also up a little bit again.
Q: I am surprised that you said it will inch up 'a little bit'. I would have expected after this really awful experience people have had of COVID-19 either personally or through the experience of friends and family, that would have made them more inclined to secure themselves, at least the class of Indians who can afford to buy insurance cover?
A: So, it has been a tale of two cities in India, there is a segment of population that has done extremely well despite COVID. They are the ones whose jobs were secured, who were able to actually save a lot more than they did in previous years. But there is a section of the population that actually suffered a lot, their salaries were cut, a large part of the self-employed segment were unable to run their businesses this year. So, what we are seeing is actually a reflection of that reality. For the base to grow we need actually the number of people to come through and if you look at it by a number of people, I think this year has been a tough year.
Whereas, yes, maybe by the value it hasn’t been so bad because in the first part, the people who were doing well are continuing to do well. I must just, however, caveat all that I have said by saying that the percentage of business that is happening digitally has grown a lot this year. So that portion that changes that has happened in other industries has also happened in insurance and we estimate that perhaps up to 15 percent of all insurance has moved online and this number would have probably just been 2-3 percent 5-6 years ago.
So that actually is a big shift and that is probably going to be a more enduring shift as well.
Q. You mentioned how December to March, the close of the financial year, is when people sort of get galvanised into doing their insurance investments and how the industry has to push the product to consumers. Has that changed and why?
A: I think it is definitely changing at the margin. What we are seeing is that while yes, a large portion of insurance sales are still driven by somebody telling the consumer that you must buy these products, we are also seeing a very heartening trend which is that people themselves coming especially to platforms like ours, coming to explore and to understand insurance.
One of the key drivers that we have found over the last, let us say five years or so is the increase in protection products. So, there are two types of insurance products - one is the flexi products - where you pay a certain amount of money and which you only get utility if something happens. So, either you die or you go to a hospital, there is no other benefit.
Then there are the traditional insurance products which are the vast majority of the industry. These are insurance cum investment products where you invest a certain amount of money and you get a small amount of insurance with you.
Now in the last five years, the focus has been - there is a growing trend of people focusing on the first part - the protection products and these people tend to be self-driven individuals who come and explore. So, I think that is a very heartening and a very important part of the industry and of course, we at Policybazaar would like to believe that we have played a role in that by making it easier for consumers to compare as well as to discuss with an expert as to what kind of insurance they should buy.
Q: How responsive was the insurance industry as a whole and the role of the regulator in being able to respond to the kind of needs that arose last year?
A: I would say that the regulator started immediately - I think in late March they came out with an announcement that all health policies will cover COVID because that was a very important announcement. People were concerned whether COVID is covered or not covered etc. so that set everybody at ease. They introduced many digital measures, last year including the fact that you can use soft copies for claims etc. They came out with standard products as I mentioned both on health and corona and various other products as well. I think the regulator to give them a lot of credit - they did everything which one would have expected a far-sighted regulator to do.
Like all other industries, the industry was on the path to digitisation even without COVID, but COVID has accelerated that whole thing. I think the industry had to cope very fast. Things like getting physical medical done became an issue, so the industry had to move to tele-medicals, to video medicals and of course many other digital processes. So, I think there was a difference, I think the larger companies were perhaps better prepared whereas some of the maybe older companies were not as well prepared. But I would say that now if I were to look at the industry in March, I think we have all come a long way and COVID has been that silver lining to increase the digitisation quotient of the industry for sure.
Q: We are seeing a resurgence of COVID especially in states like Maharashtra, there is talk of a lockdown, what are you worried about?
A: Always the first thing in a situation like this is to look after our employees. We have our office in Mumbai and we had started coming to the office, around 50 percent kind of rate, we will dial that back as things proceed if required. First thing is to secure our employees.
The second step is - we always want to be in front of consumers in moments like this so last year also in April - while typically April is a lean season for insurance, and from our television advertising perspective, we sometimes take a break in April. But we were on last year at full flow and this year also if things continue like this, we will definitely be in front of the consumers explaining what they can do, how they can protect themselves.
(Edited by : Yashi Gupta, Abhishek Jha)
First Published: Apr 2, 2021 5:11 PM IST
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