Until now, it was a common practice to research and compare products online. But when it came to buying, people prefer to go to the agents. However, customers' attitudes are changing.
So far, the online route was the preferred one for renewals of policies and not purchase. But, it makes sense for customers to complete the entire transaction online given the ease and transparency, say experts.
“While buying a health insurance plan online, the customer can see what is he opting for. It offers transparency,'' says an official from ICICI Lombard General Insurance. For ICICI Lombard, 70 per cent of its e-channel business comes from those who buy plans online and also renew it, and the remaining from only renewals.
Online buying offers the customer the choice of multiple modes of payment, such as net banking or credit card, instead of paying by cheque in the case of buying a policy from an agent. Also, it may work out cheaper, though this need not always be the case.
Aviva Life Insurance recently launched an online critical illness plan. According to an official, customers can look to save up to 25 per cent of the cost.
“If the plan is bought directly by the customer, we can pass on the savings from the distributor,'' he says. However, according to the ICICI Lombard official, there is no difference in pricing as it is a function of risk being insured varying across customer type.
According to Akshay Mehrotra of policybazaar.com, while there is no clear price advantage in health insurance, on an average 70 per cent of customers who buy online save more than Rs 5,000 on each policy.
He cites examples of two products of a health insurance company which offer almost the same cover. While one has a 10 per cent commission, the other product has a 17 per cent commission. So, agents would push the product which offers higher commission and, therefore, charge higher premium.
“When customers research online, they will come to know about the cheaper product. Pricing for online products will change over time,'' he says.
Gaurav Garg, managing director & chief executive officer of Tata AIG General Insurance feels there is still preference for what is called ROBO – research online and buy offline. “Our website has seen a strong trend where customers research and buy the products online, which are relatively more standardised structurally and have a lower ticket size like overseas medical and travel insurance,'' he says
For the company, the share of health policies being sold online is still small, at two-three per cent. But its customers have shown steady increase in interest for online purchases, Garg points out.
The online platform offers customers the opportunity to conduct extensive research and easy comparison between multiple insurers. Information presented online can help customers make the right choice of coverage according to his or her needs. When buying online, the customer saves the hassle of waiting for a policy and gets full control over its renewal.
“We have noticed that customers who buy online tend to renew their policies online and also use our service and claim registration processes after buying the policy,'' he says.