Millennials ask questions, choose products better, says Policybazaar CEO

Six top insurance executives discuss the mind of the millennials and their buying behaviour. They speak at length on how mis-selling has reduced significantly and why penetration levels have come down

On how to woo the millennial customer 

Sanjeev Nautiyal: The millennial consumer of today likes to co-create products with life insurance companies. Millennials want the life insurance industry to be more flexible and participatory. We have more structured products now but customers want to be able to modify products. Millennials value clear and honest communication. Insurers have to put that to perspective and reimagine customer journey. Simplification of products is important, and they should be de-jargonised. The ecosystem should be transparent in order to cater to millennials. 

Suresh Badami: We need to go back and look at the value proposition that we are creating for millennials keeping in mind their different spending habits, consumption behaviour, and brand preferences. I don’t believe millennials are reckless and they will buy insurance if it adds value for them. For millennials, it is more about an ecosystem and not just a single product. We need to create an entire support system.  

N S Kannan: This is a huge heterogeneous population which cannot be boxed in by stereotypes. You have to talk their language in terms of what their life goals are. Close to 50 per cent of our term policies comes from millennials and it is a very good segment. We should be open to partnership and non-conventional distributorship. The buying process has to be smooth, else the millennial will move out. Policies have to be issued instantly. 

Yashish Dahiya: Millennials do their own research, identify what they want to buy and trust Google and their research more than what anyone says. They are questioning in nature and choose products better. The biggest resistance we find is that most of them are not yet long-term investment thinkers. We are not seeing churn in millennials, but they question the lock-in period and want more freedom.

On why the proportion of insurance premium to GDP is coming down 

Pankaj Razdan: If you compare to 2010, the same products are now being sold at much cheaper rates, almost 25-30 per cent lower than before. You cannot ignore the fact that life insurance, due to regulatory changes, has become more affordable and easy to access. One has to look at insurance not as a ratio to GDP but in terms of number of households. A large pool of the population owns insurance but they don’t have adequate insurance. 

Tarun Chugh: Private sector has been growing faster. So, if you take nominal GDP at about 10-12 per cent and growth of private sector is upwards of 14 per cent but growth of Life Insurance Corporation has been a little slower. That is, of course, a large base and it is difficult to grow on a larger base as just one company. There are segments that have slowly gone away from us and some segments that we are not addressing. 

Nautiyal: There was a period where a lot of sales of ULIPs (unit linked insurance plans) had happened because of which the penetration level had increased but then the regulator stepped in and course correction happened. There was a spike and then the regulator stabilised those highs. The industry has grown at a constant rate in the last three to four years.  

On mis-selling 

Badami: For a long time, life insurance was a push product due to complexity. The new product regulations, technology and design wherein people are able to compare and understand features is leading to a pull effect, we are not fully there but it is happening. In life insurance, there is a lack of understanding but there have been controls put in by the industry. 

Chugh: Mis-selling is coming down and there has been a downward CAGR (compound annual growth rate) of almost 22-23 per cent every year. There was a phase where everybody mis-sold, the regulator put trust in the insurance companies and all of us went haywire trying to hit the 4 per cent. That is an issue of the past but the stigma still stays. 

There are issues around liquidity which people later realised and it is the single biggest reason why people talk about mis-selling.  

Razdan: Wherever money is involved mis-selling does happen. The entire industry got coloured but it was certain pockets that were misspelling against which the regulator took a hard stance. There is significant reduction in mis-selling. 

Kannan: Mis-selling doesn’t help us. We are not getting any benefits out of mis-selling and destroys value for shareholders. So it is not something companies should be encouraging. In fact, we should come very hard on mis-selling with the help of the regulator and that is what has happened. The ultimate proof is the persistency movement in the past five years with renewal premium coming back. If a mis-sale has happened, people will not pay renewal premium.