There’s an internet meme that was doing the round some years ago. The meme shows a picture of a door and someone standing outside it. The text on the picture says: “They have either come to eat your brain or to sell you insurance; both options are equally terrifying.”

The top bosses of the over $60 billion life insurance industry in India may have taken notice. From the pitch of selling insurance as a product that takes care of your family when you are dead to a life-stage solution that is ‘customisable’ as per your needs, insurance selling has come a long way. A few years ago, in some parts of the country even today, the life insurance market was primarily dependent on push, tax incentives and mandatory buying. There was little customer pull. However, that has started transforming as customers are becoming financially more aware. Better savings and higher disposable income have also made people look at insurance more as a solution. Higher ticket-size, better conversion rates are just some of the advantages of wrapping an insurance product in the ‘solution’ mould. This could be why words like retirement, child savings, assured income and wealth creation are increasingly finding themselves on product covers.

Listening to clients

Snehil Gambhir, chief operating officer, Aviva Life Insurance, hits the nail on the head when he says that among all the products sold in the financial domain, insurance products have a distinct feature — intangible and not for immediate consumption.

“…in the true sense are financial solutions, or protection covers from various financial uncertainties. In many cases (term life covers), the financial benefit of insurance may not be realised during the lifetime of the insured. However, he/she can be mentally contended knowing that in the event of misfortune striking, he and his family is protected. Thus, it’s a life solution,” he says.

It is the era of stress and tension in our-day-to-day chores. A solution is an answer to a problem. Customers seem to prefer it that way. “Selling certainly becomes simpler when done as a solution. It allows customers to lay out a roadmap of what their needs are, what their resources are and what eventualities do they want to cover…our experience is in line with providing solutions. Our sales professionals are trained such that we focus heavily on understanding customer needs. We conduct a suitability analyses and bar certain products for certain customers to ensure a need-based sale,” says Gambhir.

A solution approach allows life insurers to understand customers better, build longer term relationships and retain them longer. There is a distinct correlation to persistency and child products for instance. “Parents understand why they bought that product and will not do anything to jeopardise their child’s future. Insurance coverage should not be deemed as an investment or tax saving tool, rather they should be viewed as a necessary life solution,” he adds.

Munish Sharda, MD & chief executive officer at Future Generali India Life Insurance, has earlier sold loans (at Citibank) and now looks after life insurance. And he has something very important to say. “Often life insurance products are designed in a way that the money is given to the nominee at one go. Sounds like a lottery. But do you know what really happens when somebody gets Rs 30 lakh at one go? They are likely to spend it very soon. That’s where the problem lies in such a design,” says the MBA from Indian Institute of Management, Lucknow.

Sharda is not wrong. When the nominee, say a housewife, gets a huge sum of money, often the money is spent for all wrong reasons. While taking the policy, her husband would have thought that the money would take care of the children and his wife for some time, but the reality could be very different. “This is why we have designed products which will give you money every month like a fixed income. Simple products are what are required. Life insurance is a product like no other. If it’s simple, people will buy. If it’s a simple solution to your problem, it will make you think. You will come back tomorrow, if not today,” he adds.

The writing is on the wall. Customers like when an insurance agent tells them that he/she has a solution for their problems. Amit Kumar Roy, chief distribution officer of AEGON Religare Life Insurance, who has nearly 25 years of experience behind him, agrees. “We have come a long way in the perspective of life insurance distribution methods. A large number of people now understand the need for insurance and they generally want to look at that as specific solution for the individual.”

He had previoulsy worked with Reliance Life Insurance, Bajaj Allianz Life Insurance and Life Insurance Corporation of India. “One of the examples in this is the growing popularity of online protection solutions and the variety of life planning solutions available for offline products. The biggest advantage of such a solution oriented sale is customer’s ability to judge the merit of the product and decide accordingly,” he adds.

In such an approach, the sale becomes a moment of truth for the seller too. Gone are the days when insurance could get sold only on the merits of individual relationship. The seller must now deliver what the customer needs, else the seller would not last long, avers Roy.

From push to pull

All advertising can fall into two broad categories — push and pull. The ‘push’ variety attempts to push products towards customers using attention-grabbing claims to put products into the minds of customers. On the other hand, ‘pull’ strategies target the right customers at the right time and pulls them towards a product. While industry experts agree that it’s not a ‘pull’ market yet in life insurance, there has been quite a bit of progress.

Aalok Bhan, director, product solutions and customer marketing, Max Life Insurance, feels that this change from push to pull is surely happening. Attribute it to change in regulations, companies’ planning, needs of the customer or a combination of all these. This change in approach is evident in the ways life insurers sell insurance. Data still shows India remains one of the most under-insured nations in the world.

“Traditionally, life insurance was considered as a push product primarily ‘sold’ through intermediaries for financial protection and systematic savings. However, over the period of time this has evolved with life insurers offering sharply defined products and solutions targeting specific customer needs,” says Bhan, who has previously worked Standard Chartered Bank and ABN Amro.

No single life insurance company can offer all products that can meet all needs of the customer and therefore the need for customising existing products to tailor-made specific solutions. “Life insurance solutions act as an enabler for the seller to bridge the gap between the product suite of the life insurer and needs of the buyer helping him to customize a solution by combination of one or more products/riders offered by the company or by creating a customised wrapper over the product that specifically talks to the customer needs,” Bhan says.

For instance, at Max Life Insurance, they offer multiple life insurance solutions over and above their product suite. They call these solutions as ‘sales stories’. Sales stories (life insurance solutions) contribute 20 per cent of total sales from Max Life proprietary channel.

“A sales story helps the customer to understand a complex life insurance product in a simple and more customer friendly manner using pictorial representation specific to the customer life stage. The customer is able to better relate to the solution explained and understands the value that he/she would derive on purchasing the solution,” opines the post graduate in business management from IIM Calcutta.

Research shows customers who bought insurance products as a solution had a higher recall of key benefits and features than who bought life insurance products sold through traditional conversations. This in effect would impact long-term customer retention as well. Also, customers who bought products through solutions had a more realistic expectation of returns. This in effect should result in to lower customer complaint rates.

These solutions positively impact productivity of the sellers on account of higher conversion and higher ticket size. The higher conversion is a result of sharper proposition customised for the client and the higher ticket size results from improved customer willingness to pay when a life insurance product is showcased as a life solution.

Gambhir of Aviva Life feels that the solutions have to be practical and well-defined too. “Insurance solutions can help an individual cover many of his life’s solutions — financial assistance to dependents in case of premature death, continuing support for children’s education, and regular pension in the latter years of life. To cater to the need of protecting the family from bread-earner’s early demise, simple online term plans offer life cover protection till old age at a very nominal premium,” he adds.

Source: My Digital FC