Risky Risk

 

The preamble below is for the purpose of readers who might be unfamiliar with the Indian life insurance industry. The actual subject matter of the post starts from Paragraph 2.

Around a decade back, Life Insurance Corporation of India (LIC) enjoyed a monopoly in the life insurance sector. Awareness about insurance was low, life insurance penetration even lower. Then, the markets were opened and competition flooded the market. All was for the good, so to say. Enlightenment about insurance increased by leaps and bounds. But, the idea of risk was still a new concept in the Indian market. Companies had to use the “Tax sop under 80CCC” line to attract customers. People were buying insurance, not with the intention of covering their risks, but to save on tax money. However, they were buying insurance which in itself was a success. And then did the story take a U – turn. A couple of years back, tax sops were revised. It became no longer attractive for people to look towards insurance for saving themselves some tax money as other, more attractive products got added to the list.

Selling insurance is not the same as selling FMCG. More than half the time (definitely more than that), the potential customer is not going to walk up the steps of an insurance firm and buy the product. Maybe (s)he will, in case of motor insurance, which is compulsory. Otherwise, insurance, specifically life, involves a lot of ‘push’.

What is the need of a life insurance customer? Is the customer just interested in risk coverage? Or, does he like believing that he would live for a long time, but his life span increases in a tension free world if he safely insures himself? Or, does he like investing in it like how he would in a Mutual Fund, deriving the primary benefit out of linking it to the market and keeping the risk coverage as a secondary and less important benefit?

Keeping all these in mind, what is the case that insurance companies have taken to the market to sell their wares?

As far back as I can remember, LIC used to toe the “During Life, after life” (‘Vaazhum Bodhum Vazzhkaiku Piragum’ in Tamil) line in their advertisements. One of them portrayed the breadwinner’s untimely demise leaving his family regretting over not insuring his life which could have helped them lead a comfortable life. Though such advertisements did put off the viewer, LIC was jus going the “scare to death” way of increasing its base. It subsequently moved on to toned down versions such as a widow marrying off her only daughter, thanks to the insurance policy that her husband had taken when alive.

The new entrants, if they had any hope, had it in differentiating themselves, for LIC as a brand was known for its reliability. This has led to interesting concepts that these companies have come up with to sell the concept of risk.

ICICI uses the “Jeethe Raho” (Live long) concept where the wife explains to the husband that insurance is not just a ‘death benefit’ tool but a safety model which secures the family’s future as a whole and comes back in a circle to help the person lead a longer, tension – free life.

 

 

 

 

 

HDFC says, “Sar Utha Ke Jiyo” (Live with respect) without expecting anyone else’s helping hand for your kids’ education, your old age etc. Their latest advertisement shows a kid who is worried as to who will buy him games if his Papa gets lost and then his Papa says that even if he gets lost, he would buy it for him. This advertisement, somehow, did not go too well with me. It had an irritating effect. Surely, there could be a better way of representing the concept of “Live with respect” than telling a small kid that he would get his games even if his father gets lost.

 

 

 

 

Aegon Religare, a relatively new entrant in the industry, toes a different strategy altogether. It says that the amount of money you may have insured your life with, today, might not be enough a few years hence because of rising inflation and exponentially increasing prices. Quite unique a concept, it looks at value sales instead of volume sales. I wonder how relevant it is to the Indian market where insurance has not reached a majority of the population yet and where taking an insurance policy itself is a big deal. In such a market, proposing the idea of increasing one’s cover of insurance sounds quite premature, and seems to assume that the target group would be large enough to sustain the company. But, there is definitely hope for such an idea to blossom in the years to come.

Despite all the education and awareness that various advertisements by private life insurers have provided, the Indian consumer still prefers the concept of investment over the concept of risk – cover. Hence, it looks like for many more years to come, companies will have to follow the route of “investment based insurance” to attract customers to their fold.