Insurance: Nearly 80% Rely on Personal Recommendations, Known Agents, Says Report

Personal recommendation from friends and family or a known agent is the top trigger for insurance consideration for major of people (about 80 per cent of the respondents), according to a survey report by Policybazaar. For 56 per cent, a recommendation from friends and family was the main trigger for purchasing health insurance, while the number stood at 54 per cent for life insurance.

In a report titled ‘How India Buys Insurance’, Policybazaar said trust building is the key in the insurance business.

It also said brand familiarity and vintage seemed to play a key role in trust building. About 58 per cent and 64 per cent respondents said they trust the brands they are familiar with or the brands that have been around for a long time, both while purchasing health insurance and life insurance, respectively.

“Two key reasons that deterred the purchase of both health and life insurance included affordability issues and difficulty in understanding the product. While more than 40 per cent respondents cited high premiums as the reason for not purchasing health and life insurance, around 53 per cent found the products/ process difficult to understand and thus, dropped out. This indicates a clear need for education in the category along with simpler, more affordable options. The earlier this education starts, the easier it will be to hit the message home,” the report said.

It also said around 80 per cent respondents across health and life insurance looked online for information before purchasing the policy. However, over 85 per cent ended up purchasing offline primarily through an agent they knew or was recommended by friends and family.

The convergence of online and offline mediums seems to be the way forward for the insurance industry.

Sarbvir Singh, CEO of Policybazaar, said, “Policybazaar’s efforts to maximise insurance penetration are in alignment with the Irdai’s vision of a fully insured India. In order to achieve that objective, we need to deeply understand the changing consumer needs.”

He added, “With a detailed series of face-to-face interactions, we have gone beyond tier-I and tier-II cities in this research and also explored the perspectives of tier-III India. We hope that the insights from our research will pave the way for more relevant and consumer-centric solutions from the insurance industry.”

The report is based on the responses of over 3,300 respondents from 27 cities across India, including metros, tier II and tier III cities.