Data from personal devices and electronic transactions are powering businesses around the world. And the story is no different for bancassurance. Customer information is used to forecast market trends and personalize insurance products. That’s how you get add-on travel insurance while booking a flight to Berlin or an extended warranty on the latest top-of-the-line iPhone. Data misuse concerns pale compared to the perks of data-driven digital insurance.
Is this applicable to the Indian bancassurance market? Yes, it is! A recent survey observed that Indian consumers would permit banks to use their transaction data to offer tailored insurance products within banking apps. Indian consumers want easier digital insurance options. If that requires data, then so be it.
What Indian bancassurance consumers want
A survey of banking customers in India shared some interesting findings:
91% of the digital banking customers surveyed would like to receive embedded insurance products based on their transaction information. The figure is slightly higher (95%) for customers of traditional banks.
63% of those surveyed mentioned ‘convenience’ as the primary reason for their interest in embedded offers.
A higher preference for embedded insurance offers is observed among consumers who have recently made expensive purchases or experienced major life events.
Why consumers want easier digital insurance
The bancassurance model—where banks sell insurance on behalf of insurance carriers—has been around for many years. It turned banks into one-stop shops for banking and insurance services. Plus, it offered access to risk protection products in areas with low insurer presence.
But as insurance tech companies and new-age insurers disrupt the sector, the limitations of traditional bancassurance are becoming more obvious. What are the gaps in the traditional insurance space? And does insurtech have the solutions?
Problem: Traditional insurance purchase demands initiative from the customer.
New-age solution: Bundled insurance plans
The traditional model requires the customer to make an effort while buying a policy. Let’s take high-end jewellery purchases as an example.
Consumers who buy expensive gold jewellery can only get insurance after the purchase through an insurer, a bank, or an agent that offers asset protection plans. That extra step is hassle enough that many consumers prefer to remain uninsured. But what if the seller bundles insurance with the jewellery? Suddenly, an insurance purchase doesn’t feel like such a big deal.
Insurtech companies are using software to bundle insurance with relevant offerings at checkout. For example, your bank might offer add-on life insurance when you make mutual fund investments through their app.
Problem: Traditional insurance has an accessibility problem.
New-age solution: Insurance via non-insurance brands
Insurance penetration has been a major goal for carriers, but accessibility remains an issue for Indians who live outside Tier 1 cities. And while banks have brought insurance to less-developed regions, lack of awareness about risk protection remains an obstacle.
Offering a silver lining is smartphone penetration. India is on track to reach 400 million smartphones by 2026, up from 300 million in 2021 (Source: Economic Times). With innovations like the Unified Payments Interface (UPI) providing the digital rails for e-retail, the country already has an online shopper base of 140 million and growing (Source: Bain & Company). Insurtech is leveraging these advantages and application programming interfaces (APIs) to bring insurance into everybody’s hands. An insurance API transforms any online sales channel into a digital insurance platform. Online brands like Amazon already integrate policies into their core products and transactions. A bank could do the same by clubbing home insurance with every home loan they service. As it is, shoppers prefer to buy from brands they already trust.
Problem: Traditional insurance has only cookie-cutter policies.
New-age solution: Personalized insurance plans
Traditional insurance carriers have neither the time nor the man hours to tailor insurance to each customer. It also does not make financial sense. This is why traditional insurance products are so generic.
But personalization can be automated thanks to artificial intelligence and data analytics. If you recently bought baby food online, your bank has the details. Insurtech may use this data to suggest a life insurance plan for you or a health insurance plan for the newborn.
And there is scope for even more niche options. Think short-term home insurance offers for those renting their home for a few months or car insurance premiums based on actual driving times.
Insurance tech makes insurance purchases easy.
Insurtech companies like Turtlefin are helping banks spread their wings with digital insurance. When Dubai-based Mashreq bank approached us, it wanted to reduce the time required to compare and fetch quotes from its insurance partners.
Turtlefin deployed an insurance API to speed up operations for insurance specialists behind the scenes and improve the customer experience at the front end. The time is taken to offer quotes improved by more than 150%. A win-win for the bank, its personnel, and consumers.
Turtlefin has the experience and expertise to guide banks, financial institutions, and other online brands through the developing embedded insurance segment.
Experts from Turtlefin develop the right technology solutions and oversee insurance API integration.
Our business partners gain access to a new insurance vertical without business interruption or large investment outlays.
Personalized digital insurance adds value for customers of our business partners, which keeps their revenues flowing in and fosters brand loyalty.
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That data is the lifeblood of insurance has never been truer. Insurance APIs loaded with AI and data analytics capabilities are using customer data to create digital policy offers that are relevant, context-specific, and tailored to the consumer’s immediate need. Consumers get what they need through a seamless online transaction and with none of the headaches associated with the traditional modes of insurance purchase.