By Murad Jawed, Visista Insurance brokers 9 July 2021
COVID-19 pandemic which began as a relatively small-scale epidemic in end of 2019, has spiralled into one of the deadliest health and financial catastrophe on a global scale in history. While the immediate impact on the health and wellness of people, including both the physical and the mental health, has been abundantly apparent right from the beginning, it is in fact, the associated financial catastrophe that has been unravelling itself in numerous unforeseen ways with time; in process making it one of the worst financial crises as well.
While on one hand the pandemic has created a huge crisis and posed many challenges, on the other hand, however, it has also led to increased awareness and interest among people especially the younger ones who have been traditionally disinterested towards insurance. A majority of them now consider it a necessity. According to one report, Before the outbreak coronavirus pandemic in India, only 10 percent of people were interested in buying insurance to cover healthcare emergencies including infectious and pandemic diseases, but now 71 per cent people consider health insurance as a necessity.
Therefore, while the pandemic has revealed many inefficiencies and gaps with respect to technology, systems, products, and processes in the insurance industry, the insurance companies in turn have responded by looking towards creating new and innovative products which are more tailor made, customer friendly, tech enabled and transparently driven.
Among many such innovations to have taken front stage, tech driven bundled insurance and wellness offering is one which has gained a lot of traction with individual customers and hold a lot of promise towards bridging the gap in penetration for the sector.
What is insurance bundling?
The term Insurance Bundle refers to a bouquet of more than one insurance products from the same insurance company which may be coupled with other health and wellness offerings. While the way an insurance bundle is packaged varies hugely depending upon the regulatory and socio economic constrains, the concept carries a number of benefits for both the customers as well as the service providers. Among them, bulk discounts for the customer, single point contact for the covers, better streamlined services and access to otherwise declined products and add on services like, OPD consultation, health check etc, are prominent. Like any other offering, it has its disadvantages too. The biggest among them is that these may not suit the specific needs of individual customers. For example, in a bundled offering while an individual may choose from among the various bundled options being offered by a service provider, he or she may not be able to customise the cover limits of the health insurance, or the personal accident insurance being offered.
Currently, there are two prevalent models of insurance bundling in the Indian insurance market: price bundling and product bundling. In the Price bundling model, the service provider offers multiple related products along with add on health and wellness offerings at a cumulative discounted price. For example, an insurer may bundle hospitalisation cover along with personal accident while also offering home and motor insurance cover and at the same time also giving wellness offerings like limited free health check-ups, OPD, teleconsultation and pharmacy discounts. On the other hand, in the product bundling the service provider may offer enhance value add-on related to the basic insurance cover. For example, a life insurer may offer supplementary benefits such as premium waiver along with riders like accidental death benefit and critical illness coupled with bouquet of other wellness add-on benefits.
Appeal and challenges
As a customer the appeal of a bundled insurance offering lies in the relatively lower price tag and convenience of buying and managing multiple covers through only one proposal to take care of all their needs. Consequently, one doesn’t need to keep track of multiple payment dates or multiple service providers. It may also enable you to buy those relatively cheaper policies in which the insurer may otherwise not be interested on a standalone basis. For example, a personal accident policy for self which may hardly cost a few hundred rupees. However, in a bundle, this price gets coupled with other products and creates viability for the insurer. Another major and often overlooked feature of the bundled insurance offerings which has a major appeal to the customers, is the much-reduced entry barrier in terms of payment options. Most of the service providers offer bundled insurance products with monthly payments options coupled with the convenience of opting out relatively easily. The reduced immediate burden on the wallet along with the ease of transaction enabled by the use of
technologically driven platforms make the idea much more appealing to the younger generation. For insurance companies, the idea of selling multiple products to a single customer makes much more business sense as this reduces marketing and administrative costs, which can be translated into discounts for the customer and profits for the company. Moreover, this increases customer loyalty, something desperately sought after by the insurers.
For insurers, the trick lies in creating the right bundles of offering, something which gives maximum to the greatest number of customers while at the same time also fulfils the regulatory requirement, as well as creating the most robust and customer friendly platforms to service the product and thus creating the best winning offering.
Conclusion
In conclusion insurance bundling presents a win-win situation for both the customers as well as the service providers. It has immense potential to bridge the huge shortfall in the insurance penetration levels in the country. With the right approach, technology driven service platform and investment in data
management, it is poised to be the next big offering from the sector.
End note
Visista insurance broking services pvt ltd, is one of the leading domestic insurance broking and risk advisory firms in India. With operations spanning almost two decades, we have been at the forefront in providing the most optimal mix of both the latest innovative and traditional insurance solutions from both the general
as well as the life insurance space in India, to a rich and diversified clientele spanning across all the sectors. Currently operating out of seven different locations, we service our clients both in corporate as well as retail space spread all over the country. We realize the potential of bundled insurance products in the wake of the awareness created by the pandemic and are actively working with multiple service providers to bring the best offerings for the customers especially in the retail segment.
To know more about the same or for any other queries related to insurance, as well as for any requirements related to the same you may get in touch with info@visistarisk.com or visit our corporate website www.visistarisk.com
