Back in 1999, when online shopping first took off in India with Fabmart, most people didn't really use it. It wasn't just because internet access was limited back then, but also because they didn't trust this new way of shopping.
Things changed gradually when Snapdeal, Flipkart, and Amazon came into the picture. Sure, their discounts caught people's attention, but it was also the little things like buying books online, which got people interested. As more and more shoppers tried found that it was reliable, trust in online shopping grew, making it a favourite pastime for many.
Now, imagine a single online platform where Indians can easily find all kinds of insurance policies from different companies. If something catches your eye, just swipe right and make a purchase. That's what the Insurance Regulatory and Development Authority of India (IRDAI) recently announced with Bima Sugam—an online marketplace that brings together all life and non-life insurance companies in one place.
How does Bima Sugam solve big problems?
Think of it like an e-commerce platform, but for insurance. It's a one-stop destination where you can buy insurance policies, switch between policies seamlessly, change your insurance agent if needed, and settle claims—all in one place. You can buy life, motor, or health insurance policies directly, and there are also web aggregators, brokers, banks, and insurance agents to help you out. Plus, with an e-insurance account (E-IA), everything is much easier for policyholders.
India's insurance market is underpenetrated, currently standing at a mere 5 per cent of the country's GDP. This low penetration can be attributed to several factors beyond mere lack of awareness.
Firstly, there's a widespread lack of trust in insurers and insurance products. This stems from mis-selling practices by intermediaries who push policies without adequately considering customers' needs.
Secondly, the complexity of insurance policies makes purchasing them daunting. People often hesitate due to the cumbersome process of poring over pages of terms and conditions. As a result, more than 60 per cent of life and health insurance plans are still sold offline.
Moreover, the perception of insurance as a luxury adds to the challenge. In a country where the top 1 per cent earners receive over 20 per cent of the national income, many perceive insurance as an expensive and often unnecessary investment. This income disparity exacerbates the reluctance to invest in insurance.
Furthermore, the lack of awareness leads many Indians to view insurance primarily as an investment vehicle, seeking returns rather than protection.
To address these issues, IRDAI aims to simplify the insurance purchasing process and ensure comprehensive coverage for every Indian by 2047. By fostering trust, streamlining processes, and promoting awareness, IRDAI endeavours to make insurance accessible and beneficial to all citizens.
What are Bima Sugam’s benefits?
Bima Sugam will bring significant advantages to users. Firstly, it will capitalise on a centralised database, streamlining processes for insured individuals facing challenges with their current insurers or agents. This will facilitate the seamless porting of policies based on coverage and pricing, while also expediting the acceptance of new or innovative products.
Moreover, the platform will offer users a diverse array of policy options to choose from. Whether it's life insurance or general insurance, users will have a comprehensive view of their policies, including details and renewal dates, all within one convenient window.
Additionally, Bima Sugam aims to reduce intermediary commissions, thereby enabling users to select the most suitable product at a fair premium price. By cutting down on intermediary costs, the platform empowers users with greater control over their insurance choices and expenses.
IRDAI aims to make this service completely free for users. With all your policies consolidated in one place, you won't need to navigate multiple channels to renew, make claims, or address grievances, regardless of the insurance type—whether it's life, health, vehicle, or other general insurance policies. This streamlined approach to managing insurance promises to alleviate another layer of complexity within the insurance process.
Indeed, this new platform has the potential to resolve many, if not all of the challenges faced by insurance buyers in India.