Two decades ago it was sacrilegious to think that an existing insurance product could ever have a use by date tag attached to it. Once introduced into the market, it was guaranteed an eternal existence. However as we progressed into the 21st century and with the opening up of the Indian market, there has been a dramatic shift in the lifespan of a product. In the very competitive and dynamic environment that prevails today, every insurance product is now threatened with a short shelf life unless it remains relevant by continuing to meet the needs of the very informed and demanding insuring public.
A customer today is spoilt for choices. A wide array of products are available on a platter for him to pick and choose from, a large number of insurance advisors are at his doorstep to provide expert advice, and a variety of insurance tools are available at a click of a button to help him compare products and make an informed choice. In such a customer centric environment, it is not uncommon for a product to arrive with a bang and wither away with a whimper in a shockingly short period. The post mortem that inevitably follows would provide causes that are very obvious– very complicated language, no innovative features, repetitive and irrelevant coverage, insufficient indemnity, inordinately high pricing. In short, it is a sad demise of a product that the customer did not find attractive enough to buy or enticed to renew in future.
The key of survival therefore lies in understanding the psyche of the new age customer. The modern customer is wary of insurance products couched in legal verbiage and shies away from them unless coaxed by an intermediary albeit with a lingering suspicion on its efficacy. He looks for simplicity in language and clarity on the product features. Ease of understanding opens the door for an independent and deeper exploration of the product features. A customer whose interest is thus ignited would look for interesting features that he has not come across, its relevance to his insurance needs and whether it would provide adequate succor to him in his hour of need. Once satisfied on these counts, the next critical question that would arise in his mind is about the affordability and whether there are other products with similar features that are priced cheaper. It is a victory of sorts for the product if the customer buys it. The product survives to live another day and be the object of interest of another customer.But for how long would today’s customer be interested in a life insurance or general insurance products?
In the age of rapid technological advancements especially in the sphere of Information Technology, it is a critical question that needs to worry the product developers. The products that companies today proudly hail as “marquee product” “the pride of the company” “the best seller” “the golden goose” “the money spinner” “the cash cow” could easily become relics of the past if insurers do not move with the times.
The answer lies in constant innovation that addresses the changing needs of the customer. A product becomes innovative when it stands out in the market as the only one that meets most of the aspirations of the customers at large. The customer could be looking for something unique in either the coverage, the design of the document, the tenure of coverage, the medium of purchase or savings in the cost etc. It is therefore imperative for the insurer to feel the pulse of the customer through a robust market research and develop products contemporaneous in nature. Insurers who regard product development activity as a mere support function or at best a minor accessory to underwriting will have to be alert to the fact that innovation in products would be very vital for its existence in the testing times that lie ahead. The focus therefore should be on inventing and reinventing products that would help insurers to not only have an early bird advantage but also be the market leaders in their field.
(The author, R. Suresh Nair is the Head, Product Development at Bajaj Allianz General Insurance Co. Ltd. Views expressed in this article are personal.)