An RBI committee report said that insurance agents face stiff competition from digital channels.
“Traditional broker/agent in-person distribution faces significant competitive pressures from digital channels in personal lines. Distribution partnerships with banks and retailers through white-labelling and over-the-counter products have become increasingly popular,” the committee stated.
The report said that fintech distribution is disruptive and can change the course of insurance business. The report found that in the last 10 years, many insurers have opted for digital channels and process automation that will have a disruptive effect on the insurance industry. In addition, many insurance companies are focussing on providing personalised services to attract clients through technology. “The rise of online aggregators and the potential entry of technology players could disaggregate the distribution of personal and small commercial policies and separate insurers from the ownership of customer relationships,” the report said.
However, experts feel that despite a continuous push for digital means, the progress in fintech distribution space is quite insignificant.
Subrat Mohanty, of Springdale Insurance Broking, said that digital channels would not affect individual agents. “Currently, the online direct channel comprises 1% of the total insurance sales. Many people do research on insurance policies online; however, they still prefer buying insurance policies through an agent,” Subrat said.
He believes, though, that people would go online to buy simple products such as travel and motor insurance. “People will buy a few non-life policies with pre-defined benefits, but they will not buy life and health policies due to their complex structure,” Subrat added.
On the other hand, Kapil Mehta of Secure Now Insurance Broker, believes that the hybrid model is the way forward. “The digital channel does not necessarily replace agents. In my view, it complements agents. For example, if the agent can evaluate risk of their clients by using digital platforms. We have seen this in developed country like USA,” Kapil said.
He also added that fintech helps clients in smaller towns to process complicated processes in the absence of individual agents.