The sales of online life insurance policies are gradually increasing. The Gen ‘Y’ finds it more convenient and cost-effective to purchase a life policy over the internet.
IRDAI data shows, the online sales channel had contributed 0.22% of new business premium in FY 2015-16. Earlier, the online distribution channel was included in the ‘direct sales’ channel.
Private insurers sold around 42,000 life policies via the online platform whereas LIC sold 4,500 life insurance policies in FY 2015-16.
Commenting on the meagre number of online insurance sales, V.K Sharma, Chairman, LIC said, “Although the contribution from the online platform is minuscule, the numbers are set to increase in the coming years as we move to adoption of advanced technology.”
Life insurers sell simple products like term policies online that do not require a medical test and are not complex to understand. Currently, LIC sells term policies for a sum assured of Rs.25 lakhs or above which is 25%-30% cheaper compared to its offline policy.
The government is also doing its part to increase insurance penetration and moving to a digitalised society. Post demonetization, the government has asked state owned LIC to offer discount up to 8% on new insurance policies.
Currently around 70% of the population is not insured. The insurance regulator is continuously making efforts to increase insurance penetration in the country. In a recent circular on guidelines for insurance e-commerce norms, IRDAI said, “The promotion of e-commerce in insurance space would lower the transaction cost and bring higher efficiencies and greater reach.”