Agents score over direct channels and bancassurance in health insurance business

General insurance companies and standalone health insurers rely on individual agents to solicit health insurance policies. The latest IRDAI data shows that individual agents accounted for more than half or 54% of the total health insurance policies sold under individual business last fiscal.

In terms of premium amount, individual agents contributed 73% of the total premium collected under individual business.

Direct sales followed individual agents with 26% of the individual policies sold by the channel. While direct sales through physical route accounted for 24% of the total individual policies sold last fiscal, direct sales through online channel account for just 2%. In terms of premium collected, direct channels collected 10% of the total premium collected under individual policies.

Next in the list was corporate agents like banks and national distributors commonly known as ‘bancassurance’ in insurance parlance. The channel account for 16% of the total policies sold and 11% of the total premium collected under individual policies.

Experts attribute this to handholding by advisors. Gurpal Singh Dhingra of Prudent Insurance Broker believes that most people prefer buying health insurance policies through advisors as it requires customization. For instance, a policyholder suffering from hypertension or type A diabetes cannot buy a health policy on his own, he said.

“Health insurance is a complex product and it’s not one size fits all kind of a product. Every company offers different kind of customization and people are often confused with all the variants, therefore people believe that there is a need for an agent as intermediary for the entire process of selection of health insurance,” Sanjay Datta, Chief - Underwriting and Claims at ICICI Lombard General Insurance told Cafemutual.