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Foreword
When I was asked to write a foreword for this report, A New Beginning - Online Insurance Trends, I was not quite sure what to expect. A flip through the first few pages of the report however, gave me a sense of the enormity of the impending change that is poised to soon sweep the Indian insurance industry via online distribution. Most of the insurance bought till date is offline; however going forward, it is clear that convenience and speed would influence the choice of internet as preferred mode of distributing insurance in India. MDI has been contributing to research in various fields of management and this report is a product of the research interests of the institutes faculty in combination with MDIs initiatives to support businesses, new and old. This is a proud moment for MDI since this white paper has been coauthored by three of our students in partnership with InsuringIndia. What began as a research initiative has shaped up into a first-of-its-kind report on the topic of online insurance in India. New ideas and new approaches can be the only way to progress forward and improve the quality of life in society. This report is an attempt to think differently by analyzing trends in a field as nascent as online insurance in India. Like all researches, this report is an attempt to point out new possibilities and a new direction to the way in which the insurance sector operates in India. I compliment the authors on the great job they have done in bringing out lucid presentation of the report in simple language. I would especially like to congratulate the authors for bringing within the ambit of their report, the study of both rural and suburban reach for insurance in the country. I believe the trends are worth pondering over. I commend the report and have no hesitation in saying that it deserves a serious reading.

Asha Bhandarker, PhD RML Chair Professor of Leadership Studies & Dean Research Management Development Institute, Gurgaon

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Acknowledgement
The idea to work on a research report titled Online Insurance Trends in India was borne out of the sheer lack of any existing available research on the topic. We got in touch with few business schools in the National Capital Region about a partnership and all of them showed their interest. After due diligence, we decided to go ahead with the Management Development Institute, Gurgaon. We specially thank Gourav, Saurabh and Harsh, the three student participants from MDI for tirelessly working on the report. We also thank Dr. Asha Bhandarker for agreeing to do the foreword for this report and her kind words. In the end we thank the entire InsuringIndia team for their help in making this report possible. We are very glad with the outcome of the research and are proud to be part of this initiative.

Bhavesh Sharma Managing Director InsuringIndia.com

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Table of Contents
1. Methodology ............................................................................................................................. 5 1.1 By Regions ........................................................................................................................... 5 1.2 By Cities............................................................................................................................... 6 2. Executive Summary ................................................................................................................... 7 3. The Trends ................................................................................................................................. 9 3.1 Overall................................................................................................................................. 9 3.2 Health .................................................................................................................................. 9 3.3 Term .................................................................................................................................... 9 3.4 Motor ................................................................................................................................... 9 4. The Big Picture ........................................................................................................................ 10 4.1 Geography ......................................................................................................................... 10 5. Health Insurance Trends .......................................................................................................... 12 5.1 Geography - Small is also Big ............................................................................................ 12 5.2 Cover Average National Online Health Insurance Cover is INR 4.2 lakh....................... 13 5.3 Product - Family Always Comes First ................................................................................ 15 5.4 Age - Online health insurance is driven by 30 to 39 year olds .......................................... 16 6. Term Insurance Trends ............................................................................................................ 18 6.1 Geography - West and North driving the demand............................................................. 18 6.2 Age Maximum term insurance seekers start at 31 years .................................................. 20 6.3 Cover Average cover across India is more than INR 40 lakh .......................................... 21 6.4 Policy Period - People desire term insurance with bigger term periods ............................. 24 6.5 Gender - Females are highly under insured ....................................................................... 25 7. Motor Insurance Trends ........................................................................................................... 28 7.1 Geography - North India has the maximum demand ........................................................ 28 7.2 Product - Comprehensive policy is most popular .............................................................. 30 7.3 Insurers - Private insurers need to relook their strategy ...................................................... 31 8. The Last Word ......................................................................................................................... 35 9. Cases........................................................................................................................................ 36 9.1 Health Insurance needs of an Average Indian ................................................................... 36 9.2 A Farmers Quest for Agriculture Insurance ....................................................................... 37 10. About Us ................................................................................................................................. 38

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1. Methodology
The main objective of the report is to highlight the emerging trends in Online Insurance in India. For the purpose of this research, we used the primary data of the visitors who visited our portal www.insuringindia.com from a six-month period preceding October 2011. The data was scrubbed clean of all the personal information, i.e. names, numbers, email ids and addresses. Outliers in different product categories were removed. In the end, out of nearly one million visitors, a sample of more than 75,000 was selected for the study. Three products namely, Motor and Health Insurance (Non-Life) and Term Insurance (Life) were compared. For this, the sample has been compared against demographic data available from the Census of India, 2011 besides other available research, references to which are given, both in the report and at the end of the report. For the purpose of analysis, we have classified India by regions, states and cities.

1.1 By Regions
According to the administrative division of Government of India, the country is divided into 5 zones. We included the North-Eastern states as part of the East India region. Region States Delhi, Chandigarh, Punjab, Haryana, Jammu and Kashmir, Himachal North India Pradesh and Rajasthan West India Goa, Gujarat, Maharashtra, Daman and Diu; and Dadra and Nagar Haveli Karnataka, Andhra Pradesh, Tamil Nadu, Kerala, Lakshadweep, South India Pondicherry; and Andaman and Nicobar Islands West Bengal, Jharkhand, Orissa, Bihar, Sikkim, Arunachal Pradesh, East India Meghalaya, Mizoram, Manipur, Nagaland, Assam and Tripura Central India Madhya Pradesh, Uttar Pradesh, Chhattisgarh and Uttarakhand

Regions

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1.2 By Cities
We have used a 5-point classification from Tier I through Tier V. The cities have been classified according to their population. The population figures are from the recent Census of India, 2011. The classification is as follows City Classification Tier I Tier II Tier III Tier IV Tier V Population 40 lakh and above 20 lakh to 40 lakh 10 lakh to 20 lakh 5 lakh to 10 lakh Below 5 lakh Examples New Delhi, Kolkata, etc. Jaipur, Lucknow, etc. Indore, Patna, etc. Guwahati, Mysore, etc. Palwal, Bilaspur, etc.

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2. Executive Summary
The response to online insurance products has amazed everyone. What started as a novelty product is being lapped up by the Indian consumers. The annual online sale projections of companies have been met in less than two months. The Indian Insurance regulator, IRDA, recently came up with an application to compare ULIP products (Unit Linked Insurance Product). So much so that the public sector life insurance giant LIC has plans for coming up with a game changing online term insurance product shortly. We believe these trends suggest how the future of insurance is going to be in India. People are not just going online to check and compare insurance quotes because it is convenient, for growing number of Indians; it has now become a necessity. As with many sectors such as travel and retail, internet is now looking to transform the insurance sector in India. The regulators, and the insurers, have been trying very hard to increase the insurance penetration in India. Despite that, insurance penetration (ratio of premium to GDP) is only 5.1% (IRDA Annual Report 2010-11), which is less than the world average. With nearly 50 insurers, each having multiple distribution channels, one hoped the insurance penetration would be better. Comparing us with other countries with a more mature insurance market, one very clear difference is visible. Indian insurance has a very nascent online presence as compared with countries like the US, UK, Italy, Spain and Germany. Online insurance sales account for more than 30% of all sales in these countries compared to roughly 3% in India. The insurance industry there has seen a gradual shift from complete offline model to a more online, less offline, model. We think this is the way to go forward for the Indian insurance industry as well. A country as big and diverse as ours has many challenges. One of the biggest challenges always, is to reach out to the maximum people at the lowest possible costs. Google is potentially reaching out to a large chunk of Indias online population by providing customized searches in 10 Indian languages. Warren Buffets Berkshire Hathaway recently opened its operations in India by not opening an office pure online model. They are selling motor and travel insurance through the internet and telephone, a model they have already proved to be highly successful. GEICO of US, a USD 28 billion company, is the 3rd largest auto insurer in that country. Online insurance may be a new and unchartered territory for many insurance shoppers in India; however it seems to be the way forward. With only 10% of the population being online, the potential is huge. India is the 3rd largest market for Facebook and it expects the country to reach the 1st rank in a not so distant future. This growth of the internet, supported by the ever increasing young population of this country, has fueled the growth of many online trends. Ecommerce is a big success story. People have less time and an increased faith in products and services sold online.

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In this report, we analyze insurance buying trends of visitors to our portal www.insuringindia.com. The study reveals some interesting and surprising outcomes that should be of interest to all the stakeholders in the Indian Insurance Industry. Some of key trends that we observed are summarized below: 1 out of every 3 visitors is from smaller towns - less than 10 lakh population - which incidentally have the maximum internet density, even better than top 8 metros

Health Insurance
Average age of online health insurance shopper is 39.9 years More than 50% of the population is looking for a cover size between INR 3.5 lakh to 4.5 lakh Average National Online Health Insurance Cover is INR 4.2 lakh Average health shopper in smaller cities is demanding bigger cover sizes compared to fellow citizens from big metros Almost 80% shoppers are looking for Family Floater products 2 out of every 5 people looking for health insurance are aged between 30 to 39 years The middle aged population (30 to 49 years) accounts for 2 out of 3 online health insurance visitors

Term
Top 5 states make up for almost 60% demand against a population share of almost 30% The urban term insurance demand is equally distributed amongst the bigger and smaller cities at 50% each The average term insurance seekers start early at 31 years 1 out of every 2 shoppers is aged between 30 to 39 years 9 out of 10 shoppers are from age group of 20 to 49 years Average National Online Term Insurance Cover is INR 46.1 lakh Average term insurance cover across all 5 regions is more than INR 40 lakh 10% of online term insurance shoppers are smokers Every 2nd customer is looking for a policy period of 25 years or more Females are highly underinsured with only 4% of the total term insurance sample

Motor
Almost 90% of the visitors are looking for Comprehensive Policies At 56% of the total motor insurance demand, Comprehensive Renewal is the most popular product 7 out of every 10 shoppers reported their previous insurer to be a private insurance company

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3. The Trends
The data has been analyzed across different categories for all three (Health, Term and Motor Insurance) products. The trends have been found across the following classification:

3.1 Overall
Geography

3.2 Health
Geography Age Cover Product

3.3 Term
Geography Age Cover Policy Period Gender

3.4 Motor
Geography Product Insurers

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4. The Big Picture 4.1 Geography

Exhibit 1: Online insurance demand (Top 10 States)

Maharashtra 19% 18% Delhi Andhra Pradesh Karnataka 3% 4% 5% 6% 9% 6% 7% 8% 14% Gujarat Uttar Pradesh Tamil Nadu Haryana West Bengal Kerala Rest of India

Insurance is not being trended necessarily from the areas with maximum population. Delhi shows a very high demand across the spectrum of products analyzed although it ranks very low in terms of population as compared to the rest of the country. The top 10 Indian states account for 81% of the study sample. These states make up for 63% of the countrys population. Maharashtra, which ranked 2nd on the Census 2011 ranking, leads in the online ranking with 18% of the total demand. Delhi surprises with its huge online demand. With only 1% of the countrys population it is ranked 2nd in its online demand. Uttar Pradesh, the most populated state of the country is a lowly 6th rank. Looking at the diversity across these states, one expects exciting trends if insurance products and their information is available to these regional visitors in the languages of their choice. (Exhibit 1) Looking at the demand from a region wise perspective is even more interesting. Eastern and Central India with a share of over 50% of the countrys population are only trending an online demand of 20%. 8 out of every 10 online insurance shoppers are coming from the regions of Western, Northern and Southern India. (Exhibit 2)

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Exhibit 2: Online Insurance Demand (Regions v/s Population)

South West North East Central 10% 26% 10% 25% Enquiries Population 28% 21% 26% 14% 26% 13%

The urban population has been the traditional drivers of the internet revolution everywhere. It has been assumed that internet is the privilege of the big cities only. It is time we changed such notions. We compared the sample with the recent ICube 2011 report. (Exhibit 3) Exhibit 3: Urban Online Insurance Demand (Demand v/s Internet Density)
Online Enquiries 42% 35% 22% 25% 18% 11% 11% Claimed Internet Users

37%

Top 8 Metros

Other Big Cities

5-10 Lac Towns

Less than 5 Lac Towns

1 out of every 3 visitors is from the smaller cities and towns, i.e., semi-urban centers with a population of 10 lakh and below. An average citizen from Adampur and Dhule is showing that they are curious enough like their friends from Ahmedabad and Delhi. This demand is completely against the conventional logic of smaller cities not being aware of internet and insurance. In most of these smaller cities, insurers have a smaller presence, catered mainly though agents or extension counters. Traditional leaders of the online market, the big metros have 42% of the total demand. Insurers have always been looking for a justification to reach out to this population. One reason why, until now, insurers chose to ignore the smaller cities was a lack of sufficient demand to support costs. Our research shows that a large part of the insurance market in these cities is waiting to be tapped. Online insurance with its ease of access and low cost can be an answer to address the problems of insurers and customers alike.

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5. Health Insurance Trends

Health Insurance is the product with the maximum potential in the general insurance sector. It is also the most popular product trending with maximum enquiries out of the sample researched. Consumers are comparing premiums and benefits for health products available in the market. We classified the health insurance trends across the following categories: Geography Age Cover Product

5.1 Geography - Small is also Big

The Tier V cities show the maximum online health insurance visitors second only to the 8 big metros. This is an eye opener against common perception of the people in smaller cities not being aware of health insurance. It seems that the government schemes such as Rashtriya Swasthya Bima Yojana are making the average citizen of these smaller towns more and more aware of the basic right to good healthcare. Most of these Tier V cities are also centers of high rural activity. An average citizen of these towns and the rural population around them now wants better hospitals and facilities instead of depending on the traditional Indian medicinal system. High demand from these towns along with their capability to serve as rural hubs makes for an exciting prospect. (Exhibit 4)

Exhibit 4: Online Health Insurance Demand (Cities Tier wise)

Tier I Tier II Tier III Tier IV Tier V 12% 25% 6% 16%

42%

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The average North Indian is the most curious online health insurance consumer. 1 out of every 4 online insurance shoppers is from the North with the region only accommodating 13% of the countrys population. This is followed by South and West respectively. Eastern India is the most under-insured region in the sample. The top 10 state rankings are similar to the overall rankings shown earlier except Uttar Pradesh and Tamil Nadu trading places. The top 3, Maharashtra, Delhi and Andhra Pradesh have a combined demand of 40%. Interestingly, two big western states of Maharashtra and Gujarat make the top 5 and all the 4 southern states make the top 10 rankings. (Exhibit 5)

Exhibit 5: Online Health Insurance Demand (State wise)

Maharashtra 19% 17% Delhi Andhra Pradesh Karnataka 4% 4% 4% 6% 7% 7% 8% 10% 13% Gujarat Tamil Nadu Uttar Pradesh Haryana West Bengal Kerala Rest of India

5.2 Cover Average National Online Health Insurance Cover is INR 4.2 lakh
More than half the population is looking for a cover size in the range of INR 3.5 lakh to 4.5 lakh. This is not surprising considering that online buyers are big ticket buyers who are considerably better educated and with more money to spend in comparison with their peers who buy through other channels. Widening the range to INR 2.5 lakh to 5.5 lakh gives an INR 3 lakh window in which 90% of online health shoppers were found enquiring. This is an opportunity area for providers of health insurance. The national average online health insurance cover is INR 4.20 lakh. The regions of Western and Northern India have their average slightly more than this and that for the remaining 3 regions is below this. (Exhibit 6)

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Exhibit 6: Average Health Insurance Cover (INR lakh)

West North National Average Central South East 3.85 3.99 3.97 4.20 4.31 4.39

We compared the value of sum assured with the total enquiries demanded by the cities across the country. The result gives us a sense of what an average consumer from these cities demands as a cover size. The average ticket sizes of the top 10 cities make a very interesting find. Only two Tier I Cities make the list along with two Tier II Cities. The rest are all smaller cities and towns led by Ludhiana with an average ticket size of INR 5.7 lakh. An average health insurance shopper from Ludhiana is asking for more value per person as against his friend from Chennai. (Exhibit 7) Exhibit 7: Average health cover demanded by average health shopper (Top 10 Cities)
Ludhiana Pune Bhubaneshwar Gurgaon Mumbai Lucknow Noida Navi Mumbai Thiruvananthapuram Chennai Average Ticket Size (in lakh) 566,162 515,445 509,123 507,248 499,753 467,881 458,465 453,870 451,061 448,090

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5.3 Product - Family Always Comes First

A huge 79% of the health consumers are looking for Family Floater products and the rest for Individual products. The success of the Family Floater Health product can also be seen in the online model. Family Floater (Self, Spouse & Children) is the most popular product with 57% demand followed by Individual (Self) at 20% and Family Floater (Self & Spouse) at 15%. (Exhibit 8) Exhibit 8: Online Health Insurance Products Market Share (in %)
Family Floater -Self + Spouse + Children Individual -Self Family Floater -Self + Spouse Family Floater -Parents Individual -Parents Family Floater -Self + Children 5% 2% 1% 20% 15% 57%

The average cover for a Family Floater policy is INR 4.2 lakh and that for an Individual policy is INR 3.9 lakh. Average cover size for all the products in the health insurance segment is more than INR 3 lakh. The ticket size for health insurance products searched online is big and insurers can specifically target the online customer with bigger cover size. The average cover per person is a different story with the Family Floater population seemingly under insured at INR 1.4 lakh. The average Individual health insurer is however doing just fine at INR 3.9 lakh. (Exhibit 9) Exhibit 9: Average Health Policy Size (in lakh)
Family Floater -Self + Spouse Family Floater -Self + Spouse + Children Family Floater - Average Individual -Self Individual - Average Family Floater -Self + Children Family Floater -Parents Individual -Parents 3.1 3.6 3.5 4.3 4.3 4.2 4.0 3.9

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The average cover size per person seems to suffer with most people not going beyond the limit of INR 4.5 lakh per policy be it Individual or Family Floater despite different number of members in each policy. Hence, Family Floaters seem to be an under-insured segment while the Individual health insurance appears the most protected segment. We believe the reasons for higher sale of Family Floater covers are a one-cover-for-all policy as well as Family Floaters being cheaper for younger families. Consumers seem to be more price conscious than product conscious. Health insurance cover size does not change with policy type. The policy size for Self is almost 29% higher than parents in the Individual category. Only 7% families reported three or more than three children. 93% families report up to two children while shopping for family floater products. Thus the profile for a family floater health insurance shopper is most likely to be Self, Spouse and up to two children (Exhibit 10).

Exhibit 10: Family Floater Policies (No. of Children wise)

Four Three Two One 1% 6% 48% 45%

5.4 Age - Online health insurance is driven by 30 to 39 year olds

The average age of the online health insurance seeker is 39.9 years. Post this there is a gradual decline in health enquiries. 90% of the health insurance enquirers had an average of 37.3 years. An age-slab analysis shows that in most probability (41%) the customers are 30 to 39 year olds and 2 out every 3 persons demanding online health insurance would fall in the 30 to 49 years old category or what is called the middle-aged population. (Exhibit 11)

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Exhibit 11: Online Health Insurance Demand (Age wise)

41%

25% 15% 12% 7% 1% <20 20-29 30-39 40-49 50-59 >=60

We established a human life-cycle through the health insurance demand data that we analyzed. Individuals first (34.5 years) get themselves a health cover, and then they get a health cover for complete family (Self, Spouse & Children) when they anticipate future illnesses for themselves and their children (39.3 years). (Exhibit 12) Only 7% of the total health cover enquiries were for parents. The average parental age seeking a health cover was around 57.5 years. When seeking Individual parental insurance for single parents, the shoppers are younger (54.8 years) than when searching for a couple or family cover (58.5 years). We hope that with more people becoming aware of online health insurance, the age of the average online health insurance shopper should come down. Exhibit 12: Online Health Insurance Shopper Life Cycle
54.8 yrs 41.9 yrs 39.3 yrs 36.1 yrs FF(S+C) 1% 34.5 yrs Self, 20% FF (S+S) 15% Individual (Parents) 2% 58.5 yrs

FF (Parents) 5%

FF(S+S+C), 57%

30

35

40

45 Age (in years)

50

55

60

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6. Term Insurance Trends

Online Term Insurance is one product which has made the entire insurance industry see the potential of the online distribution channel. Term insurance is traditionally a simple product. Therefore, it makes it easy to sell it online. One can buy an online term insurance policy within minutes today. We track online term insurance trends across the following categories: Geography Age Cover Policy Period Gender

6.1 Geography - West and North driving the demand

Generally, population seems to have an inverse ratio to the number of enquiries for term insurance from that region. An average citizen of Western and Northern India shows the maximum appetite for online term insurance. The highly populated regions of East and Central India appear to be most underinsured in comparison to the rest of the country. (Exhibit 13) Exhibit 13: Online Term Insurance Region wise (Demand v/s Population)

30% 27% 23% 21% 14% 10% 10% 25% 26% West North 13% South Central East

Total Enquiries

Population

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The top 5 states make for almost 59% of the demand and only 29% of the population. With just 1% of the countrys population and 14% of the total demand, Delhi shows its important position in the online insurance space. (Exhibit 14) Maharashtra and Delhi are ranked 1st and 2nd; however Andhra Pradesh drops down to 6th rank. Kerala is not in the top 10 making way for a new entrant at 10th rank, Rajasthan.

Exhibit 14: Online Term Insurance Demand (State wise)

Maharashtra 18% 21% Delhi Karnataka 3% 4% 5% 5% 6% 7% 8% 8% 14% Gujarat Andhra Pradesh Uttar Pradesh Tamil Nadu Haryana West Bengal Rajasthan Rest of India

The demand for online term insurance is split equally between the bigger cities and the smaller cities and towns. This demand is more evenly distributed across the smaller cities as compared to the bigger cities. The online consumer from the smaller cities has become curious enough to match up to their fellow citizen from the big metros. Drilling down further, Tier I cities make up the biggest urban market for the online term insurance industry. Out of the remaining city classes, the Tier V cities have a huge demand with customers asking for almost a quarter of the total demand.

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Exhibit 15: Online Term Insurance Demand (Cities-Tier wise)

24% 43% 10%

Tier I Tier II Tier III Tier IV Tier V

16%

7%

The Top 10 cities cater to 50% of the total online term insurance demand. The share increases to 54% in terms of the total sum assured. (Exhibit 15)

6.2 Age Maximum term insurance seekers start at 31 years

The ideal age to buy term insurance is when one starts earning and has dependents to support. The maximum online term insurance shoppers start at the age of 31 years. At this age the average Indian may have a family of his own and this explains his need for term insurance. The average age is around 29 to 31 years. The number of enquiries shows a steep increase at the age group of 22 to 25 years and again at 27 to 32 years, after which there is a steady decline until the age of 60. Dividing the number of enquiries as per age slabs gives a clearer picture. More than 50 % of all enquiries for term insurance are coming from users in the age group of 30 to 39 years. Users in the age group of 20 to 29 years and 40 to 49 years each have more than 20% of enquiries. Thus, users in these age groups make almost the entire online term-insurance seeking population in India. (Exhibit 16)

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Exhibit 16: Online Term Insurance Demand (Age wise)

50%

22%

21%

6% 0.5% <20 20-29 30-39 40-49 50-59 0.6% >=60

6.3 Cover Average cover across India is more than INR 40 lakh
The cover amount was categorized into following segments: < 25 lakh Less than 25 lakh 25 lakh to < 50 lakh 25 lakh to 50 lakh 50 lakh to < 1 crore 50 lakh to 1 crore 1 crore < - More than 1 crore

The national average cover for online term insurance is INR 46.1 lakh with the North and West India above this and the other 3 regions below this demand. It is notable that the average cover across all regions is more than INR 40 lakh. In two categories, demand for term insurance is more than others INR 50 lakh to 1 crore (31%) and INR 5 lakh to 25 lakh (31%). Generally speaking, consumers are looking to go for policies with maximum protection for their dependants. This also gives a sense of the average consumer because term insurance cover is a direct factor of ones annual income. (Exhibit 17)

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Exhibit 17: Online Term Insurance Demand (Cover wise)

16% 31% < 25 lakh 25 lakh to < 50 lakh 50 lakh to < 1 crore 31% 22% 1 crore <

Geographically, Rs 50 lakh to Rs 1 crore is the top demanded term insurance category in the West and North India. INR 5 lakh to 25 lakh is the most in-demand policy cover size in the South, Central and East India. (Exhibit 18)

Exhibit 18: Online Term Insurance Demand (Cover v/s Regions)

30% 5% 27% 5% 10% 9% 23% 4% 7% 5% 8% South 10% 1% 3% 2% 3% Central

1 crore < 50 lakh to < 1 crore 25 lakh to < 50 lakh < 25 lakh

7%

5% 8% North

8% West

10% 1% 3% 2% 4% East

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INR 50 lakh to 1 crore is most demanded in the Tier I, Tier II, Tier III cities and towns of India. Showing a lower appetite for term insurance, Tier IV and Tier V towns threw up more enquiries for INR 5 lakh to 25 lakh category. The online sample reveals a much lesser percentage of visitors reporting themselves as tobacco users as compared to the national average. The sample reveals 10% tobacco users against Global Adult Tobacco Survey (GATS) India 2010 figures of 35%. It is interesting to note that though tobacco-users have a greater risk of death compared to nonusers, they demand lower policy size. Tobacco-users demand more of INR 5 lakh to 25 lakh term policies than any other policy while most non-users demand INR 50 lakh to 1 Crore closely followed non-users demanding INR 5 lakh to 25 lakh policies. This could also be attributed to non-users being more risk conscious and therefore insuring themselves for bigger cover amount. Thus, the non-users are better insured as compared to tobacco-users despite the latter having a bigger need for term insurance. A surprise lies in the age group comparisons. 20 to 29 year olds and 40 to 49 year olds demanded a policy cover of the size INR 5 to 25 lakh more than any other cover size. People in the age group of 30 to 39 years perceived highest life risk with INR 50 lakh to 1 crore term insurance shooting to the top spot by a clear margin. In fact, as the age progresses, we see a gradual decline in size of policy demanded, probably due to a decrease in perceived life risk. 50 to 59 year old prospective customers show a clear preference (3.1% out total 5.7%) for INR 5 lakh to 25 lakh policy cover. This may also be due to existing savings already in place to support the family and possible retirement of policyholder at the age of 60. (Exhibit 19)

Exhibit 19: Online Term Insurance Demand (Cover v/s Age Groups)
50.1% 8.7% 1 crore < 50 lakh to < 1 crore 25 lakh to < 50 lakh 17.0% 22.4% 3.5% 7.0% 4.3% 0.5% <20 7.7% 20-29 11.2% 13.2% 30-39 20.6% 3.4% 6.1% 4.7% 6.4% 40-49 5.7% 3.1% 50-59 0.6% >=60 < 25 lakh

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6.4 Policy Period - People desire term insurance with bigger term periods
The policy period was divided into 3 segments: <15 years Less than 15 years 15-24 years - 15 years to 24 years >=25 years 25 years and above

Every 2nd consumer is going for a policy period of 25 years and above. Since most people retire by the age of 60, this suggests that the ages of most buyers in this segment are in the early to mid 30s, a trend also proved earlier. Consumers are looking for maximum policy periods to cover their dependants against any eventuality. The consumer here seems well informed and is not going for short term plans to save on premiums or because they help save taxes over a smaller period of time but are actually looking to take maximum benefits from this product over a long term period. This trend is visible across different geographical regions of the country. A policy period of 25 years and above is the most popular category across all regions. We see similar trends when we compare the policy period with the cover size. With policies of 25 lakh and upwards, consumers show the maximum need for a period of 25 years and above followed by 15 to 24 years and less than 15 years respectively as shown in the figure below. However, this trend is reversed in the under 25 lakh segment. People in the 50 years and above age group, of online term insurance consumers are looking for low cover-low policy period products i.e. below 25 lakh and less than 15 years. Most of them will retire by the age of 60 to 65 and may already have enough savings to take them through a comfortable retirement period. Also, as the age increases, the premium increases substantially, making term insurance less lucrative as one grows old. Thus, these consumers plan very carefully, spending only as much as is absolutely necessary. (Exhibit 20) Exhibit 20: Online Term Insurance Demand (Policy Period v/s Cover)

3% 11% 3% 11% 6% 20% 9% < 25 lakh 12% 2% 4% 10% 8%

<15 Years 15-24 Years >=25 Years

25 lakh to < 50 lakh

50 lakh to < 1 crore

1 crore <

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The age group of 30 to 39 years with a policy period of 25 years and above is the single most lucrative segment. A total of 31% of the visitors are from this category, more than any other category. Every 2nd enquiry for term insurance was from the age group of 30 to 39 years and 9 out of 10 were from 20-49 years age group. (Exhibit 21) Exhibit 21: Online Term Insurance Demand (Policy Period v/s Age Groups)

50% 7% 12% <15 Years 22% 5% 4% 13% 6% 20-29 30-39 40-49 31% 15-24 Years 21% 4% 10% 0.5% <20 6% 3% 2% 50-59 0.6% >=60 >=25 Years

6.5 Gender - Females are highly under insured

Females form a minority in the total term insurance sample at only 4% of the total visitors. The sex ratio of India according to the Census 2011 is 933 females for 1000 males. This gives an indication of the extremely high levels of uninsured female population in Indias life insurance sector. We compared the male and female samples against each other to give a sense of fair comparison. The trends are very interesting especially from the perspective of the female population.

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Average female term insurance buyer prefers buying policies with shorter policy period compared to her male counterpart. (Exhibit 22) Exhibit 22: Online Term Insurance Demand (Gender v/s Policy Period)
52% 43%

29% 19%

29% 28%

Male Female

<15 Years

15-24 Years

>=25 Years

Younger and older females buy more term insurance as compared to the males in the same age groups. The males are more prolific buyers in the middle age group. (Exhibit 23) Exhibit 23: Online Term Insurance Demand (Gender v/s Age Groups)
Male Female

51%

36% 31% 22% 21% 15% 5% 13% 0.6% 2% >=60

0.5%

2% 20-29 30-39 40-49

<20

50-59

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Average females in bigger cities are buying more term insurance in comparison with their male colleagues in these cities. The males overtake the females in smaller cities and towns. (Exhibit 24) Exhibit 24: Online Term Insurance Demand (Gender v/s Cities Tier wise)
Male 51% 43% Female

24% 22% 16% 11% 7% 8% 11% 8%

Tier I

Tier II

Tier III

Tier IV

Tier V

Females are buying policies with lower cover amounts and the males lead in all categories except 25 lakh and below. (Exhibit 25) Exhibit 25: Online Term Insurance Demand (Gender v/s Cover)
Male 41% Female

30%

32% 25% 21% 20% 16% 14%

< 25 lakh

25 lakh to < 50 lakh

50 lakh to < 1 crore

1 crore <

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7. Motor Insurance Trends

Motor insurance is one of the popular general insurance products being asked for online. Online renewal of motor insurance is possible on most insurance websites today with the customer able to buy a cover within minutes. In case of new policies, the online process helps speed up things by doing all the application process in a jiffy. We trended motor insurance across the most popular product in motor, car insurance. We compared motor insurance across the following categories: Geography Product Insurers

7.1 Geography - North India has the maximum demand

North India shows the maximum appetite for online motor insurance with one of every three customers mainly due to Delhi showing a great demand. West and South India are not very far behind. State wise, Delhi leads the way with the maximum enquiries for this product. Almost every 5th visitor to our motor insurance page was from the state of Delhi. This could be attributed to the high number of passenger cars in Delhi. The top 10 states make up for 3 out of every 4 visitors to enquire about motor insurance in the sample. (Exhibit 26) Exhibit 26: Online Motor Insurance Demand (Top 10 States)

19% 25%

Delhi Maharashtra Haryana Karnataka Gujarat

3% 4% 4% 5% 5% 6% 8% 8%

13%

Andhra Pradesh Uttar Pradesh Kerala Tamil Nadu Punjab All Other States

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Considering the response from Delhi, it is no surprise that the city with maximum hits on the motor insurance page is from Delhi. Surprisingly, Mumbai is not ranked 2nd in this list and comes only at rank 4. Bengaluru comes 2nd and Gurgaon is 3rd. All the top 10 cities hold a little less than 50% share in the overall demand. Thus, a greater demand comes from all the smaller cities and towns across the country. (Exhibit 27) Exhibit 27: Online Motor Insurance Demand (Top 10 Cities)

New Delhi
19%

Bengaluru Gurgaon Mumbai

6%

Hyderabad Pune

51% 6%

Chennai Noida Surat Ahmedabad All Other Cities

5% 4% 3% 2% 1% 1% 2%

If one looks at the urban demand from a Tier I through V classification, one understands that both the bigger cities and smaller cities and towns have the similar demand. Tier I and II cities (population of 20 lakh and above) and Tier IV and V cities (population of less than 10 lakh) both have a demand of 44% each. The Tier III cities make up the remaining 12%. Thus, any insurer looking to capture this segment cant afford to have a localized strategy. (Exhibit 28)

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Exhibit 28: Online Motor Insurance Demand (Cities Tier wise)

30% 39%

Tier I Tier II Tier III Tier IV Tier V

14% 5% 12%

7.2 Product - Comprehensive policy is most popular

An overwhelming majority, 88% online visitors searched for comprehensive motor insurance and rest for third party insurance. As much as 64% of the online market comprises of renewals and the rest 36% make for the new car insurance. The main reason behind this could be car dealers offering new car insurance at the time of sale of a new vehicle whereas when it comes to renewals the consumers have to mostly look for it themselves. With a huge 56% share of the entire online motor insurance market, comprehensive renewal is the most trended product category. (Exhibit 29) Exhibit 29: Online Motor Insurance Demand (Products)
88%

56% Renewal New

32%

12%

8% 4% Comprehensive Third Party Liabilities

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7.3 Insurers - Private insurers need to relook their strategy

Prospective customers looking to renew their motor insurance gave interesting insights into their previous insurers. As many as 71% visitors checking renewal quotes were from private insurers and only 29% were from the four PSUs. The market share of the PSUs is 59% and that of the private insurers is 41% (IRDA Annual Report 2010-2011). This does not seem to be good news for the private sector insurers. Despite the four PSUs having a commanding share in the market, the average insurance shopper seems to be happy with them and does not want to change. The trend is completely opposite for the private insurers. (Exhibit 30) Exhibit 30: Online Motor Insurance Demand (Public Sector Insurers v/s Private Insurers)
Public Insurers Private Insurers 71% 59% 41% 29%

Non-Life Market Share FY 2010

Enquiries

We publish the charts for the top 10 previous year insurers across the country and the 5 regions. (Exhibits 31 to 36) Exhibit 31: Nationwide Top 10 Insurers (Previous Year)
Bajaj Allianz 14% 4% 5% 5% 6% 10% 8% 8% 10% 13% 17% ICICI Lombard New India Assurance National Insurance TATA AIG Reliance IFFCO Tokio United India Insurance HDFC Ergo Bharti Axa All Other Insurers

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Exhibit 32: Western Region Top 10 Insurers (Previous Year)

Bajaj Allianz 13% 21% 5% 5% 5% 5% 5% 6% 7% 13% 15% New India Assurance ICICI Lombard TATA AIG Reliance Royal Sundaram National Insurance Cholamandalam HDFC Ergo IFFCO Tokio All Other Insurers

Exhibit 33: Northern Region Top 10 Insurers (Previous Year)

Bajaj Allianz 10% 4% 5% 6% 7% 8% 9% 10% 12% 13% 16% ICICI Lombard National Insurance Reliance TATA AIG IFFCO Tokio New India Assurance Bharti Axa HDFC Ergo Oriental Insurance All Other Insurers

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Exhibit 34: Southern Region Top 10 Insurers (Previous Year)

Bajaj Allianz 12% 5% 5% 12% 6% 7% 9% 9% 17% ICICI Lombard New India Assurance Reliance TATA AIG United India Insurance Royal Sundaram 9% 9% National Insurance IFFCO Tokio Oriental Insurance All Other Insurers

Exhibit 35: Eastern Region Top 10 Insurers (Previous Year)

National Insurance 13% 6% 6% 7% 10% 7% 8% 8% 8% 12% 15% Bajaj Allianz New India Assurance HDFC Ergo ICICI Lombard IFFCO Tokio Reliance Royal Sundaram Bharti Axa TATA AIG All Other Insurers

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Exhibit 36: Southern Region Top 10 Insurers (Previous Year)

ICICI Lombard 10% 3% 4% 4% 6% 7% 14% 11% 13% 14% 14% National Insurance New India Assurance Bajaj Allianz TATA AIG United India Insurance Cholamandalam Reliance IFFCO Tokio Bharti Axa All Other Insurers

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8. The Last Word

A recent report on Indian Digital Consumer Industry by Avendus Capital says online insurance accounts for 3% of the total insurance sales today. As per the last IRDA Annual Report (2010-11), the total premium booked was 335,400 crores. Thus, we could infer that Rs.10,062 crores of insurance was booked online by the end of last financial year. With analysts projecting approximately 10% of total insurance being booked online by 2015 and the insurance industry looking to double by then, we are looking at the online insurance sector being pegged at 60,000 crores by 2015, a whopping 6 times in 4 years. Customers like the benefits of instant policy issuance, fast and convenient purchase process and easy customization. Online insurance is simple and fast, has low acquisition costs for the insurers, provides ease of accessibility and can help save both the insurer and consumer up to 50% in costs. Chances of mis-selling and overpricing are negligible as everything from proposal forms to premium calculation is logic driven. Insurance consumers in the near future will become more demanding in search for more customized products. This level of customization is only possible through faster and smarter online platforms. Customers will seek the convenience of easy information availability through smart phones and tablets. Intelligent platforms which educate the customer and at the same time allow easy comparison of various insurance products are thus the need of the hour. Not only is the internet changing the way people buy products and services, it is changing how people make their buying decisions. The consumer today likes to do their research before making a decision. People use the internet to compare and choose the products and services with the right fit for their needs. A companys website can help create the first impact. We hope that the understanding one derives from this study helps the Indian Insurance Industry evolve towards a better future especially in the online space.

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9. Cases
We interviewed two people from different parts of India. Both the interviewees had an impending need for insurance albeit for different products. The cases in point show the difficulties faced by an average insurance shopper in India.

9.1 Health Insurance needs of an Average Indian

Rajesh Kumar is a cloth merchant from the town of Siwan in Bihar. At 32 years, he is the primary bread winner of a family of six which includes his wife, two children and his parents. For the last couple of months, he has been looking for a health insurance cover for his family including his parents. A friend referred him to an agent selling health insurance products of a leading private insurer. Rajesh was not satisfied with the information he received from the agent. The agent tried to hardsell the insurance products of his insurance company. Rajesh wanted to know if there were other insurers who could offer him better services and coverage within his budget. He also wanted to know if there were separate products available for his parents with benefits specific to old age and critical illness. The agent had no clue about these products. Rajesh then visited offices of three insurance companies, two private and one public, on his next business trip to the state capital Patna. The private insurers advised about different products and specific products for senior citizens. However, he was not happy as they did not offer any comparisons with similar products of competitors. As a layman it was difficult for him to understand the insurance jargon used by private insurers. He visited the regional office of a public sector insurance company, from where he was rudely turned away. He did not have enough time to visit a branch office as he had to leave in the evening. Despite spending almost an entire day, his position as a health insurance shopper had not changed much except having some brochures. In the end, he had to buy health insurance from one of the private insurers. Three months later, he recounts his ordeal to his cousin Sunil, who faced similar dilemma six months back. Sunil had checked insurance quotes from different insurers and a couple of web aggregators, online. In the end, the premium he paid for a cover similar to Rajeshs was 20% cheaper.

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9.2 A Farmers Quest for Agriculture Insurance

Mange Singh is a hardworking farmer with 20 acres of fertile land in the district of Sonipat, Haryana. He has all the modern farm equipment such as a tractor, access to a harvester, pumpset, seeder, etc. He is a modern day farmer who likes to be updated with the latest trends and practices in agriculture. However, the last years below normal rainfall left him worried before the new harvest. He had heard of schemes like crop insurance and farmer insurance, but never really thought he would need them one day. On enquiring with the local cooperative banks branch in his village and with the Block Development Office he only got names of some insurance companies. He had no way of knowing how to reach these companies. He discussed his situation with the village headman and panchayat and someone suggested the internet. Luckily the government had recently installed a computer with an internet connection in the village panchayat office as part of a pilot project. On checking Mange is disappointed that there was not even a single website which provided information about different types of crop insurance schemes or farmer policies on one platform. Almost all insurers websites were in English, a language he did not understand. Nevertheless, he found someone to translate the information for him. He was surprised to find that many general insurers have completely ignored the rural segment on their websites. Only a few insurers provide information which did not seem sufficient. Mange Singh is still looking to insure his assets and is yet to find a solution.

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10. About Us InsuringIndia.com

InsuringIndia.com is Indias first multilingual ecommerce portal and one of the leading online insurance aggregators. We provide an intelligent customer-centric online platform for our clients, in their language of choice, to compare, choose and purchase all types of insurance products. www.insuringindia.com

Management Development Institute (MDI)

Management Development Institute (MDI) was formed as an autonomous body in 1973, in collaboration with several reputed institutions like UNDP, UNIDO, World Bank and ILO. MDI is recognized in the business and education community for the outstanding growth it has been able to achieve in a short time span. The first Indian Business School and Second in Asia to be accredited by the Association of MBAs (AMBA), United Kingdom, MDI is consistently ranked among the Top 5 Business schools in India. Over the years, students have joined well renowned corporations and have done their alma mater proud with their exceptional performance and professional approach. www.mdi.ac.in

Research Team
Bhavesh Sharma Gourav Dokania Harsh Maru Saurabh Gothoskar bhavesh@insuringindia.com pg10gourav_d@mdi.ac.in pg10harsh_m@mdi.ac.in pg10gothoskar_n@mdi.ac.in

External Resources
Census 2011 IRDA Annual Report 2010 Internet in India (I-Cube) 2011 India Goes Digital-November 2011 Global Adult Tobacco Survey (GATS) India 2010 Changing Channels-Accenture MultiChannel Distribution Insurance Customer Survey http://censusindia.gov.in/ http://www.irda.gov.in/ http://www.imrbint.com/ and http://www.iamai.in/ http://www.avendus.com/ http://www.who.int http://www.accenture.com

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Contact Details
For more copies or other information please contact: Corporate Office: Plot-8, Sector-32, Urban Estate, Gurgaon-122001, Haryana, India Phone: 0124 499 88 88 Email: research@insuringindia.com

Disclaimer This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Great Indian Marketing & Consulting Services Pvt Ltd. (hereinafter referred as GIMCS) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. GIMCS or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. GIMCS or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. GIMCS and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the views mentioned in this report. This information is subject to change without any prior notice. GIMCS reserves the right to make modifications and alternations to this statement as may be required from time to time. Nevertheless, GIMCS is committed to providing independent and transparent information to its clients, and would be happy to provide information in response to specific client queries.

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