Lack of differentiation in services of Life Insurance brands affects brand loyalty: Hansa Research

Delhi: Hansa Research has released its 4th annual edition, Insurance CuES, a survey that lists the top Life Insurance Brands in India, on the basis of their customer experience performance. It captures feedback from more than 3200 customers, across 12 life insurance brands in India. 

The industry has seen an improving growth rate in the Life Insurance segment, thanks to proactive initiatives from the regulator, brand innovations, increasing consumer awareness about insurance, economic growth, and an expanding middle class. However, the improvements in customer experiences in this sector have come to a standstill and that is one of the main takeaways from Hansa Research’s Insurance CuES 2024. 

Up until now, the customer experience in the Life insurance segment in India has been improving significantly in the consecutive years since 2021. However, according to the 2024 report, the industry's Net Promoter Score has stagnated; remaining unchanged from 2023, and continues at 54. This inertia in movement could be attributed to a lack of brand differentiation, dynamic consumers’ expectations and perhaps because of the diminishing returns on digital transformation, as the incremental improvements owing to it are now slowing down. 

In the last two years, players like ICICI Prudential Life Insurance and Max Life Insurance have consolidated their positions with impressive NPS scores of 63 and 60 at the moment. Customers perceive them as relatively more innovative and have consistently rated these brands higher on their products and plans, digital support, easy documentation and policy issuance time among other things. An additional noteworthy finding is that LIC has improved its customer experience after declining over the previous two years, primarily due to a disparity in digital experience. It still has the highest level of brand awareness.

Praveen Nijhara, CEO, Hansa Research, commented, “While brands like ICICI Prudential, Max Life, HDFC Life, Tata AIA and SBI Life have firmly cemented their place in the top 5, in terms of customer experience in the last couple of years. It is also concerning, that after a few years of improvements in the industry, most brands are failing to raise the bar further for customer experience.” 

He further added, “Life insurers are facing several challenges and opportunities as a result of India's current demographic trends, which include the youth bulge and rising life expectancy as well as rapid urbanization and the income, cultural and linguistic divide. To meet consumer demand, insurers must innovate services, improve the current fragmented distribution strategy and create affordable and simple products that meet the diverse needs and financial capabilities of its customer base especially in markets that are expanding.”

Piyali Chatterjee, Executive Vice-President, CX, Hansa Research, said, “Digital adoption is continuing to rise. Our study shows that compared to 2023, there is a significant increase in the number of customers who have used the Chatbot / Chat box on the website while buying the policy to get help. Customer preferences for digital channels like WhatsApp for renewal payment reminders are also increasing. But organizations need to understand that over-pivoting on technology and data, could limit differentiation. It is important to focus on other foundational CX elements such as communication, ease of use, and distribution channels, to establish leadership and differentiation. The physical customer experience continues to remain important for building trust, fostering relationships, and providing personalized service to customers. Our data shows that there is a significant increase (1.6X) in customers wanting agents to spend time reviewing their changing needs and financial goals, to suggest policies/ plans. In fact, given the complexities that exist in products, the role of Agents/Advisors remains vital in increasing digital purchases of Life Insurance, with 87% of these customers engaging in pre-purchase with Agents /Advisors.”

Among the numerous insights and trends uncovered in this report, there are specific Industry takeaways worth highlighting.

1. Buying a policy is not as easy as it seems. The study reveals ‘Easy and Quick to buy a policy from’ emerging as customer’s top Brand selection criteria among other things. 44% of the current policyholders mentioned that they had a policy application rejected in the past year. While Medical Reasons were the #1 reason for rejection, a sizeable 27% of them were unaware of the reason. 

2. Life Insurance products are multifaceted. Overall, while life insurance in India has traditionally been viewed primarily as a risk management tool, there is a growing understanding of its potential as a wealth-building option. With continued innovation, education, and awareness initiatives, it is likely that this perception will continue to evolve, driving further adoption of life insurance for wealth accumulation purposes. 

3. The study also highlights the increasing brand awareness of private insurers among the uninsured customer segment. It also lays emphasis on the 3 major barriers to customers’ LI purchasing decisions: - Behavioral biases/ perceived need, affordability, and perceived difficulty in purchase. The uninsured customer segment in the non-metros seems to reflect higher price sensitivity citing affordability as a key barrier to a greater extent. They also believe that there are better alternative investment options and hence have not purchased Insurance.  

4. Insurance CuES reveals preferences of the younger demographic (25-35yrs), in terms of brand selection criteria, payment mode and payment frequency etc. The study reveals that the younger demographic is more inclined to select a brand basis, the ease of buying process. They also have a higher preference for making monthly premium payments as compared to their older counterparts, preferably online. 

5. Staying in touch to build a connection is becoming even more critical: According to the study, 30% of customers cited 'Company does not keep in touch' as a potential reason for leaving, an increase of over 8% over 2023.