Insurers widen networks in small towns as online policy renewals rise

Online renewals of third party private car and two-wheeler insurance policies are on the rise. Insurers are finding this as a means to widen their distribution network in smaller towns and to cross-sell and up-sell.

Bajaj Allianz started offering online renewal facility two years back and today online channel contributes 30 per cent of the renewals, growing at a rate of 30 to 40 per cent yearly. In two to three years, the company expects online to account for 50 per cent of the renewals.

It is not just the convenience of logging in and comparing quotes of different insurance providers that is making customers choose online, many a times, quotes of the same company is either cheaper or more attractive compared to what is offered by the agents.

“As the customer comes directly online there is no intermediation cost, which is usually paid to the dealers or agents. Adding the policy fulfillment cost to that, online saving can go up to 10 to 15 per cent. This is passed on to the customer as value-adds or as a better price while buying online,” said Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance.

According to Vijay Kumar, chief technical officer (motor), Bajaj Allianz General Insurance, there are over three crore unlisted and uninsured two-wheelers and commercial vehicles. “In case of two-wheelers, many agents do not chase the customers due to smaller ticket sizes. Online is the right medium to get these two-wheelers insured,’ he said.

Young people in the top cities form the major chunk of customers who take to online renewals.

“The customers in smaller cities and towns also have started renewing policies online. This is an opportunity for us to reach out to the smaller towns,’ said Sanjay Kumar, VP and head- motor underwriting, Bharti AXA General Insurance.

Insurance companies are also using this opportunity to cross-sell and up-sell.

“As customers come online for renewal, they also come to know about other offers and features and sometimes ends up buying them,” said Kumar.

‘We try to push products like travel insurance, personal accident insurance, health policies. As we get to understand the profile of the customer better online we also have the opportunity to sell the right product and right solution, cross-sell and up-sell,” said Bimbhet.