Digital payment platforms offer insurers the potential to reach a large customer base effortlessly
With the advent of digitisation, customers are increasingly seeking to purchase insurance directly, bypassing intermediaries. More online sales are being completed using smartphones, which is generating greater interest in digital payment platforms that offer the opportunity to reach out to a larger customer base. Digital payment can be a boon for insurers in gaining customers.
Digital payment, insurers and PhonePe
Most recently, India’s domestic e-wallet platform and online payment company, PhonePe, has started selling term life insurance plans through its platform, thanks to a partnership with insurer Prudential. Although 78.5% of adults in India already hold a life insurance product, as per findings from GlobalData’s 2020 Global Banking and Payments Survey, the country’s population is vast, and therefore there is considerable potential for further growth.
In addition, our survey highlights that smartphone ownership in India is almost ubiquitous, with 97.4% of respondents indicating they owned such a device. In fact, more than a third of respondents indicated that they would prefer using devices such as a smartphone or a tablet to purchase a new insurance product (all types), making it the preferred way of taking out a new policy.
PhonePe’s move follows its success in 2020, when it launched motor and bike insurance. Since then, around 30 insurers have signed up to sell motor and/or bike insurance through PhonePe. Its success can be explained by the convenience that mobile technology offers customers, with digital-first companies tending to excel at providing seamless customer experiences.
Similarly, insurance products have been widely sold through China’s Alipay for several years now. Again, the online payment platform offers insurers a quick way to access a large customer base. The country’s largest insurance providers, including companies such as Ping An Insurance and Taikang Insurance, typically use this channel as another way of distributing products.
To date, a broad range of insurance products can be bought through Alipay, including health, home, motor, and travel insurance. Alipay also sells pet insurance using advanced facial recognition, allowing insurers to identify pets by their nose prints. Cat and dog owners who purchase such pet insurance must take close-up photos of their animals in order to create their digital profile and digital nose prints.
As digitisation continues to shape customers’ attitudes and purchasing behaviours, insurers will be forced to rethink how to optimise their distribution strategy. Offering insurance products through a broad range of channels will be necessary so that customers can purchase policies through their preferred route, often the one that is perceived as most convenient.