One of the biggest myths about insurance is that it is seen as an expense: Satishwar Balakrishnan

ET Insights spoke to Satishwar Balakrishnan, MD& CEO of Aegon Life Insurance, to take a look at how insurance business transformed from the brick-and-mortar to a total digital model.

Edited Excerpts:

As an insurance company that is completely digital, your focus areas and growth are very different from those of companies who are into the brick-and-mortar model. Can you help us with the challenges faced in leading such a model?

The biggest challenge before us was to build a solid tech stack that could digitise all our operations. Right from providing the appropriate pricing of the product, determining the eligibility and authentication of applicants, analysing customer data for customised insurance products, and medical underwriting. All these complex processes had to be digitised.

If you wonder about a model that lacks human touch, I would say that this model understands human behaviour better. When combined with simpler journeys and intuitive products, this eliminates the problems that consumers face while buying insurance. We have forged partnerships with credible InsurTechs, FinTechs, and even e-commerce platforms that are helping us reach a larger market. Furthermore, we provide ‘assistance on demand’, so that we do not spam the customers and give them the choice to ask for assistance when required. So, while data is our brain, we are operating through digital means, and our partners are helping us reach our consumers.

In an industry which is usually traditional, you decided to go completely digital. What was the idea behind it and what gave you the confidence to go completely digital?

Going completely digital from a traditional setup was a calculated move. The brick-and-mortar model of selling insurance has its merits, but it is yet to reach the underpenetrated markets. We had to disrupt the existing model to fulfil our vision of making every household financially secure.

At the same time, we saw that the country was undergoing a digital revolution. A large chunk of the population started relying on digital for financial transactions, and digital technology’s penetration went up manifold. So going digital was the most logical and economical way forward for us if we wanted to work towards our vision.

With the imposition of the lockdown, we started working from home. Many of our employees had gone back to their hometowns. We had to strengthen our IT systems to support this change, and these were battle-tested over the last couple of years. We saw that the system was working well, and that remote working did not impact productivity. We became very outcome-driven, with a stronger emphasis on results. The ‘Work from Anywhere’ model has allowed us to attract a broad range of talent across the country. Today, our talent pool comprises of people from insurance as well as non-insurance backgrounds. This is a healthy mix because it has allowed us to be agile, experiment, and optimise our efforts—all while ensuring that our core skills related to insurance are retained. Today, Aegon Life has the highest employee engagement rate of any Aegon company globally. This is a testament to the enormous cultural transformation in the company – our people are working from anywhere, but they remain more engaged than ever before.

What are your differentiators from the other insurance companies and your target areas of growth?

The key differentiator is that we are India’s only 100% digital life insurance company. We pioneered and popularised the online term insurance category in India. All our business practices are digital. Our digital solutions are designed to financially secure every Indian household. We are committed to simplifying the insurance process, ensuring transparency and a superior customer experience.

We started our digital transformation exercise three years ago, and we successfully created a zero-operations, zero-documentation, algorithmic underwriting, and on-the-spot issuance process for profiles that do not require a medical test. This has changed the way insurance is bought and sold.

Insurance as a product needs to reach out to the public on a larger scale with hardly 18% of the populations coming under its purview. What are your views and thoughts?

There is a huge part of the population in India that is still uninsured or underinsured. It is probably because people still do not understand the urgency and the need to buy life insurance. People cannot imagine the possibility of their death – it is a touchy subject. So, while almost everybody is aware of what insurance means, few understand its necessity and the urgency.

One of the most under-penetrated population segments is that of the self-employed. This is a huge population, comprising around 333 million people (as of 2021). They need insurance but have been left out because of the paperwork that is required. At Aegon Life, we have eliminated any kind of paperwork and recently even introduced a term plan with a special 10% discount for the self-employed segment. We hope that we will be able to make a positive impact in this market with this initiative.

One of the biggest myths about term insurance is that it is seen as an expense. This myth needs to be busted. It is a risk mitigant – something as important as a fire extinguisher; you may never use it, but if there is a fire, you need one handy. In fact, life insurance is as affordable as buying a cup of tea each day if you purchase it when you are young.

Insurance plans have therefore evolved to include more customer-friendly features like investment components to make insurance more attractive for them.

Besides this, I feel the other deterrents for people not buying life insurance could be complex buying journeys, and the paperwork required.

We have adopted a 3-pronged approach of ‘Data-Digital-Partners’, and we have made insurance buying affordable, paperless, simple, and easy for the customers.

What is the vision for the future of the industry as a whole?

Life insurance is evolving rapidly. But its place within holistic financial planning is still underappreciated. Financial literacy is something that should be inculcated at an early age (like in schools and colleges), so that the young can learn both, the importance of saving and the need to mitigate risks to life and livelihoods.

With a rapid growth, there is also an increased risk of fraud. The industry needs scalable tools to combat this threat. Integrating data across the insurance ecosystem will allow us to create fraud detection models that benefit both consumers and insurers alike. A strong ecosystem of insurers, FinTechs, InsurTechs, HealthTechs, and others will limit fraud while also helping to bring under-penetrated new segments under the insurance umbrella in a scalable and sustainable fashion.

In the years to come, our focus should be on building on each other’s strengths to realise our collective dream of ensuring ‘Insurance for all by 2047’. A dream that seems achievable with every passing day.

What is your Budget wishlist?

Incentives like GST exemption or a reduced GST slab can further help meet the needs of consumers. Pension/annuity proceeds should be made tax-free in the hands of policyholders, or a deduction for the principal component should be allowed.

An aggregate deduction of up to Rs 1.75 lakh, for the premiums paid for life and health can be introduced to nurture the eco-system of insurers, InsurTechs, and consumers.