Influence of digital media on our daily lives is growing. Today we live in the 'app' world. From booking cinema tickets to finalising the holiday destination, everything can be done online these days. Growing penetration of internet and use of smartphones is really changing the behavior of consumers. Two decades ago ticket booking agents were in demand and it was a hot business. However, as online platforms got developed, that business became less lucrative. On similar lines it appears that, insurance agents may lose their business in next few years.

Here is why?
As reported by the Economic Times based on a survey done by The Boston Consulting Group, sale of insurance through online route may grow 20 times by 2020. At present, the total value of online business garnered in India is about Rs 700 crore, of which Rs 300 crore comes through life insurance. Furthermore, one estimate says that internet influenced sale may total to Rs 15,000 crore to Rs 20,000 crore. Internet influenced sale includes business garnered from people who actually buy online and also includes that garnered from people who use internet in at least one of last 10 pre-purchase and post purchase activities. Many of you might be using internet for comparing prices of insurance products offered by two different companies.

Moreover, effective use of online route goes beyond just buying and selling insurance policies. Insurers are also trying to switch to online route even for renewal of policies. It is expected that the contribution of online renewals in total renewals would be in the range of 35%-50% by 2020.

PPersonalFN believes that online activities might play a significant role in the development of insurance sector going forward. Apart from digitalisation, malpractices of insurance agents have made people observe great caution while buying insurance and switch to online route which is cost effective. Yes, online route is effective and you should prefer it.

But here’s a checklist you need to follow before buying insurance online:

How to shortlist insurer?

Promoter's Background: Remember, the insurer indemnifies you against the risk, which you face, and hence assessing the promoter's background and their philosophy becomes very crucial.

Number of years of existence: Well, it is always said that experience counts and in our opinion too it does! It would be prudent to go with season players (insurers) rather than the one who are relatively new entrants in the business of insurance.

Financial Background: A well-established insurance company with a proven track record is in a better position to give you that extra bit of peace of mind.

Claim Settlement Ratio (CSR): CSR will help you assess the percentage of claims settled, against the total claims lodged with the insurer.

Solvency Ratio: This ratio reveals the strength in the balance sheet of the insurance company and the capability of the insurance company to settle insurance claims. It takes into account the net worth and the reserves and surplus held by the insurer.

Apart from above given factors you also need to fairly assess the technological prowess and the commitment of the insurer on technological upgradation.

Advantages and disadvantages of buying insurance online

• Absence of intermediaries and benefit of reduction in policy administration costs helps lower the premium
   
• Although premium is low, services provided by the insurance companies remain same for both offline and online customers.
   
• The disadvantages include no support of agent. You will have to set your own alert for paying premium in time. There wouldn't be any helping hand at the time of filling claim
   

PersonalFN believes that growing awareness about insurance is good news. But while buying an insurance policy through an agent or buying it directly online; you must be careful and shouldn't forget that insurance is a contract between you and the insurance company that comes with "terms and Conditions". Reading the devil in the fine print is important.

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klnarasaiah@hotmail.com Aug 20, 2016 The Insurance agent is a facilitator  and need to help timely payment of premiums, information bonus additional options and most important   to ensure policy holders gets his returns as per plans.  The agent suggestion/knowledge was though in adequate were pulling on when insurance was offered in monopholic  Conditions  only From LIC and its Agents.  But off  late the Government has opened insurance sector to Private players and is very well recognised as very important aspect of investment as well as  Insurance. The Pros & Cons are well  explained to the policy proposer  and better options are suggested  by Advisors  in place of Traditional Agents  !! An Important aspect is still the lac of complete knowledge of the Proposals, comparison of offers  based on  the need of the proposer is missing. But the services offered do not  guaranty payment of premiums on time and the number of Policies  lapsing are on the increase!!   It Is hoped that  the New breed of Advisors get enough education about the plans   and suggest the most suitable product and assist in timely payment of Renewal Premiums  Hope importance of Insurance  is well understood by better services and the policy holders find it helping in their lifestyles where the Interest Rate are decreasing awareness of utility of Insurance is increasing      KRISH L NARASAIAH
gainvestment@rediffmail.com Mar 25, 2014 very helpful article for giving life insurance as well as health & general insurance.why we give more premium to the insurance company ? our all life lives surrounding in internet . webs. and so many application.
jalakhkar@gmail.com Mar 25, 2014 I wish to add a comment regarding the claim settlement ratio.   IRDA report for 2012-'13 gave statistics that a low premium insurance JV had the last quartile claim settlement ratio.  When I queried with the insurance company (my sone recently bought an online term policy from the company) in this regard, I was advised that IRDA statistics included both on-line as well as off-line policies.  I was asked to peruse the on-line portion of the insurance company's website which showed that the claim settlement ratio of on-line policies during FY 2012-'13 was a respectable 92%.   When I queried why there was such a vast difference between the claim settlement ratios of off-line and on-line policies, it was explained to me that the on-line policyholders were typically well-educated professionals or businessmen with all their documentation in good order.  This helped in fast claims settlement as well as high claim settlement ratio.

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