been over four months since the Goods and Services Tax (GST) came into play, leading to a rise in insurance premium. Prior to GST, the insurance products had a service tax of 15% which has now been increased to 18% on account of GST. In an interview with Moneycontrol, Tarannum Hasib, Director, Sales, Canara HSBC Oriental Bank of Commerce Life Insurance, talks on whether a hike in premium rates is having an impact on consumers behavior towards buying of insurance product. Here are the excerpts:

What behavioral changes can be seen in consumers while buying policy post GST?

The customers buying behavior for life insurance is influenced by many factors, the premium is only one of them. Increased awareness of life insurance has altered the perception of insurance from a tax-saving tool to a long-term financial asset which ensures protection. Today, customers opt for insurance products for the financial security of their families and hence a price or tax change may not supersede the objective of protecting financial needs of one’s family.

Insurance is a long-term commitment and small changes in premium are unlikely to impact the decision of protecting one’s family from unforeseen circumstances or investing for their future goals and aspirations.

Which factors will influence the consumer to buy the same policy at a higher price?

Currently, we are not witnessing any negative impact of GST and we believe that customers have accepted the change. Factors which influence the buying behavior of Life Insurance essentially are a mix of features offered, customer experience, claims experience, the strength of the insurance brand etc. along with the price. We hence do not expect the GST increase to significantly alter the buying behaviour.

The largest impact of GST will be on pure term premiums; however, our market analysis indicates that customers are willing to pay slightly higher premiums for seamless customer experience, relevant product differentiators, and long-term perception of brand’s strength and surety of claim payment.

What initiatives should an insurance company take to increase the awareness?

We will continue to highlight and educate customers and prospects on these factors to ensure that they make a well-considered choice.

The Industry is also working at increasing the awareness around customer need for having adequate life cover and long-term investments to meet financial goals. With the competitive market environment and range of product solutions offered, affordable insurance is only a click or nearest bank branch away and customers would be well advised to focus on the benefits and coverage that are needed for their financial well-being & protection.

Do policy premium need any correction post GST?

GST or changing tax rates are not a trigger for revision of products or features. Insurers periodically review their product portfolios and add new benefits, features, etc. Also as more information and experience about risks becomes available, targeted pricing to customer segments is often introduced thereby benefiting customers.

What role should actuaries play to help consumers?

In Insurance, actuaries along with the product team work together to design and price products and product modifications to ensure an attractive and competitive offer to the customers while creating a sustainable proposition for all the stakeholders. The teams continue to work on bringing better and more relevant product options to fulfil customers need through customer insights, data and technology for creating more affordable and innovative product solutions.

 15 Nov 2017, 04:54 AM