14 Jan 10 Innovate, Converge and Penetrate – Indian Insurance 2020
A couple of days back Varsha and I attended an Insurance summit in Mumbai, organised by FICCI, where the theme of the conference was Insurance 2020. It was an interesting conference and I was glad to hear things repeated through the sessions that should stand the industry and the country in good stead – increase efficiencies in the distribution channel, minimize mis-selling, explore alternate distribution channels, improve channel productivity, innovate and of course, everybody’s favourite bottom-of-the-pyramid product, micro-insurance!
There were some very pertinent issues discussed in the conference relating to the above, but what stood out, according to me was the discussion on convergence in financial services. The unanimous opinion in the conference and among the panellists was that convergence or in simpler terms, product bundling in financial services is here to stay.
Insurance and banking have come together very successfully in Europe and bancassurance is one of the fastest growing distribution channels in India as well – players like Canara HSBC in fact are committed to a pure bancassurance model; There has been convergence between credit and insurance products (home loans with a insurance cover on the side). Credit cards and insurance. Investment products and insurance – so whats the futuristic view?
Imagine one single relationship through which ALL your financial needs are done – you can transact, invest, loan, insure and save. Seems like a brilliant idea, and not surprisingly everyone present appeared to be in love with the vision that was presented – including yours truly. But when I was thinking about it on the way back to Pune, I realised this is exactly the kind of behaviour that got companies like Microsoft into trouble in the first place. Sure, you can argue that this is not the same case – the customer will be given a choice. But my argument is, at what point does the benefit of a seamless transaction exceed the cost of conducting a supplementary transaction – purely from a customer perspective. Further, the “bundling” will always come at a price and the customer may not be aware that he could have other choices.
My concern with convergence is that customer angle may just get missed out and in our hurry to keep customer service at the centre of the solution, we may actually end up doing a dis-service!
There is such a thing as too much convergence and my guess is its not all good.