Insurance

Insurance has been part of the financial lexicon for years now. What has changed to some extent though is how it perceives insurance.

Most of us saw our parents using life insurance policies as the only investment and savings tool, other than fixed deposits (FD), to fund education, weddings and other needs of the family. Then we bought or were made to buy our own set of similar insurance policies once we entered the workforce.

The first big change in how we perceived insurance still largely as investment though-was when unit-linked insurance plans (Ulips) came in the mid-2000s. They promised market-linked returns and the exuberance at the time coupled with investors' trust in older insurance institutions gave a leg up to these. But soon enough, people realised that these products were heavily frontloaded and agents were promising unreal returns. The 2008 crisis brought home the fact that markets were not always friendly and could erode both money as well as trust. People started going back to traditional policies.

But as markets recovered and mutual funds became a new and viable investing option for people, term insurance-the simplest and cheapest form of insurance that is meant for pure protection with no investment component-started gaining attention.

The 2000s was also the decade when aspirational India started buying more cars, and auto insurance became part of common parlance. Familiarity with health insurance for most was through the good-old schemes available to government employees, but it came in its own when Covid hit in 2020.

Over the past few years, as Covid hammered down the need for protection, both health and life insurance got a new lease of life. Coupled with the need for protection was digital innovations-again Covid forced the industry to dust off its processes and embrace digitalisation with renewed vigour. Then came a series of process changes from digital know-your-customer (KYC) and online policy issuances to video-based inspections of damaged vehicles and bite-sized policies for small and immediate needs.