Digital payments – paying for transactions using digital means and foregoing cash. After demonetization was effected in November 2016, the Indian population faced a severe cash crunch. Old currency notes were sucked out from circulation and the substitution of new notes took time. In the meanwhile, consumers had one way of transacting for their lifestyle needs – digital payments. While digital payments were in existence much before demonetization, demonetization gave it the push it needed for exponential growth. Even the digital India movement launched by the Government gained prominence after demonetization. Usage of debit cards, credit cards, net banking, digital wallets, and payment applications grew manifold and the growth is consistent even two years after demonetization.
Call it the attraction of discounts, cash-backs, reward points or the simplicity of use, digital payments are here to stay. In fact, as per current reports, the usage of digital payment platforms is projected to grow by 400% in the next 5 years itself. Are you prepared to tap into this growth?
You must be wondering how the growth of digital payments and cashless transactions in India would affect the insurance segment. Well, it would. It would impact the insurance industry as a whole including your insurance business. Here’s how–
Impact on the insurance industry
- Introduction of more online plans
Online insurance plans have become very popular in recent times. They are easy to buy, convenient for the customers and the policies are also issued in an instant. Since online insurance plans require online payment systems, such plans depend heavily on digital payments. As digital payments are poised to grow, insurance companies would be motivated to offer more online insurance products to their customers. This would increase the diversity and variety of such products in the insurance market.
- Ease of premium payments
Potential policyholders who face a cash crunch and have difficulties paying premiums in cash or cheque would find it easy to pay premiums online. The possibility of dishonor of cheques would become zero and insurance companies would be able to collect premiums easily and that too in real time.
- Adherence to AML guidelines
Online digital payments would also reduce the possibility of money laundering. Since online payments would be done from the bank accounts of individuals, it would have a paper trail which would be easy to trace. Moreover, digital payments would ensure linking of bank accounts of all customers making KYC and AML compliance easier for the insurance company.
Impact in your insurance selling business
If you are thinking about how the growth of digital payments would affect your business positively, here’s how–
- A wider bouquet of plans at your disposal
Since insurance companies would be motivated to offer more online products, your product bouquet would also increase. You would have a larger number of products to pitch to your clients. You can present your clients with diversity in insurance plans and if one plan does not suit the financial requirement of your client, you can resort to another plan if you have the other plan at your disposal. A wider product portfolio would, therefore, increase your insurance sales.
- Ease of collecting premiums
Using digital payment modes you can make your clients pay for their insurance plans online. This would ease your way of doing business as you would not have to visit the insurance company to deposit the premium cheque or cash. The premium would be paid online and you would be able to save time.
- Time-saving = more sales
As you save time in collecting premiums from customers, you can concentrate on selling more insurance plans to other new clients. You can utilize the extra time to make multiple appointments in a single day, upgrade your insurance knowledge or making contact with your existing clients for getting referral leads. So, as digital payment modes save your time in selling insurance, they also give you extra time for increasing your sales.
- Ease of renewing the insurance policy
Even in the case of renewals, you would not have to visit your clients to collect the renewal premium. You can simply make a reminder call to your clients for paying the premiums online and cut down on the hassles of visiting your customers physically. In fact, digital premium payments for renewal premiums would be greatly helpful if you are out of town and cannot collect the renewal premiums personally.
The projections for the growth of digital payments would prove to be beneficial for your business and the insurance segment as a whole. Are you prepared to tap into the growing market of online insurance sales?