Buying products in small affordable sizes is not a new concept. For instance, shampoos were successfully sold, especially in rural India, in sachets through which the shampoo industry tapped into the lower-end market, which could buy it at a low cost for one-time use. Taking this concept ahead, the insurance industry has introduced sachet or bite-sized insurance products in the market. Still at a nascent stage, sachet insurance products are gaining interest from investors and consumers. Here we looks at bite size insurance products and tells you whether you should buy it.
Changing Consumer Demography
The demand for bite-sized products is fueled in part by the millennial and Gen Z consumer enthusiasm. They view insurance differently, as their financial vulnerabilities have made the kind, and extent of coverage they need very important to them. Digital-savvy generations seek ease and convenient processes without complex documents, tardy processes, and periodic payments. It identifies these under-insured consumers and first-time buyers who want to do financial planning without neglecting their income and lifestyle needs. Their bite-sized products are simpler and affordable versions of the traditional insurance policies with very low premiums. They provide wide coverages and are accessible without any lengthy forms, hidden clauses, and deliver ease of purchase and claims.
Increasing Customer Expectations
Customers’ expectations are getting set by digital-only offerings for their convenience and simplicity, leaving them disappointed if their insurance experience does not match their lifestyle and needs. Today’s task-rich and time-poor consumers now expect more than just round-the-clock access, competitive prices, and good quality in their products. Consumers across markets expect personalized high-touch service. Insurance by its very nature had remained a low-touch industry, and so only offerings with high-quality interactions can inspire loyalty. An effective CX strategy balances personalization, empowerment, and efficiency using a combination of human and digital solutions at every touchpoint throughout the customer journey. And the strategy must be flexible enough to accommodate a wide range of preferences, with hyper-personalization becoming a baseline expectation.
Shifting Product Needs
Lesser number of customer touchpoints and increasing innovation in insurance product offerings has ushered non-insurance services, which are a natural extension of the core product. Ecosystem services not only build loyalty but also increase profits. Insurers follow different underwriting methods for bite-size insurance plans as compared to traditional products, where insurers arrive at the value of premium considering the risk and exposure of the policyholder. In case of bite-size plans, a single premium amount is offered to all customers as the underwriting method varies completely. With deep data science abilities and third-party plugins, fraud mitigation is achieved through a separate process.
Blurring of industry Boundaries
Businesses that once seemed disconnected are now fitting together seamlessly with unexpected synergies. Opportunities have arisen for insurers to reinvent customer relationships by providing an ecosystem of services beyond traditional products. The changing forces have enabled all sectors to redraw its borders with wider product and service offerings. As digital connectedness blurs industry boundaries, opportunities now extend across ecosystems. Hence, an ecosystem-based approach, which involves a set of interconnected products and services related to core dimensions of home, wealth, mobility, or lifestyle, has captured the consumer imagination.
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