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Digitisation has broken the geographical and structural barriers by replacing legacy, branch-led distribution models with scalable, tech-enabled solutions.
Due to the digital adoption, the share of insurance policies purchased through insurance aggregators has risen significantly.
Authored By Balachander Sekhar
Driven by around 1 billion internet users, increased smartphone usage, evolved consumer habits, and a growing tech-savvy population, the consumer market is already booming in India, with a market size exceeding $80 billion. Superseding traditional distribution networks, consumer-based brands are reshaping the retail landscape, offering personalised and direct engagement with consumers.
In the insurance sector, it has traditionally thrived on branch networks and agent-driven models, relying heavily on personal advisory services. These traditional offline models came at a cost — historically, up to 60 per cent of policy-related expenses were absorbed due to offline inefficiencies, pushing up prices and limiting affordability for end consumers.
Digitisation has broken the geographical and structural barriers by replacing legacy, branch-led distribution models with scalable, tech-enabled solutions. There has been the rise of the POSP model, which transformed the insurance landscape in the last 4–5 years and has taken insurance to Tier 2, 3, and beyond markets.
India is expected to have 1.2 billion internet users, and consumer expectations and experience will take centre stage in the times to come. Driven by enterprise AI and automation, today’s consumers enjoy faster service, personalised products, and a seamless digital experience. Due to this digital adoption, the share of policies purchased through insurance aggregators has risen significantly — from 10 per cent in 2018 to over 30 per cent in 2024.
However, the future is not about digitisation and POSP functioning as separate models. The true winners will be those companies that can embrace an integrated ecosystem — one which seamlessly blends POSP and digital distribution, rather than relying on isolated models.
A strong digital approach can significantly enhance the effectiveness of the Point of Salesperson (POSP) model in insurance distribution. A prominent digital presence across websites, apps, social media, and online ads will work as a powerful lead-generation engine for companies operating within a POSP framework. While digital platforms can be used to attract potential consumers, the leads generated can be seamlessly passed on to POSPs, allowing them to engage with warm prospects rather than starting from scratch.
Consumer platforms used by brands usually cultivate a stronger emotional connection with consumers due to their direct-to-consumer approach. This connection can be further nurtured when consumers connect with POSP advisors, who operate under high-touchpoint advisory roles, leveraging the brand reputation further. Parallelly, for tech-savvy consumers, especially today’s youth, different consumer platforms offer self-service options like online quote engines, calculators, and policy comparisons, empowering them to independently explore insurance products. The dual approach can create a comprehensive ecosystem, where consumers can engage with the insurer directly through digital platforms, take the route of personal guidance, or opt for both options.
The hybrid approach across digitisation and POSP ensures that there is consistent engagement through digital touchpoints like renewal reminders, claim assistance, and policy upgrades. POSP advisors can focus on personal reminders, whereas digital platforms can manage backend consumer service and policy management.
AI-driven chatbots and virtual assistants can play a significant role in improving the consumer experience. These tools can provide 24/7 support, answer frequently asked questions, and help companies save manpower costs for initial FAQ interactions. Once the consumer receives information on the initial set of questions, he/she can be redirected to the POSP advisor for high-value, detailed information and personalised guidance. This process significantly reduces customer acquisition costs compared to traditional sales and ad marketing methods.
Insurance is not about replacing human expertise, it is about enhancing it. Insurance is a complex product, and customers often rely on advisors to guide them through critical choices. From educating customers to recommending the most suitable policy, to managing intricate claim situations and addressing unique individual needs — human oversight, empathy, and judgment are invaluable. Digital is significant to accelerate the process and bring in ease. Thus, the industry should look at working synergistically, by aligning traditional and digital strategies, where insurers can maximise reach, efficiency, and long-term growth.
(The author is co-founder and CEO, RenewBuy)
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