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The Gift of Insurance


Summary

Gift Insurance

The blind date you had gifted your friend, on her last birthday, hadn’t turned out the way you had anticipated. This year being her 30th, you are under added pressure of choosing a gift that would be commensurate to the occasion.

As you relentlessly reject one gift after another, browsing through Amazons, Lenskarts, Ferns & Petals, a small ad on one of the screens catches your eye. Gift your friend an insurance policy. ‘Whoa, now isn’t that different and grown up’ you think to yourself as you click on the link.

Novel as it sounds, the Gift of Insurance product isn’t just some idea borrowed from the West – In 2020, the Insurance Regulatory and Development Authority of India (IRDAI) approved two Gift Insurance products under its Sandbox guidelines (guidelines that allow Insurers to live-test products on a pilot basis for a limited period).

  1. The Insurance Gift Card by Reliance General Insurance: – In September 2020, Reliance General Insurance launched an Insurance Gift Card to buy Health Insurance policies. The gift card worked like an e-voucher and could be redeemed by purchasing Health insurance policies from the Reliance General Insurance website.
  2. ‘Shagun – Gift an insurance’ by SBI General Insurance:- SBI General Insurance launched ‘Shagun – Gift an insurance’ in September 2020, a Personal Accident policy that could be gifted to anyone. True to its name, the denominations of Premium were set at Rs. 501, 1001, 2001. The policy provided for losses arising due to accidental death and disability.

The traditional method of gifting insurance is through assignment. An assignment transfers the legal ownership of a policy to the Assignee, the catch however is that an Assignee should be related to the policyholder by blood or marriage. And that is the gap, Insurance as a gift, addresses.

Given the low penetration density in the country, Insurers are warming up to the idea of Insurance as a gift. Future Generali (FG) recently launched their ‘Gift of Health’ product. The product is being offered in two variants at the moment but FG is bullish on its uptake.

Here’s a list of tell tale signs that the product category is here to stay:

  1. Increased awareness – New and exciting product categories attract top advertising and marketing brains. These agencies in turn help in improving visibility for the products thereby increasing awareness.
  2. Increase in the insured population – Increased awareness translates into increased footfalls. The insurance penetration in the country stands at around 4% as of 2021. If there is one industry that has waited for its turn to explode, it is Insurance. It is a matter of time that a savvy advertiser realizes the potential of pitching an Insurance Gift voucher to a Customer in Diwali, as opposed to a Dairy Milk.
  3. Compulsion of use – When was the last time, a friend gifted you an Amazon voucher that could buy you anything and everything, but from Amazon? Extrapolated to Insurance, elder folk, who tend to understand the concept of risk and health insurance could gift their daughters & nieces  a Health voucher. When you know you cannot buy anything else from the voucher, you are bound to study and buy the appropriate product for your health needs.
  4. Ease of use – The Gift card market in India, which stood at around 5500 USD in 2021 is set to explode to 12500 USD by 2026. Most Indian majors are fine tuning their portfolios to jump the bandwagon – LIC Card Services entered a strategic partnership with IDBI in 2021. Vouchers, be it physical or digital are going mainstream – something about a discount appeals to the psyche in a way that one cannot discard the feeling. Coupled with technology, the convenience these products offer becomes irresistible.
  5. Emotional and traditional value wrapped in a cover of security – Do you remember the joy you felt when you received a gift from someone? Or the sparkle in the eyes of your loved ones when you gave them a gift? Gifts foster a sense of belonging and have been a part of our culture since time immemorial. Nothing else showcases love and affection as a gift does.

A gift of insurance transcends other gifts from the perspective that it couples thoughtfulness with the understanding of risk and can be of help to a loved one in their times of need

The gifting industry in India is growing at a CAGR of around 17%. Imagine the impact on insurance penetration and density when Insurers design products to ride this wave. A Gift of Insurance Diwali voucher for the maid could go viral as early as this year. The possibilities seem endless.

As for me, I am checking if I can get a buy in bulk discount on Gift of Insurance, all my friends are getting insured this year!!!

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write mostly on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Marketing Management.