PB FinTech , the parent company of Policybazaar, a leading online insurance marketplace, has reported a significant shift in consumer behavior following the removal of Goods and Services Tax (GST) on term life and health insurance policies. The platform observed a 38% increase in high-sum insured health policies, indicating a growing trend towards more comprehensive coverage.

Key Findings

Health Coverage Trends

• Average health cover size increased from ₹13 lakh to ₹18 lakh
• 45% of buyers now opt for coverage between ₹15-25 lakh
• Only 18% choose plans below ₹10 lakh

Geographic and Demographic Shifts

• Tier-II cities showed increased adoption of higher coverage
  • Customers choosing ₹15-25 lakh coverage rose from 44.1% to 48.6%
• 11.5% increase in high-sum purchases among customers aged 61 and above

Add-ons and Riders

• 25% increase in Day-1 pre-existing disease add-ons
• 20% increase in critical illness riders
• 50% rise in policy renewal rider attachments

Impact on NRIs

The GST removal has simplified the term insurance purchase process for Non-Resident Indians (NRIs). Key changes include:

• Elimination of the requirement to pay premiums through NRE accounts
• No need for annual international address proof documentation

Analysis

The data suggests a clear shift towards higher-value health insurance policies across various demographics. This trend could be attributed to several factors:

1. Increased Awareness: The COVID-19 pandemic may have heightened awareness about the importance of comprehensive health coverage.

2. Affordability: The removal of GST has made higher-value policies more accessible to a broader range of consumers.

3. Tier-II Growth: The increased adoption in Tier-II cities indicates a growing insurance consciousness beyond metropolitan areas.

4. Senior Citizen Focus: The rise in high-sum purchases among older customers suggests a recognition of potentially higher healthcare costs in later years.

5. Customization: The uptick in add-ons and riders points to a desire for more tailored insurance solutions.

This shift in consumer behavior could have significant implications for the insurance industry, potentially driving product innovation and marketing strategies to cater to the growing demand for comprehensive coverage.

Insurance payments in India have seen a significant uptick, with a 35% year-on-year increase and a 14% week-on-week rise between September 22 and October 14, according to data from PB FinTech . This surge coincides with the implementation of 0% GST reform and increased festive spending, highlighting a growing trend in the insurance sector.

Digital Payment Methods Take Center Stage

The data reveals a strong preference for digital payment methods, with UPI (Unified Payments Interface) emerging as the dominant choice for insurance transactions:

UPI transactions showed remarkable growth across various insurance categories:

• Motor insurance: 17% growth
• Two-wheeler insurance: 17% growth

Segment-wise Payment Trends

Different insurance segments exhibited varying payment preferences and growth rates:

Festive Season Impact

The festive season has particularly boosted vehicle-related insurance, driven by:

1. New vehicle purchases
2. Increased focus on family protection

Monthly Premium Plans Gain Traction

There's a notable shift towards monthly premium plans, especially in health insurance, where monthly instalments saw a staggering 307% growth. This trend indicates a growing preference for more flexible payment options among policyholders.

The surge in insurance payments and the increasing adoption of digital payment methods reflect a changing landscape in India's insurance sector. As consumers embrace the convenience of UPI and other digital payment options, insurance companies are adapting to meet these evolving preferences, particularly during the festive season.