HDFC Life sees 20x growth in online insurance

BANGALORE: HDFC Life is expected to double its revenue from its online insurance sales by 2016. The insurance provider is seeing 10% of its new insurance business coming from the online sales in just about two years.

“While the offline insurance premiums have a renewal rate of about 70%, we are seeing over 95% renewals for online insurance,” said Subrat Mohanty, executive vice-president and head of strategy and technology for HDFC Life. “Online revenue has grown 20 times to Rs 300 crore since 2012, when we started online sales.”

For HDFC Life, online channel is making insurance premium underwriting quicker, less prone to error and higher renewals. For customers, online insurance comes 20-25% cheaper as there is no broker involved in the transaction.

The ability to retain customers for at least 8-10 years is crucial to profitability in the life insurance business, especially as acquiring a customer is expensive.

In 2012, HDFC Life decided to revamp its IT infrastructure and signed up TCS for a four-year Rs 120 crore contract to revamp its technology infrastructure and develop online and mobile offerings.

HDFC Life, a joint venture between HDFC Bank and UK's Standard Life, is India’s largest private life insurer.
For its offline business, the company is facing resistance from agents, who fear loss of business to the online channel. However, the insurer is trying to convince agents to move online.

“Most of the websites selling online insurance currently do not charge brokerage but just a small commission for passing on the lead,” Mohanty said.

HDFC Life has 80,000 insurance agents, with 11,000 on its internal payroll. “We are offering tablets to about a third of our Salesforce so that insurance premium can be underwritten on the same day and all data is validated online.” The tablets are given to the top performing agents as an incentive.

The company is expected to launch a mobile app by October, which would allow customers to buy insurance on mobile as well as get information about various product offerings from the company.