Affordability and lack of understanding are main reasons for people not opting for insurance in India

• Over 40% respondents mentioned high premiums as the main reason for not buying insurance
• About 53% expressed difficulty in understanding the products and processes.
• 58% of respondents expressed trust in brands they were familiar with when purchasing health insurance.

Affordability concerns and difficulties in understanding the product are the two primary reasons discouraging individuals from purchasing health and life insurance in India, according to a consumer insights report from insurance marketplace Policybazaar.com.

The ‘How India Buys Insurance’ report says that its survey found over 40% of respondents mentioned high premiums as the main reason for not obtaining insurance, while about 53% expressed difficulty in understanding the products and processes, leading them to abandon the idea.

The survey examined the buying behaviour of 3,300 plus respondents from 27 cities across India, including metros, Tier II and Tier III cities.

Trust factor plays an important role

Approximately 80% of the respondents identified personal recommendations from friends, family or a known agent as the primary reason for considering insurance. Among them, 56% stated that a recommendation from friends and family played a significant role in their decision to purchase health insurance, while 54% reported the same for life insurance.

The survey also revealed that 58% of respondents expressed trust in brands they were familiar with when purchasing health insurance, while 64% expressed the same for life insurance. This indicates that individuals tend to place greater trust in insurance brands that they recognise or that have a long-standing presence in the market. Brand familiarity and a strong track record seem to contribute to the building of trust among consumers when it comes to selecting insurance providers.

Says Sarbvir Singh, chief executive officer of Policybazaar, “With a detailed series of face-to-face interactions, we have gone beyond Tier-I and Tier-II cities in this research and also explored the perspectives of Tier-III India. We hope that the insights from our research will pave the way for more relevant and consumer-centric solutions from the insurance industry.”

Research vs buy

Approximately 80% of the respondents, for both health and life insurance, sought information online before making a policy purchase. However, despite the online research, over 85% of the respondents ultimately opted to purchase insurance offline, primarily through an agent whom they were acquainted with or who came recommended by friends and family.

This indicates that while online platforms are used for gathering information, the personal connection and trust associated with known agents play a crucial role in the final decision-making process when it comes to purchasing insurance.