Insurance Brokers and Agents Drive 80% of New Motor and Health Policy Sales

Insurance Intermediaries Remain Critical for Motor and Health Segments

A recent report by Praxis Global Alliance highlights the significant reliance of the motor and health insurance segments on third-party sellers, including brokers and corporate agents, to bring in new customers. According to the report, these intermediaries drive nearly 80 percent of new business in the industry.

Despite the growing adoption of digital platforms, direct-to-customer insurance sales remain limited. Consumers continue to rely on intermediaries to navigate complex insurance policies and claims processes. The report notes that 83 percent of consumers find buying insurance products to be complex, with two-thirds frequently citing "assistance in policy selection" as a top reason for choosing agents. Furthermore, half of the consumers surveyed were unable to understand the difference between various insurance plans.

The report identifies trust and better pricing in motor insurance, as well as better service and pricing in health insurance, as key reasons why consumers turn to intermediaries to purchase insurance products. When selling insurance products, agents primarily highlight claims support, product features, and policy coverage details, which aligns with consumer expectations.

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However, the report reveals a significant gap between consumer expectations and actual service delivery. Only 35 percent of motor insurance respondents and 28 percent of health insurance respondents reported that their expectations were fully met during the purchase experience, clear explanations, and assistance during claims.

Intermediaries Drive Cross-Selling and Customer Loyalty

The report notes that policyholders often form a strong bond with their intermediary rather than the insurer itself. Around 40-50 percent of customers continue to purchase multiple financial products through the same agent, who drives cross-selling. This highlights the critical role that intermediaries play in driving customer loyalty and retention.

The report also highlights high customer turnover rates in the Indian insurance market. The retail motor insurance segment experiences a churn rate of 35-45 percent, while health insurance sees a churn rate of over 25 percent in the initial years. Furthermore, the report notes that most consumers are unable to remember their insurer's name, with only 28 percent of motor insurance and 45 percent of health insurance customers able to recall their insurer's brand.

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Customer Pain Points and Communication Platforms

The report identifies communication platforms as a key area of concern for insurers. The platforms used by insurers to reach, engage, and sell to customers vary significantly by segment. In the motor insurance segment, broker strength is primarily driven by OEM or dealer linkages. In health insurance, distribution is bifurcated, with retail health insurance being sourced through agents and group health being sourced through brokers and direct institutional relationships.