Comparing online and offline channels of buying insurance and who is it suitable for?
Health insurance is an essential part of the financial plan. But being an indemnity based product, which pays off in the event of a health risk, there is a certain hesitancy to buying it. This is why insurance selling still relies on the personal touch of an agent to convince policyholders. But as disposable income increases, the need to protect assets is natural for increasing number of policyholders. The online channel of buying insurance is gaining traction as it is not only accessible, but also provides certain advantages over offline sales. Yet, there will be a section of customers who will find relevance to an offline channel and the advantages it provides.
Here, we compare the two for their defining features and list the different policyholders suitable for each channel.
Online purchase
Online aggregators and brokers list most policies available in the marketplace on one screen for easy comparison. Policyholders of all hues can find a solution: those with a pre-existing disease that require a benign waiting period or physically active ones that are rewarded for staying fit; policyholders looking for value or a large cover. It could also be a jet-setter touring the world or one settled far away from the hustle-bustle of a metro. Most needs are specifically listed and presented for filtering in the online channel.
The insurers have clearly responded to the demands of the online channel. The aggregator will now list between 3-5 variants of a policy from a single insurer. This is after the policyholder has provided their specific circumstances.
By engaging deeply on these platforms one can also discover a right fit, previously unimaginable. A standard feature of yesteryears, the no-claim bonus, has slowly morphed into renewal bonus which may increase the coverage despite a claim. One can toggle with coverage as employer provided insurance can act as a deductible limit when complimented with a top-up health insurance. Cutting edge oncology medications can now be covered; many such features are now on offer, to be discovered online. As the engagement grows, the supply side will respond with greater agility to the nuances of demand and reduce the white space.
That policyholders can compare prices between insurers as well makes it an ideal buyer’s market. There is also a 5 per cent discount for online purchase.
But, the need for familiarity with the terms used in insurance and the time needed to be invested in filtering the vast field of options can be a drawback. A ready-made product recommendation will not be available, and prospective customers will have to scour the platform for the right product, which does introduce an element of unintended purchase of a sub-optimal policy. The prospective policyholder will have go through the fine print themselves to identify any gaps in insurance as well.
The channel is apt for customers willing to sift through aggregator platforms, understand the terminologies and choose a product with the right riders to fit their needs. There are savings from lower premiums but not counting the time invested in filtering the information.
Agents or banking channels
The primary advantage is the personalised service offered by an agent for health insurance. The agent, aware of the policyholder’s concerns, can recommend a product suitable to the policyholder at one go. The agent can also aid with the pre-issuance formalities of arranging for medical checks, paperwork and inform the policyholder on the application of the policy and the limitations.
Most of the claim rejections happen on account of misunderstanding the policy conditions. This is where an agent can recommend an optimal policy and also explain the boundary conditions, waiting period, sub-limits, consumables cover, OPD coverage and others to set expectations of claims.
Though not an agent, TPA intermediaries can also be of immense help, especially in case of travel policies needing a health plan. This is predominantly available with agent-based health insurance. This is more pronounced at the time of claims where with the aid of a TPA, claim processing becomes much smoother.
Adding the agent commission, the insurance cost can be higher in this channel compared to an online issuance, but some policyholders may find the hand-holding that comes with the premium cost useful.
But the primary drawback is the lack of price discovery or option discovery that comes with agent backed insurance. There is the commission or other forms of incentives available for agents that may introduce a bias towards those policies. There are independent agents (Beshak lists agents on its platform), who can minimise the bias.
Then there is the issue of information mismatch on policy document that comes with the agent or an intermediary. This issue arises because the sales agent is only responsible for getting the policy approved. If the claim is rejected based on information in the policy document, the policyholder will have no one to blame but themselves. In insurance, it is highly critical to provide right information in the policy document; even at the risk of a policy getting rejected, and this is applicable to both offline or online policies. But intermediation can add a layer of uncertainty in filling out policy documents compared to online mode.
This channel may be suitable for customers not willing to scour for the right policy or for those not confident of shortlisting the right policy. A reliable agent that one is personally acquainted with may be useful for navigation and also at the time of claim, which is where the pudding lies.
Overall, any mode of action will have its advantages and disadvantages. Policyholders must keep themselves updated with relevant information, whichever channel is used, to steer clear of any mis-selling, and reach out for the most optimal policy.
Key points
Online buying allows price discovery along with options
Agents, however, can bring in their expertise to recommend a policy
Policyholders should educate themselves, whichever the channel
Published on May 3, 2025
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