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India has less than 4% penetration for life insurance as on January 31, 2019, while overall telecom penetration in India (number of telephones per 100 people) was 91.82% at the same time, according to the Telecom Regulatory Authority

of India (TRAI) data. The collaboration between Bharti Airtel, one of the leading integrated providers of telecommunication services and HDFC Life Insurance, India’s largest non-bank promoted private life insurer is expected to revolutionise the telecommunication market of India with their new innovation. This partnership is going to leverage technology and the deep penetration of mobile services to build a financially secure India. The plan will bring millions of uninsured and underinsured Indians under the umbrella of insurance at a nominal charge.                      

What is the plan?

Airtel’s new plan is a prepaid bundle that will come with an in-built life insurance cover (term plan) from HDFC Life Insurance. The prepaid bundle will cost Rs. 249 and will come with Rs. 4 lakh life cover from HDFC Life along with 2GB data, unlimited calls to any network and 100 SMSs per day. The recharge is valid only for 28 days and the policy cover is valid only till the recharge is active. Once the recharge becomes inactive, the insured automatically gets out of the policy coverage. The insurance renews automatically for subsequent recharges. A customer needs to enroll for the insurance benefit after first recharge through an SMS or through Airtel’s committed mobile application.

Who can avail of the insurance benefit and how?

The process to get the policy cover under the plan is quite simple. Piyush Kumar, Manager, Marketing & Communi-cations, Airtel, informed, “The policy is available to all customers aged between 18 to 54 years. The policy requires no paperwork or medical examination to get the insurance cover. However, the customer is required to give a declaration of good health. The policy is instantaneously delivered after the recharge. A physical copy of the insurance can be provided on the request of a customer. The innovative prepaid bundle gives convenience to mobile customers with significant amount of data and a sizeable insurance protection at under Rs. 9 per day. The entire process is digitally delivered in a matter of few minutes at any Airtel retail store or on MyAirtel app.”

How will this partnership increase insurance penetration?

As of March 31, 2019, Airtel’s mobile services customer base in India was approximately 325.1 million. The Airtel – HDFC Life partnership leverages their respective digital platforms and Airtel’s distribution reach, including a phygital (physical plus digital) experience in rural pockets to make it very simple for millions of uninsured and underinsured Indians with a mobile phone to get a life cover - every time they recharge their mobile phones.

Adarsh Nair, Chief Product Officer, Bharti Airtel, said, “A telco is well positioned to provide the digital backbone to drive innovation and create value for consumers. This is first among many powerful use cases that leverage the power of a telco to build a digitally enabled and financially inclusive India. Insurance adoption is abysmally low in India, including urban areas. Price, access and convenience of payments are barriers to adoption. With this innovation, Airtel is removing those barriers for providing basic insurance to a very large set of India’s population and making the process extremely simple – just recharge your phone and you are insured.”

Commenting on the tie-up, Suresh Badami, Executive Director, HDFC Life, said, “At HDFC Life, we are constantly looking at creating eco-systems that enable us to improve our reach of insurance products. I am confident that this tie-up is a great opportunity to make insurance accessible to every Indian.”

Future prospect

India is the world’s second largest telecommunications market with 1,197.87 million mobile subscribers, as of December 2018. The industry has also been one of the fastest-growing sectors in the country with a Compound Annual Growth Rate (CAGR) of 7.3% over the last decade. The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall Internet Protocol (IP) traffic is expected to grow by four-fold at a CAGR of 30% by 2021. The National Digital Communications Policy 2018 has envisaged attracting investments worth $100 billion in the telecommunications sector by 2022. The above estimates confirm that the Indian telecom sector will soon be the largest in the world. Therefore, these types of innovative policies can play an important role in consolidating the market.