Uncertainties around life and money have prompted people to opt for life insurance policies offering financial security amid the covid-19 outbreak. Besides opting for fresh policies, people have become increasingly conscious about staying adequately protected and thus a significant population is renewing policies on time. Thus, life insurers saw some relief in their persistency levels amid signs of some recovery in insurance sales and renewals.

Persistency ratio is the ratio of life insurance policies receiving timely premiums in the year and the number of net active policies. The ratio for each year is measured for an exposure block e.g., a financial year and is estimated in the first month of the next year and so on i.e. the one-year persistency ratio is indicated as 13th-month ratio and so on.

“In the case of persistency level, while we had some issues in April 2020, but May onwards we were back to doing more collections than the pre-Covid times. Our 13th-month persistency has gone up by 200 basis points compared to the same time last year,” said Kamlesh Rao, MD and CEO, Aditya Birla Sunlife insurance. “Digitalization has played a big role here. Our Artificial Intelligence (AI) driven Conversational Renewal Bot offered a seamless digital renewal engagement journey, helped policyholders to renew their policies anytime, anywhere.”

Echoing similar views, Ashish Rao, Chief – Customer Experience & Operations, ICICI Prudential Life Insurance said that recently, ICICI Prudential Life has deployed a speech recognition AI-humanoid for renewal premium reminder calling.

“With this automated solution, we can reach out to over 50,000 customers in an hour and can converse with customers in multiple languages. For the period from March 2020 to December 2020, we reached out to over 4 lakh customers and approximately 87% of customers contacted paid their renewal premiums. Our customers can make renewal premium payments through net banking, UPI, ECS, credit and debit cards, Google Pay and other mobile wallets,” said Rao.

During this ongoing pandemic, technology has been the centre of all customer engagement activities for insurers. Whether it’s AI-enabled bot or self-servicing insurance portal for customers, all-digital offerings have been designed to enhance customer experience and reduce time for servicing them and facilitating new business and renewal transactions.

“We developed WhatsApp services just at the onset of the pandemic. And over 11 lakh customers used this platform over the year for renewal premium payment, sourcing new policies, and servicing existing policies,” said Kayzad Hiramanek, Chief- Operations & Customer Experience at Bajaj Allianz Life.

“Similarly, we launched a co-browsing tool for customers to engage with us and our insurance consultants virtually. As a result, transactions on our self-servicing portal increased by 82% YTD January FY21 over last year, and our digital payments have grown to 80% during the pandemic which used to be at 40% pre-Covid times. Our customer journey has hence been frictionless during the pandemic and has helped us keep the persistency levels at par as compared to last year,” said Hiramanek.

You must know that the formula to derive persistency ratio for the nth month is: “nth Month Persistency Ratio” = In-force ÷ Exposure

“This means a policy issued in a particular exposure block contributes to nth month exposure if it has completed at least ‘n’ months at the calculation date. Further, policies contributing to en-force comprise policies contributing to nth month Exposure which have paid all the premiums due up to an nth month as at the calculation date. Further, the persistency ratios are measured both in terms of a number of policies and premium amounts,” said Akshay Dhand, Appointed Actuary Canara HSBC Oriental Bank of Commerce Life Insurance.

Source: Livemint