Delight dilution in life insurance
India’s life insurance industry has gradually improved over the last two decades. The number of lives insured, customer satisfaction, communication, and service efficiency have all seen small but measurable gains.
In fact, earlier editions of the Hansa Research CuES study show a steady rise in customer experience scores and Net Promoter Score (NPS), reflecting better operational delivery and growing trust in insurers.
But Hansa Research’s latest Life Insurance CuES 2026 report signals that the challenge is no longer only about improving service, but about giving the customer an experience which stands out.
“Delight Dilution”
The CuES 2026 report introduces the concept of “delight dilution” where customers are satisfied but not emotionally engaged and not actively recommending insurers (“word of mouth”).
Nearly 30% of customers are now “passive”, meaning they are neutral toward their insurer despite acceptable service levels. This is critical because in a market where every life insurer is virtually similar, advocacy drives long-term growth.
A plateau
The report suggests that insurers have reached a plateau in experience delivery.
Over time processes have become standardised, service quality has become consistent but differentiation has reduced. It’s hard to tell apart life insurers now, and this is in spite of their confusing product naming which offers no clue as to the type of product it is.
Earlier CuES findings also show that the gap between top and bottom insurers is narrowing, meaning customers perceive brands as increasingly similar which means customers don’t feel a strong reason to prefer one insurer over another.
The Gen Z & Millennial shift
One of the most important insights from the CuES framework is the shift in customer expectations especially among younger generations.
Gen Z and Millennials expect digital-first, seamless journeys, their insurance coverage and servicing to be clear and transparent and compare their insurance experiences with fintech and e-commerce.
Across Hansa’s studies (including life, health, and motor insurance), younger customers consistently show lower loyalty, higher expectations and greater willingness to switch providers
In life insurance specifically, this translates into lower advocacy despite ownership of policies.
Agents: where the disconnect begins
Agents remain central to life insurance distribution in India. However, CuES 2026 highlights an issue with the agency model: Engagement with the customer is concentrated at the time of sale.
After that, the customer is effectively forgotten as interaction drops sharply, and the relationship becomes inactive save for the renewals. This gives the impression that the insurer only cares about the premium payments.
This creates what the report describes as an “engagement bottleneck.” Additionally, the known issue of misselling by agents often results in misaligned expectations and ultimately lower satisfaction or grievances. Even if unintentional, this affects long-term trust.
The post-sale disconnect
Historically, life insurance has been treated as a one-time sale followed by minimal interaction
But today’s customer expects continuous but meaningful communication, proactive updates and value beyond the promise of a claim payment.
Without this, insurers risk becoming invisible after purchase, which weakens loyalty.
While insurers have improved on faster onboarding, better service processes and digitalization, and these have improved satisfaction, they have now come to become baseline expectations, not aspects that set them apart from other insurers.
As seen across CuES reports, digital capability is now “hygiene”, not a competitive edge. The real battleground has shifted to experience and connection.
What “meaningful experience” means
The report emphasises the need for “meaningful, relevant, and resonating experiences.”
As an example, this could mean that instead of a generic reminder or transactional message, insurers could:
- Remind the customer how the policy supports their long-term goals
- Offer guidance and upgrades after life events (marriage, child, loan)
- Provide periodic protection reviews
Winning over the newer generations?
A key recommendation from Hansa Research is to move away from one-size-fits-all strategies.
Different segments require different approaches, and perhaps even different products.
- Gen Z: digital, self-service, transparent
- Millennials: goal-based and flexible
- Premium customers: personalised, high-touch
- Non-metro customers: agent-assisted, trust-led
Segmentation is essential.
The life insurance industry is entering a new phase where efficiency is expected, differentiation is difficult, and customer expectations are rising rapidly. The future of life insurance will not be decided by who serves customers well, but by who makes them feel understood and valued.
Satisfaction keeps customers. “Delight” earns their loyalty.
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