insurance in india insurance is still sold on premise of investment
The last couple of years have been tough for the life insurance industry , which had to deal not only with fast-paced reforms , but also reducing agents give the distribution in number. As a result , insurers focused their attention on raising the bancassurance channel for distribution. Anuj Agarwal , President & CEO , Bajaj Allianz Life Insurance Co. Ltd, explains the impact of shrinking agency channel and the measures taken by the company to make the soft sell and settling claims faster.Insurance companies promoted by banks have grown faster than those who rely on the agents. How hard have been the years?
Companies that are promoted by banks tend to grow faster because it is easier for banks to leverage their existing customer base . In this sense, productivity levels are significantly higher for banks than individual agents. We have also seen many changes in regulation and in rapid succession. It is easier to adapt to a change in one go . When the rules change regularly , it is difficult to maintain the pace of growth of the individual agents . Our agents depend primarily on new business premiums; after the new rules , fees were reduced , but the productivity of the agents did not increase much, but now every major reforms have taken place and the market is stabilizing. We do business mainly through agents , but we are looking for a partner for bancassurance.
The advantage of agents leaving the industry is that only serious fall , which should improve the quality of sales.
There are three main stakeholders in the insurance business : distributor, shareholders and customers. Earlier, the value to dealers was on the upper side. Many non-serious agents came aboard during the rise of the stock market , so that rationalization is good in the long term. But you have to realize that the cost of insurance distribution in India is one of the least in South Asia and Southeast Asia.
Under the commission is sustainable if there are tools like technology to simplify work . We must consider how much of a need to maintain a livelihood through a life insurance agent. In Southeast Asia, the infrastructure is well in place and there are dedicated agents . You will not see 30-40% of agents disappear without accountability, as happened in India. In addition, the prosecution is very strict. In addition, more importance is given to training. In India , insurance is being sold on the premise of investments. People do not take the trouble to go through the policy document. Therefore, it is very important that the dealer does a good job of explaining the product. This is what selling is based on need and reduce mis-selling .
There is again a mixture of skewed products . Earlier, insurance plans , primarily in units of account ( ULIPs ) were sold and is now traditional plans .
Ulips are sold in a big way , when the industry was in the process of expansion. In Ulips , the risk is assumed by the customer and very little capital is required by the shareholder . The capital is being deployed for expansion and the markets were doing well. Ulips are transparent products but meant for sophisticated customers. The problem was that they were sold worldwide. After commissions are reduced , traditional plans made a comeback . Currently 13 % of our business comes from 87% Ulips and traditional plans. We are working in a traditional child plan. We want to have a balance of 30 % from Ulips and 70% of plans for a traditional ideal mix .
What are your technology initiatives to streamline sales processes ?
We launch our application in March. Initially , it was intended to collect the renewal premium but now use it for faster policy issuance from the pilot launch also generated renewal premiums of about 3,000 policyholders.
The agent describes the policy and gives a demonstration at the same time using this application on a tablet. After the formalities , the premium may be paid immediately , either through debit or credit card , using a device mobile POS . The client receives an instant notification . In general, life insurance sales leads 4-5 visits for discussions and another 2-3 visits to collect the documents . With the application , this can be done in a matter of hours. There are a lot of cost savings, which may not be visible directly , but indirectly shown benefits such as shorter delivery and collection of renewal premiums smoothly.
Insurance regulator Insurance repositories launched last year, but insurers are still alliance with them. Why?
We are in the various stages of the connection with at least three repositories . There are some fundamental concerns with digitization policies . Policyholders do not read insurance documents , even when it is in paper form ; if policies are online, they are even more unlikely to bother . The second question is about the costs . Current digitization rate is too high, and we have to pay all the five repositories . In addition , you will get our systems built into them . A central repository would be better.
Claims settlement ratio of your business has improved 89 % in the retail segment in FY13 to 91% in FY14 . What are you doing differently?
We have a team now claims notification , which helps the candidate the necessary formalities. But what has improved our claims experience is the action we took in late claims . This took place last year. If the claim is delayed more than 30 days , we promise to pay interest at 10.5 % per day late. Our rate of settlement of claims in general ( group and individual policies) was 97.45 % for FY14 .
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