'We Need To Move From Products To Solutions For Seniors'

I think it has the potential to continue over the next decade. All the building blocks are in place. However, there are some short-term structural changes that are happening almost every year and that has caused the growth in life insurance to be fairly volatile. We have had the tax (incentive) withdrawal of `5 lakh and above. Then we have had a significant change in surrender charges on (life policies) other than unit-linked savings products. In financial year 2025-26, we have had a significant positive and impactful change in goods and services tax (GST) on policies. So, there have been myriad of changes.

But if I were to look at the medium term, I believe that we are in a good place. Covid has been that inflection point, so people are no longer asking: Do I need insurance? They might be deferring their decisions due to various reasons but awareness has certainly gone up significantly. I hope that people start nudging themselves, rather than it remaining a push product.

We saw that in term insurance. What happens in term insurance is that the ‘give-get’ equation is very noticeable. So it’s very well understood and appreciated that earlier I was paying Rs 118, and now I am paying `100.

However, in savings products, there are many other things. We keep repricing them based on factors, such as where interest rates are, persistency, mortality, and so on. So, it doesn’t become very apparent to the customer as to how much are they actually saving.

As far as protection is concerned, we have grown 50-70 per cent after the GST withdrawal. That’s a meaningful impact.

Annuity payments are non-negotiable. That’s important because you may have non-negotiable payments, such as mortgage, rent, maintenance and so on. Everything else is good to have, like a holiday plan can be pared. Also, all of us are living longer. That also means that one might start running out of money because of inflation or because you dipped into your corpus. All this means that you need that regular stream of income, like a salary after retirement.

We have launched a product called Agni (in the annuity space), which has a reasonable amount of equity along with the guaranteed element.

Retirees sometimes complain about returns of 5-6.50 per cent in annuities. But the risk-taking capacity is higher for retirees, who want to be involved in income generating activities till their late 60s. With this product, you can take advantage of the markets while having a decent amount of capital protection.

If I were to look at the mis-selling numbers, they are lower than many other industries. If I were to look at per 10,000 complaints, the numbers are lower and not as alarming as it might sound to the public.

Having said that, perception is reality, and we need to pay more attention and understand the concepts of liquidity versus long-term guarantee. Insurance is meant for long-term protection. If you want liquidity here and now, possibly that’s not the right product for you. Asset allocation comes in here. Some part of one’s portfolio needs to be in liquid assets, and some in products like annuity for non-negotiables.

Mis-selling does happen, but I think a stronger distribution of the pie between the customer, the distributor and the insurer is needed.

At the same time, selling a life insurance policy is a lot more involved because it is not just about money; assessment of health is involved. It needs to be a healthy balance between the two.

Also, one has to see what we have done with complaints from senior citizens. We look at it from a very different lens. Then complaints from the lower income groups are given the benefit of doubt and money is returned.

For people in between, we are trying to make every attempt to explain the key features of a document. (But we need to realise that) we spend more time on figuring out what phone model we want than which insurance policy we want. All the information is there on the website. You could even ask ChatGPT. The point I am making is information is available. Senior citizens, too, need to understand that they need regular income. So, all of us need to make a concerted effort.

I think that we do have some ideas in terms of variants on annuity. We are in discussion with the regulator (Insurance Regulatory and Development Authority of India or Irdai), and we are building on the concept, because Indians like equity markets and want a little bit of alpha if they have the risk-taking ability.

What’s needed is innovation in the retirement space. For instance, in Japan, there is a disproportionately high number of senior citizens, and insurance is enmeshed with senior living. So, maybe, the concept of annuity can be extended so that you pay a lump sum and everything is taken care of, including your medical needs. Of course, not discretionary spends on entertainment. That might give a senior citizen a lot of comfort because then you don’t have to worry about the doctor, help and so on.

Another one is where regular income translates into services. If the services are guaranteed, you don’t need that much regular income. What drains a senior citizen today is the worry of finding a passbook, not understanding what the doctor is saying or simply a broken fridge.

Then one is about social ecosystems. People who are in their 50s, even in Tier II cities, are beginning to be digitally savvy. So, imagine an ecosystem where you come on a digital platform for whatever you want, to solve any doubt. An ecosystem where senior citizens teach other senior citizens online and, of course, have offline chances to meet. Of course, it has to be accredited, and needs to have checks and balances. These are opportunities for fintech players to partner with insurers, with retirement companies and others. Regulations today don’t permit it, but it’s a matter of time.

Today we are talking about a product, we are not talking about an end-to-end solution. We need to talk about that because a person who is retiring is not only thinking of money, but a whole host of things like what do I do with my time. We have to think how do we co-opt people who are healthy into the workforce—through part-time jobs, consultant and trainer roles, and so on. They are all people with huge amounts of skill sets.

I think there will be a revolution in this space if we start moving away from a product conversation to a solution conversation.

Trying to attract money into India is good. Money will flow for maximum returns, minimal amount of risk, and maximum opportunities. But how do we create these opportunities?

In reality, not a large amount of money came in, at least in life insurance, when we went from 49 per cent to 74 per cent and now to 100 per cent (FDI in insurance).

The reason is that money flow will come in when there is predictability of returns and growth. If you stop showing that growth, then money might just stay back in the developed countries where growth is relatively at a stable level.

I think there needs to be a period of stability in regulations, at least paradigm changing regulations that impact new business margins for more than 30-50 basis points (bps). The surrender charges regulation impacted us by 100 bps, while GST impacted us by 300 bps.

Money will not come in if people don’t know about the return because every year is a completely new story.

This used to happen with tax back in the day when there was a lot of cross-border tax. The same thing is now happening with regulations for our sector. I am leaving aside the geopolitical situation and other factors that are outside our control, but money flow will come back if there is certainty of outcomes and growth.

I am hoping whatever regulatory changes are in the pipeline should happen swiftly and with clarity, and then the industry is largely left to do their own thing and focus on growth. There could be some tinkering here and there, but not paradigm changing.

When one belabours regulatory changes, an overhang is created. When there is a lot of news flow on what’s coming, people defer investing decisions.

nidhi@outlookindia.com