You have a high number of lives insured, how was this achieved?
As a company, we pursue a multichannel distribution strategy. So we have various channels like agency and online to distribute our products, and each channel has its own advantages and disadvantages. We believe that it is best left to the customer to decide where they want to buy our products. We have equipped the distribution to be able to cater to the needs of different customers. We have also gone to Tier II and Tier III centres, where we have managed to make inroads in terms of the number of lives insured. I feel that instead of gauging insurance penetration by looking at the premiums, one should look at the number of lives insured, a factor where we are way ahead of the others.
How much of this growth is to do with agents, the human interface, when selling a policy?
While different distribution models exist, the role of agents cannot be undermined. But, customer expectation from agents is very high. For instance, a customer will expect the agent to know of stock market movements, crude prices, and the impact of global financial issues, like the Greek crisis, on India. The reality is very different; not all agents are equipped or learned enough to know all these aspects.
Yes, one can go through the wealth management route to have more trained and equipped agents who will have the desired expertise. But, such agents need to be trained accordingly, the cost for which will get built into the product.
Do you have any rules that determine what kind of policies are sold by what type of agents?
At some point of time, the thinking was that we would allow only some agents to sell Ulips, but that is no more the case. Instead of checking on who sells what kind of policy, we are internally debating whether to segment customers into who will be sold Ulips and who will not. In this way, if we have someone from a smaller town considering to buy a Ulip, we make sure the customer understands what he or she is getting into. This is a far better way to check on possible mis-selling.
So, what is the product mix between Ulips and traditional plans now?
We are around 55-60 per cent in Ulips, which we are happy with. You should also factor in stock market movements when it comes to customers wanting Ulips over traditional plans.
What is the average size of a policy that gets sold? Our average ticket size of a policy is Rs. 30,000 a year. We have also found that most agents sell insurance products part-time so, on an average, an active agent sells two policies a month. The commissions are defined and in case of Ulips they are between 6 and 10 per cent. So, on the sale of a Ulip, on an average, an agent is making Rs. 2,500-Rs. 3,000. This is also one of the reasons why agents work part-time. In contrast, the commission is higher in case of traditional policies, at times even twice of what one earns through a Ulip sale. The persistency of traditional insurance plans is far greater than that of Ulips.
How has the experience been on the digital front?
Online selling has its limitations, as there is still need for an interaction at some stage. But, we are equipping our agents and distributors to use technology. Let me cite an example: a customer spells out the need for a plan that will fund his 10-year-old son’s education seven years later. He will then get into discussing the current engineering college fee with the agent to arrive at how much he will actually need.
Say, the fee costs Rs. 1 lakh today. The agent will explain the impact of education inflation and why the customer will actually need more by the time his son is ready for college. In the past, the agent would seek another appointment to come back with such details, but now with mobile devices at their disposal, they can instantly share what would be the cost involved. Therefore, the turnaround time has gone down.
How do you manage your records and their digitisation?
By law, you need to keep records for seven years even after the closure of the contract. For us, the record keeping is a two step process— once before the customer becomes a policyholder and then when he becomes one. In the first stage, we get a proposal filled, which is physically stored at the branch. The written document is scanned and precautions are taken to check customer privacy. Then it is digitised. Meanwhile, the proposal undergoes scrutiny on whether it needs medical underwriting or not. Then it goes into our archival facility, which is currently spread at four locations. In most life insurance cases, the end could be either due to death or maturity. In case of death, we need to maintain records so that we can defend if, at a later date, someone claims to be the beneficiary and is not the person we have paid out to.
Has the digital front played a role in increased persistency for the company?
We are able to contact 85-90 per cent of our customers on their mobile phones or reach them by email. So, we send them regular updates, reminders and information. We have also introduced a policyholder card, which has ready information on the agent who sold the policy, its details, our contact numbers and website links. Considering most people buy a policy and stack it with other documents and forget, this attempt is to provide readily available policy details to them.
Any new products that you are planning to come up with?
We have filed for a health insurance product, which we feel will add value to both existing customers and new ones. Since it is a health plan and may require underwriting for a greater number of customers, we plan to segment agents into who will sell it and who will not. The reason is that such a product requires greater engagement and explanation, something that not all agents may be able to handle. We are awaiting IRDAI approval.
