Insurance companies have a major role to play in creating awareness about the product they offer for customers. Adequate protection needs to be ensured during the sale of policies. The implementation of need-based selling is a step taken in the right direction by the insurance regulator to curb mis-selling and ensure sufficient coverage for the policy holder. Deepak Mittal, managing director and chief executive of Edelweiss Tokio Life Insurance, speaks to Aswathy Varughese about the necessity of product awareness and the role of insurance advisors.
How do you see the growth potential for the industry in coming years?
While the last year has seen slowdown in life insurance premium collections, the industry has grown at 25% for the past five years. And we believe that in the longer term, the industry will continue to show robust growth. Currently, life insurance penetration and density in India is quite low in comparison to the existing potential. The number of life insurance policies in force increased nearly 12-fold over the past decade. The total annual premium is likely to increase from about Rs1.2 lakh crore in 2010-11 to about Rs10 lakh crore in 2019-20.
What about your distribution channel set-up?
We are expanding our presence across the country in a phased manner. We are currently focusing on our organic agency channel and opening branches and appointing personal financial advisors who are being trained to offer products to customers after understanding their needs. We are also utilising the existing Edelweiss network and offering products to the existing retail customer base of Edelweiss Group. By FY15, we aim to cover 5 million lives and create insurance awareness among millions of Indians across the country.
Average premium size and no. of polices sold so far?
Till date, we have sold over 3,000 policies and the average premium size of our policies is around Rs30,000.
What is your take on the recent guidelines on need-based selling of insurance policies?
We believe this move by Irda is an effort to make the industry more customer-friendly, and once implemented, it will direct the channels of distribution towards becoming more transparent and focus on the needs of customers, thus improving sales practices.
Very often, a customer buys an insurance product without actually understanding the need that it will cater to. We aim to bring in a differentiated approach to providing insurance advice focussed entirely on the customer’s needs. Our entire product range has been designed keeping in mind the needs of customers and our insurance advisors are being trained to offer customers products after analysing the customer’s key needs.
As a new player, how do you see the challenges in the industry?
A key challenge, which is also an opportunity for the industry, is insurance awareness or penetration of insurance, which continues to be low. While the scenario is beginning to change in some urban centres, a lot more needs to be done. To create awareness, activities that connect with people need to be carried out at a local level. We are doing this with the help of our employees and advisors at various locations where we are present. Second, protection as a need has not been addressed specifically in Indian market. Most of the population, which has insurance cover in some form, has bothered very little to check the sufficiency of the same. We wish to address this problem through our need-based selling approach. One of the important needs we have identified is ‘income replacement’. Under this need, we would scientifically calculate the insurance coverage requirement of a client and offer solutions to bridge the need gap.
Your view on bancassurance guidelines.
The guidelines have been encouraging for the industry which may benefit further from the extensive reach of banks. Currently, sales through bancassurance channel are growing at a healthy rate and some of the companies have already started to gain out of their partnerships with banks. The regulations may forge a few more relationships and widen the insurance market, which would help us reach some of the unexplored regions/areas as well.
Customers will benefit from such partnerships and would be able to avail of more competitive product offerings and better service.
What are your future plans?
We are committed to expanding the reach of life insurance in India. In the current fiscal, the company plans to set up 22 branches in 16 cities in the North and the West, and this would expand to 64 branches by FY14 and 75 by FY15 across India.
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