Life cos on a product-launch spree

Life insurance companies are lining up new products across all categories, much ahead of the tax planning season (January-March). These launches have been combined with new advertising campaigns. Even companies that have not launched new products have been advertising as a re-branding exercise.

On Monday, HDFC Standard Life launched HDFC YoungStar Super and Pension Super, while ICICI Prudential Life launched ICICI Pru Pinnacle. IDBI Fortis is set to launch an endowment and money-back plan on November 18. Aegon Religare, IDBI Fortis, Max New York Life and other insurers have also launched products between September and November 2009.

Usually insurance companies get active with advertising campaigns and launches post December, to target the customers who wake up to taxation blues toward the end of the financial year. But why are insurance companies this year on an adrenaline rush since September?

Sujit Ganguli, senior vice president & head — marketing, ICICI Prudential Life, said, “Research shows people start planning their tax-saving investment options between December and February. However, we also realised that the entire salaried class has to complete their tax planning by end of January or early February and hence they need to start planning well in advance.”

He said, “Our campaign was launched in November since it typically takes 2-3 weeks to build awareness. We wanted to effectively tap the salaried class by establishing top of the mind recall for the brand.”

Recently, Bajaj Allianz used cricket to promote its child plans via two campaigns — one in October and another in November. Aviva has been running its ‘Education is Insurance’ campaign featuring Sachin Tendulkar, since September. Aegon Religare launched the ‘There is a star in every child’ campaign, while ICICI Prudential Life initiated its tax-planning advertising campaigns recently.

In October, DNA Money had reported that insurers that spent Rs 406 crore in the whole of 2007 had already spent Rs 906 crore between April 1 and October 20, 2009.

Apart from the tax pitch, insurers said that regulatory developments were also a reason for the increasing product launches. Paresh Parasnis, principal officer & executive director at HDFC Standard Life, said, “We saw consumer demand for these products.” He also agreed that regulatory developments have prompted insurers to launch more products during the current period. 

The Insurance Regulatory and Development Authority (Irda) has notified caps on charges for all new unit-linked plans launched after October 1, 2009 and all existing products are to be re-filed with lower charge structures before December 31, 2009.

“We would see more launches,” said a top official of another insurance company. “Just as it happened with the mutual fund industry before August 1, 2009 (since when upfront charging of entry load was barred), the insurance industry too would see launches and higher sales before the charges are brought down on all products by January 1, 2010,” he said.

However, Sanjay Tripathy, executive vice-president and head — marketing & direct sales, at HDFC Standard Life feels that ad campaigns and product launches are not necessarily time or need-based. “We advertise round the year. We do need-based selling and a need can arise anytime and not just during the last three months of the financial year.
Of course, 30% of the business happens during the last three months as investors get active then and  parallel campaigns help the distributors.”