Kshitij Jain, CEO, ING Vysya Insurance, provides perspectives on the growth potential for the insurance sector and key trends.
Where is the life insurance industry poised at present? What potential does the future hold?
From a macro perspective, the industry is playing a very important role towards the GDP, which is in excess of 4.5% today. Life Insurance industry is managing assets upwards of Rs. 8 lakhs crore, and is an important source of funds meant for long term financing of the economy. The industry has also generated employment (direct & indirect) for over 30 lakhs of people. With India's population showing a savings rate above 30%, life insurance remains an attractive, safe and a long-term savings and investment option. The growth of the industry over the last decade can easily be attributed to a robust policy mechanism administered by IRDA and the active role that the private players and LIC have played in harnessing its potential.
However, I believe it is important to view the industry over a long term, where a decade is not long enough. There is tremendous scope in the market, with the industry looking at growing over 12% - 15% in the coming years.
Currently, the Industry is going through a short-term decline in top line. The policy changes brought about by IRDA in September last year are important customer-centric changes for building long-term attractiveness and confidence for the industry. However, it has had an impact on all players, who are emerging from the decline seen in the second-half of last financial year. We will see a lot of Product innovation and customer service take shape as a result of these changes.
With some more expected policy announcements on bancassurance, pension category of products and IPO norms, along with entry of new players, we are sure to see a lot of excitement in the industry. I believe that the industry will register a growth against last year in the second half of FY 2011-12.
What are the key trends visible over the past few years? What are the factors driving the demand?
The last few years have been very dynamic for the industry, which has continued to show growth trajectory and attracting investments. While there are short-term blips in the growth due to policy changes, the fundamentals of the industry are in-tact.
There have been several reasons for the growth in demand that we have seen. The private players have invested in increased distribution network, including in agents, bank partnerships and other referral arrangements. There has also been enhanced customer awareness about the category. Increased transparency norms by IRDA have also contributed to customer confidence. Finally, attractive product innovation has been a factor contributing to driving demand. All these factors have contributed to the life insurance penetration grow multiple times, from 1.2%, a decade ago to between 5% and 7%.
What are the types of life insurance plans finding favour with people?
We have seen a shift towards protection and traditional long term savings product and preference for guaranteed-products. ULIP products, especially as single premiums, remain attractive for customers with their enhanced transparency.
ING Life India has one of the best death claim records in the industry, with its death claim rejection amongst lowest. How has this been achieved?
Strengthening our customer-centric service proposition has been a priority within the company as well as streamlining our claims settlement process to make it convenient for the claimants. Being amongst the top 3 is a significant achievement, and we are proud to be setting the standards in the industry. Additionally, we have put in significant efforts towards improving all round customer service, and today have an ISO Certified service process for all our branches and our centralized customer service operations. ING Life India is the first company to achieve this milestone.
What does ING Life India's healthy bonus track record reflect and how?
We have declared healthy bonuses on our traditional products over the years. This year too, we have been able to thank our customers with healthy bonus. It confirms our commitment towards offering long-term savings and protection solutions, and strengthens our position as a player with strong traditional product portfolio and attractive bonus declarations.
This is achieved as a result of our focus on building efficiency and our investments towards strengthening our product and investment management functions.
ING Life India recently announced a growth of 13% in Q4 of FY 2010-11 by weighted individual premium, beating the challenging industry environment and emerging as one of the fastest growing company in the quarter. What have been some of the key growth drivers?
Our solid results have come at a time when the industry has seen steep decline in new business. The industry challenges of Q3 (FY 10-11) continued in Q4, recording decline by 40%* in weighted new business premium for the private players versus last year. In this context, ING Life has significantly outperformed the industry by recording a growth of 13% in the same period.
The good results have been achieved because of our sharp focus on building efficiency, offering balanced product portfolio and keeping strong check on our costs. We are well-placed to continue this positive momentum, and are aiming to achieve a premium income of Rs 2,000 crore in FY 2011-12. We have invested towards strengthening our product and investment management, partner relationships and building efficiency. These are showing positive momentum.
What are the key challenges facing the industry at present and how do you plan to take them on?
The past year has been a challenging year for the industry, wherein we witnessed the impact of regulatory changes. Players in the industry had to re-adjust to the new rules, and this has led to dip in growth.
However, the long-term growth story is intact, and we will see the industry respond positively.
ING Life was amongst the few established players in the industry to achieve a growth post the implementation of the new guidelines. This has been possible due to our balanced mix of traditional and Unit Linked products.
Our effort is to continue the momentum we have set, focus on building efficiency, customer retention and delight.
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