Online media playing a prominent role in Information Dissemination
11^th Mar 2010

 

Q. Implying you cover your upside risks and cost of leaving your down side risks hugely unprotected?

No it is not a toss up between saying this that by doing this investment am I only investing but not taking care of the down side risks? On the contrary if you do all this then you are already addressing all your downside risks, and not bothering much about upside risks. So you say that you can manage investments in other instruments but where else you will get these returns and the discipline. For instance take ULIPs - everybody in the market will tell you that if you invest in equity or in mutual funds, the market will give you good returns, provided you stay in it for a longer time. Mutual Funds also see maximum redemptions when markets are down, whereas in life insurance where surrender value is lower and other thing is, you are encouraged to stay longer in a disciplined manner.

Coming back to your question – yes you are underinsured. In our country people don’t start insuring sufficiently at a young age. You start at any age, for some time to get the proper coverage, you have to pay premium which eats into your disposable income. The earlier you start it, the better you will be later on, because the proportion that your disposable income will drop as the time passes on. So if people start late, they get limited by the coverage.

Secondly we tend to say that we want to set aside some funds for our rainy days.
Thirdly people are also taking loans, so they already have considerable amount of liability on them, so they like to stagger the term element. Finally when people total up that how much term life cover that is provided by your employer also but if one leaves that job, he becomes underinsured.

Also it is about mindset, people don’t want to compromise on comfort factor of life.

 

Q. The trend is coming back to move towards traditional plans. Please comment.

ULIPs had lost their sheen for sometime when markets were down but now ULIPs products have come back to surface. We did not see any decline in ULIPs but yes people do enquire about traditional products and it is more these day, the decision to go in for is still in favour of ULIPs.

Q. What is your take on controlled distributor margins?

You are referring to Swaroop Committee recommendations and I don’t think we are ready for that kind of commission structure. Reason being the insurance is still sold, and the kind of knowledge that an agent needs to have, the comparisons that he needs to make, the kind of persuasion that he needs to do and the number of contacts he has to make with the clients, require lot of effort, knowledge and skills on his part. His time is money.

Besides, we need huge distribution network in this country if we have to reach the final level of masses that we are talking about. That can only be done if the agents are remunerated considerably for the efforts that they are going to put in. To say that an individual agent can sufficiently negotiate, with buyer of insurance, where insurance has to be necessarily sold, I don’t think they are able to negotiate the sufficient amount. And if they do not get the fair remuneration, then what will happen that the quality of knowledge that they built up and the dedication they have, will tend to recede.

Then this will lead to less sales of insurance thus limited amongst reach of people.

And what we are talking about is only first year commissions. These are long term products and consistently grow if you go long term. The overall commission that an agent gets is insignificant, as he goes on servicing that policy endlessly. Life Insurance Council took out the statistics which says that the total commission paid is nearly 6%, which is hardly any cost to reach out such huge number of people across the country.

Q. What is the Future Generalli’s take on the industry and what are its USPs that it brings to its customers?

As an industry there is a huge opportunity, which needs to be tapped. It’s not about the metros only but we need to reach out to the masses. Then there is a huge need to demystify insurance products to make them simpler, so that people understand them better. Our philosophy is to provide total protection – life & non life, to both individuals and enterprises, removing volatility of their balance sheets. This is where our focus lies, to reach all masses with our various protection plans. We are also ready to give them maximum options, in terms of how they can reach us, and rendering excellent services.

An innovation that we have done is that we are reaching customers through malls. It is about choice, it is a way of making it more accessible, for a client to be able to reach us.

On the platform of flexibility and on the platform of freedom, we are designing our products accordingly. We have recently come up with a Future Freedom product, it is completely oriented towards providing more flexibility towards the investments. We have also come up with dynamic growth fund which doesn’t even have restrictions of equity and it is up to the fund manager to give in his expertise and get maximum returns.

Though lot of customer acquisition comes from malls but will take time as mall insurance is yet to stabilize. The ticket size is small but it is possible to acquire a customer in the mall.

Q. What has been your experience with retail customer of insurance?

I think retail customers of insurance are still evolving. We continue to see that whether it is low ticket or high ticket - where they are interested, whether one geography is interested in a single product or will bundling products help. It certainly gives us the understanding that what kind of person is visiting the mall which further translates into what kind of insurance he needs and that needs time to evolve.

 

Q. A number of life insurance companies are getting into health insurance. Do you have any plans like that?

Yes, we will be getting into that.

 

Q. Future Generali has common agents for life and non life both? How does that help?

From the positioning perspective, we talk about total insurance solutions, like protecting individual’s balance sheet which has to be done from both ends - from a consumer side it benefits because he has one stop shop – one person providing you entire gamut of insurance solutions and you have Future Generali’s common platform that you have to deal with. The agent extends the values of the organization and offers uniform service parameters across the country. All together the overall proposition is complete to the customer. It gives them the opportunity to have much deeper relationship. In case you have higher product density then you have much bigger probability of arriving at moment of truth, so that you can really say that this is really good rather than it is just a perception, which gives word of mouth spread. It keeps us more conscious so our service always remains the plus one, overall it is a win-win situation.

It is a fact that Future group is a well accepted brand.

 

What role sites like ApnaPaisa can play?

Information disbursement is an important role which you are playing. More than price comparisons it is products and features comparison, which will be key to site like yours. Going forward, people learn to see differential returns on different products. These kind of facilities will really grow into independent analysis providers, which will be much more unbiased, but will convert into transaction or no, that I am not sure.

 

About Future Generali »

Future Generali is a joint venture between the India-based Future Group and the Italy-based Generali Group. Future Generali is present in India in both the Life and Non-Life businesses as Future Generali India Life Insurance Co. Ltd. and Future Generali India Insurance Co. Ltd.