In an exclusive interview with Cafemutual, G N Agarwal, CEO of Future Generali Life discusses the reasons for the decline of life insurance industry and shares his plans for the growth of his company.
With the life insurance sector declining for the second consecutive year, what is your strategy to reduce its impact on the Future Generali Life Insurance?
Many life insurance companies including ours are going through tough times. But we are optimistic of revival. There are many reasons for this decline in life insurance business like market volatility, revision in commission structure of insurance agents, changes in existing products and regulatory changes. However, insurance business needs some time to adjust and I am confident that in less than six months, we will start growing.
How has Future Generali Life Insurance been performing?
We are on a declining track for the third consecutive year. As we are new in the industry, we need more time to grow. We have witnessed a cumulative decline of 15-20 percent in the last three years. However, we are working on some new products and also seeking approvals from insurance regulator for some pending projects. We are very hopeful that these new products will create a major difference in the life insurance sector.
What are your growth plans?
We are focusing on strengthening our existing distribution force and also recruiting new agents. We plan to provide professional training to the new agents. We have hired many agents in B-15 cities so as to strengthen our reach in small cities. We have also started earning revenues from tier II and tier III cities. Our main aim is to create presence in every nook and corner of the country.
How has been the response from mallassurance business?
We are the first in India to initiate mallassurance business. Mallassurance is selling of insurance products through retail chains in malls. As we are a subsidiary of Future Group which runs various retails outlets like Big Bazaar, Pantaloons, Food Bazaar etc, we are well positioned to operate this model. The response has been good and we are confident of getting more business from this segment.
Why do ULIP products linked with mis-selling?
Like many financial products, the ULIP products have also underperformed due to continuous volatility in the market. Many investors have lost their money and faith in the ULIP products. At the same time, a few investment advisors, who were recommended ULIP to their investors, have changed their stance towards ULIP products due to the decline in commission structure. That’s why a myth of mis-selling has developed in the market for ULIP products.
ULIP products are completely dependent on market conditions. It’s not a point of mis-selling, it’s just a matter of market volatility. If market condition had been good then nobody would have dared to link ULIPs with mis-selling.
For the last few years, the performance of ELSS has also come down due to volatile market condition. Hence terming sales of ULIPs or ELSS as mis-selling doesn’t make sense.
Is it fair to compare ULIPs with some MF scheme?
No, both are regulated and operated by different bodies. ULIPs has two parts- savings and risk cover. The saving part might be compared but risk cover cannot be compared with any financial product.
What are your expectations with the coming days in life insurance business?
I am very optimistic that conditions will improve in the coming days. I have lots of expectations with the IRDA’s new Chairman TS Vijayan, who is from insurance industry. He can better understand the needs of insurance companies as well as policy holders.
The insurance sector is very hopeful of getting some boost from government in terms of increasing investment cap of FDI in life insurance sector to 49 percent.
What do you think about Standard Proposal form?
The standard proposal form is good for the interest of policyholders as well as insurance sector but it needs to be less complicated. A 10-12 page format is just a waste of paper and time. Many people may not prefer to give their sensitive personal data especially financial details. The LIC itself sells around 5 crore policies in a year. If for single life insurance cover a 10 page proposal form is filled then around 50 crore paper will be used by a single company.
