What are your key priorities?
We don’t believe in achieving targets. Instead, we focus on growing our business by creating value. Hence, we are following a business model called ‘trust surplus model’ through which we aim to build trust among policyholders about our brand, products and services. The strategy may not pay off in the short term but I am sure this is a very promising strategy to achieve long term sustainable growth.
Agent productivity is a major challenge for the insurance industry. How do you deal with agents with low productivity? What needs to be done to increase productivity of agents?
Many agents find it difficult to sustain their practice and typically such agents give up after the initial few years of taking up the license. The problem here is not their inability to sell insurance policies; instead, it is due to their concentrated approach. Also, a lot of agents still depend on traditional channels to transact which is time consuming. These agents are missing out on an opportunity to service a large number of clients.
Our agent training programs aim to address these problems. We train our agents on how they can adopt ‘community approach’ to grow business. Instead of reaching out to a single client at a time, our agents connect with a large number of people through a community or cluster. They conduct investment awareness seminars to connect with these people.
Secondly, we don’t set any targets for our distribution partners to sell policies. We want them to counsel people by understanding their needs and goals. Even if their clients need other products like mutual funds, we ask our advisors to help their clients with such products too.
Finally, agents can increase their productivity by using the online tools provided by us.
How do you control mis-selling of your products? What checks and balances have you put in place to ensure that your brand does not get hurt?
To curb mis-selling, we follow a ‘Capacity-Productivity-Sustainability’ (CPS) model. The idea is to move from just measuring business performance to measuring business health.
The capacity of agents can be increased through knowledge enhancement. We deliver intensive training programs for our agents covering topics like client engagement, business development and practice management.
As I mentioned earlier, productivity can be increased by a focused approach and digital tools.
Achieving a sustainable growth is our key priority. We don’t look at how much business an agent generates. Instead, we look at other parameters like customer complaints and persistency ratio. These two parameters show the quality of an agent. Both these factors are key to achieve sustainable growth and reduce mis-selling.
IRDAI has notified that insurance companies will be held responsible for mis-selling of their agents. In fact, the regulator has mandated that they can impose a fine of up to Rs. 1 crore on such cases? How would this rule affect insurers?
This will ensure that we appoint serious agents. So far, many companies have recruited agents for the sake of numbers. However, the new regulations will ensure that only serious agents remain in the insurance distribution business.
Recently, IRDAI has come out with a draft regulation on commission of agents in which it has proposed to increase the commission structure of agents in some categories. In addition, the regulator has proposed to reward intermediaries with benefits like insurance cover, gratuity, office expenses, promotional gifts etc. How will it impact the industry if it is implemented?
The insurance regulator has proposed to increase commissions in term plans. It is a welcome move. These products are very essential for a majority of people. Currently, term plans contribute only 7-9% of life insurance business which needs to go up.
Also, the penetration of insurance in India is low. Such low cost products will help the industry expand its footprint.
The new IRDAI regulations on appointment of agents has simplified the procedure to shift insurance companies for agents. What would be the impact of this move on private insurers? Do you expect to see agents migrating to private players?
We could see some migration towards private insurers as the agency force of private insurers is very low as compared to the state owned players. However, the industry should focus on attracting new agents. The life insurance industry needs a large number of distributors to cater to people.
