Anisha Motwani, director and chief marketing officer, Max New York Life Insurance, spoke to DNA about various challenges and opportunities.
Tell us about the general trends in the life insurance industry and going ahead, how do you see the growth?
Though the Indian life insurance sector is currently grappling with economic and regulatory challenges, there is no doubt that in the long run the sector has major growth opportunities. The industry will be contributing to the growth of the economy by channelising small savings to infrastructure development. The economic growth will result in a larger proportion of Indian population moving into middle income group with higher disposable income. While the insurable population in 20-60 years will continue to rise, with increasing life expectancy, the number of people in retired years will also increase substantially for a larger portion of the next few decades.
Need for planning for a child’s future has emerged as one of the important triggers over other financial needs over the years. Women as buyers of life insurance are another important trend which is in line with their growing importance in society. Of course, life insurance will continue to provide solutions for long-term savings and protection for other life stage needs.
I am sure that over the next two decades there will be a significant improvement in the level of financial literacy of Indian consumers and the knowledge of intermediaries. This will lead to an expansion in Indian life insurance sector and its importance as a long-term financial instrument in the financial plan of every Indian household.
Your opinion on product design guidelines and its overall impact on the industry?
New product designs are geared towards moving the industry to long-term and protection-oriented products. Product design also has an impact on distributors’ compensation which is likely to have a long-term impact on life insurance industry. Members of life insurance industry are in consultation with the regulator on these guidelines.
Will it be a challenge for life insurers to re-file products to comply with the new regulations?
The effective date of implementation of product design changes should ensure supply constraints do not crop up and impact sales. Reasonable time for operational readiness, at least for the first set of products, is important.
Do you see a revival in pension market after the new, revised guidelines get finalised?
Pension products constituted 23% of the life insurance market in India, but post revision in pension products guidelines, the share shrank to just 3%. Pension is an important category given the fact that there is no government sponsored social security scheme and people need to build their own retirement corpus. Life Insurance being a long-term product will always form an important component of retirement planning. If the new guidelines promote well designed pension plans, there is a possibility of pension products picking up in the market.
What are the challenges you face in distribution channels?
One of the main challenges that have remained over the years is finding the right kind of people who will look to build a career in agency. The life insurance industry offers a lot of opportunities for people who want to start meaningful careers as it is a service oriented business with huge earning potentials. Lately, it has become more difficult, as the product guidelines have not been sensitive towards the effort-reward equation for life insurance intermediaries. An average agent earns about `3,000 a month with only a few top ones earning enough to make it a full-time career.
Your views on bancassurance norms. When are you expecting these to be rolled out?
The new guidelines suggested that banks be divided into three zones. In my opinion, you should not break up a bank. The banks generate business for the life insurance industry and the objectives of this tie-up with banks can be achieved by increasing penetration through efficiency of bank branches and providing consistent service product and experience across geographies. The guidelines are still under discussion and we have shared our views with the regulator and industry bodies.
Any new strategy are you planning to come up with the new foreign partner?
We already have a well thought-out strategy in place which will be unchanged. We will continue to strengthen our key differentiators – quality agency distribution, diversified distribution model, products to drive long-term savings and protection, customer centric approach to business to ensure high customer retention while improving efficiency and productivity for a sustainable profitable growth. Our prime focus is to ensure a seamless transition for our customers and welcome Mitsui Sumitomo Insurance to our business.
What is the current product mix for the company and will you be changing it?
Max New York Life Insurance has acomprehensive product suite for long-term savings and protection needs of our customers.
Endowment and money back savings form an important component of our product mix due to non-availability of full range of ULIPs, including pension plans. Our product mix strategy will continue to be guided by the customer needs.
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