"With the background of this high awareness, companies have to focus on creating a transparent environment and offer solutions to the customers suiting their needs and requirements"
Deepak Mittal, MD and CEO, Edelweiss Tokio Life, talks with Priyadarshini Maji in an e-mail interview about challenges and opportunities in the insurance space, online and offline plans and how digitalisation is changing the industry.
1. What are the key challenges and opportunities in the insurance space currently?
Given the low penetration rates, there is quite a large opportunity that exists in the insurance space in India. The increase in FDI limit to 49% has also provided access to capital which can aid further growth in this space. There have been some concerns in the past around mis-selling and companies are now adopting a need based selling approach to cater to the customer requirements. Post the change in product regulations, we are now seeing more customer-centric products. Insurance, however, still has a small share of the customer's wallet in terms of allocation but recent trends indicate that pure risk products (term, health) are gaining ground and that should yield positive results in the long run.
2. At present, all insurance companies are revamping their online processes. How do you plan to grow digitally?
Online space has created exciting opportunities and although current share of the online sales is quite small, this space is growing at a fast pace. Since there are no intermediaries involved, this has forced the companies to revamp processes and make them more customer friendly, intuitive and simple and of course are cheaper.
Our focus in this area has been to create online specific products (we started with MyLife+ and have recently launched TotalSecure+, a comprehensive term plan offering protection against death as well as critical illnesses) and a platform to provide a superior experience to the customer.
In addition to online, we are also focussed on creating digital tools for our distribution partners to assist them respond to customer needs and service them effectively. Similarly, our approach is to create similar advisory tools for our customers as well and the launch of our website and the customer portal we believe is a step in that direction.
3. Within online plans, do you have both Ulips and endowment plans?
We do offer ULIPs and endowment plans online. In ULIP, we offer Edelweiss Tokio Life - Wealth Accumulation Accelerated Cover. Our funds have been consistently rated 5 stars by Morningstar. Coupled with low charges, this is can be viewed as one of the most competitive investment plans for people aspiring for higher returns.
In endowment, we offer Edelweiss Tokio Life - Wealth Builder. It provides best in class guaranteed returns with the option of limited premium paying term.
4. With regards the new policy by Edelweiss Tokio Life, TotalSecure+ - is the policy available both online and offline?
Edelweiss Tokio Life TotalSecure+ is available only online. It is one of the most comprehensive protection plan in the market and one of the most competitive as well. Most important feature is the accelerated critical illness benefit. We realised that critical illness is a bigger risk in today's world and results in substantial loss of income. It also has various other features and flexibilities which can cater to needs of all client segments. Continuous policy term, various benefit payout options and multiple premium payment options we believe will soon catch attention of people and become a mass appeal.
5. Is the claim ratio a lot higher for online plans?
We have not yet observed enough claims, and hence it is difficult to conclude a trend. However, with the limited experience we have observed, we find the online claim experience is better than offline.
6. How is digitalization/technology changing the industry?
In today's connected world, the customer has the option and ability to make an informed choice pertaining to his products through online research. With the background of this high awareness, companies have to focus on creating a transparent environment and offer solutions to the customers suiting their needs and requirements. Technology has also started changing how the customer is being serviced or expects to be serviced. This needs companies to have the ability to serve the customer at his time and convenience and through his chosen medium thereby requiring Omni-channel servicing capabilities round-the-clock.
Over time, we expect that this will drive the industry to be even more customer focused and will lead to many self-service options available to customers, simpler products and processes that help customer choose solutions based on their needs and requirements (self-driven)
7. What are your growth expectancy numbers in the next 5 years?
We have been one of the fastest growing players in the industry with a growth rate of 40-50% over the last 3 years. We have been able to achieve this growth through our focus on providing superior need based products to our customers on the back of strong investment performance (all our ULIP funds are 5-star rated by Morningstar and we have one of the most competitive guaranteed returns products in the market), with distribution across geographies and channels and with a focus on providing superior customer experience through the life cycle. We continue to focus on growth and long term and hope to maintain this growth rate in the medium term.
8. Why is the persistency so low for the life insurance space?
Do you see the situation improving in the near future? Persistency has been a particular challenge for the industry. The causes range from lack of operational processes to lack of customer engagement. Since insurance is a low involvement product over the product life cycle, insurance companies have struggled to engage with the customers on an ongoing basis. Past legacy of poor customer experience, not understanding customer needs etc. have added to the issues.
The focus on persistency has improved across the organizations and there has been an overall improvement at the industry level.
9. Why should one buy pension plans from the insurance industry?
Insurance pension plans instil a sense of discipline that is required in retirement planning. Insurance pension plans come with annuity options which make sure that retirement money is utilised periodically, the way it is supposed to be.
Also, insurance pension plans come with a lot of choices. Customer can choose between traditional and ULIP plans based on their risk-return preference. Within ULIP also, customers have the choice of various asset classes. They can also systematically transfer their funds between these asset classes depending upon their risk profile.
Moreover, all insurance pension plans come with capital guarantee which is essential for any pension solution.
10. According to you, what are the concerns for the Indian market, which you would want the regulator to address?
The regulator has been taking a lot of steps to structurally address the issues. We have already seen a lot of changes around the products leading to better solutions for the customers. Enabling distribution channels has been another focus area which has been addressed although it will take some time to bear fruits. The regulator is also focussing on driving expense management and control across the organizations to protect the interests of policyholders. There is also been a digital push in line with the government's focus on Digital India.
We expect the regulator to continue focussing on growth by enabling the environment appropriately while keeping at heart customer interest.