What are your views on this year's significant developments in life insurance? What will be the major developments next year?
In 2018 we have seen robust growth across the entire sector. The industry has grown 10-11 per cent. We expect this to sustain and maybe do a little better in the second half of the financial year.
In 2019, I expect similar or maybe better growth because economic activities are picking up on the ground. Product innovation across categories is also seen, and the third, and the most critical thing that is happening in the industry, is around digitisation - more and more companies are adopting digitisation and looking at a digital way of selling.
The industry has seen good regulatory support with the new product regulation draft, which is already out and should help open the pension space, as well as VIP (Variable Insurance Plans) products. Those products should also come in handy and should help fuel growth. Our regulators have offered clarity around sandboxing and we will see some innovation there as well. (Sandboxing is a process in which the regulator allows life insurers to file some innovative products or launch interesting processes. Some leeway is given and these remain outside the existing regulations. The product runs for a limited period. If it works out, the product is allowed to go live.)
What is the status of wearable technologies being introduced in life insurance and their role in underwriting?
That is going to come in. If you ask me: Is there anything substantive yet? Then it is a, no. As I was mentioning about sandboxing earlier, these are some of the things we are discussing. Now that guidelines are clearer, we can expect experiments with wearable technologies.
We have seen emergence of disease specific plans. Which customer segment is finding this product attractive?
Currently, many of these customers are people who are well aware, either because they have read up or perhaps have people with illness in the family. Usually, this is the kind of person who would cover himself or herself for critical illness. Usually people who have taken a base health reimbursement product from the general insurance side, and realise that there are some limitations of the reimbursement product, tend to add the specific illness cover. Our statistics reveal that this type of well-informed customer resides usually in metro and tier 1 cities.
At present, we just want to see how our current critical illness plans are doing, and then maybe add. It is a little difficult to say (for sure) because we don't do this very often as we do one major product in a year and then for a period of time you watch it perform and then bring in the next one.
What kind of digital-only product growth has there been?
We have had tremendous success. We launched our Ulip (unit-linked insurance plan) for the online market, called Bajaj Allianz Life Goal Assure, in February 2018. In just nine months, we clocked 16,000 policies, and collected about `150 crore as premium on an annualised basis. In entire 2017, we collected about 50 crore. The reason for the product clicking is that we had the best innovation around return of mortality charges; a good hook for customers. Our fund management capability is also fairly strong.
In terms of customer segmentation, I think we've actually seen a very good spread. While metros, of course, remain strong, because of our brand being present in tertiary and secondary towns, we have seen some uptick there as well. It is spread well across the country. In 2018, our digital-only products were approximately 10 per cent of our entire product mix, which is quite a large number, as most companies clock only 1-2 per cent.
What kind of cost reduction has you new Ulip gone through? What is the overall cost at present?
The cost (all charges put together) has come down significantly versus 7-8 years ago, when the costs used to be high, say, upwards of 5-6 per cent. With the new guidelines from Irdai (Insurance Regulatory and Development Authority of India), the costs have gone down to 2.5 per cent. Our Ulip, for example, has around 1.5 per cent. So it's much more cost effective and competitive. Combine that with the positive returns on the investments - 3-4 per cent more than most competitors, over a 5-7 year period. Overall, it holds a lot of benefit for the customer.
What is the status of portability in life insurance?
In life insurance, it (portability) hasn't happened yet. That's also because when people buy life insurance, they really look at a brand before deciding what to do. With the kind of transparency now, a lot is shared. At the time of on-boarding and at the time of buying a policy, too, a lot is shared and mentioned. Everybody has been able to make informed decisions.
When can we expect claim processing to be available completely online?
It's moving very quickly. Online submission of claims is there, and payments are based on NEFT (National Electronic Funds Transfer), so that's not much of an issue. The only problem sometimes is that with an early claim, you want to get an investigator because many instances of fraud still take place. Other than investigation, the claim process will soon become digital.
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