The spread of internet will present a huge opportunity for life insurers
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"In 2016 BFSI industry can come together to create the best products"

The spread of internet will present a huge opportunity for life insurers to turn conversations into connections

V.Viswanand, Senior Director and Chief Operations Officer, Max Life

The spread of internet will present a huge opportunity for life insurers to turn conversations into connections The year 2015 has been interesting for the Indian life insurance industry. Overall, the private sector has grown 16 per cent in the first eight months of the year despite the overall industry seeing very little growth due to LIC's performance.

One may argue that growth in any form is good. But this raises concerns about what is driving that growth. For the most part, the growth in the private sector is being driven by Unit-Linked Insurance Plans or ULIPs. However, the volatility associated with ULIPs is something that Indian customers have not yet come to terms with.

Agents need to conduct a thorough need-based analysis to ensure that the customer is well-informed and makes a decision based on his or her needs. Life insurers and their distribution channels need to keep in mind that if investments are being made on the basis of short-terms needs of customers, not only will the investment be unsustainable, but the impact of this will be evident on the persistency ratios of insurers.

March 2015 also saw the passing of a legislation allowing foreign insurers to increase their equity in joint ventures with Indian companies. This has seen many insurers (based overseas) begin the process of increasing their stakes in their joint ventures.

IRDAI is also promoting the spirit of entrepreneurship in the sector by encouraging the establishment of Insurance Marketing Firms (IMFs) through the open architecture model in corporate agencies. The IMF model is being promoted keeping in the mind the International Financial Advisers model where various financial products can co-exist.

To sum up, it would be fair to say that 2014 saw product-related regulations, including standardisation of disclosures. The year 2015 saw the passing of the Insurance Bill and various regulations related to distribution of life insurance products. That leaves the question, what can we expect to see in the year 2016?

According to a study by Timetric, currently India is the world's twelfth-largest life insurance market and the fourth-largest in the Asia-Pacific region. In 2016, it is expected to surpass South Korea to emerge as the third-largest after China and Japan. We can also expect to see simplification and transparency in product design with an emphasis on digitally-enabled processes. Along with reducing levels of complexity, we can also expect to see significantly raised levels of 'customer mindfulness' with regard to levels of responsiveness adapting to customers' changing demands.

With the growth and deeper penetration of 4G in India, the number of connected devices is rising significantly in India. In 2016, this will present a huge opportunity for life insurers to tap into this large volume of data and turn conversations into connections.

Last but not least, in 2016, the agenda of the life insurance industry should not be treated or viewed as individualistic in nature but one where the entire BFSI industry can come together to create the best products across the board keeping in mind the interests of the customers. The industry has now reached a level of maturity and the time is ripe to look at opportunities to innovate and raise the bar.

The columnist is V.Viswanand, Senior Director and Chief Operations Officer, Max Life