Looking to raise persistency ratio to 60 per cent by year-end: Sabharwal of Future Generali

Sanjay Sabharwal, Senior Vice President and Agency Head, Future Generali Life Insurance, talks with Teena Jain Kaushal and Madhavi Mehra about the outlook of life insurance industry:

Q- Considering there has been a slowdown in the life insurance business for the past few years, how is the industry expected to perform this year?

A- The industry has gone through the rough weathers in 2008, 2009 and 2010 because of various global economic as well as regulatory pressure points. But things have started stabilising now and are showing some improvement in the overall industry. There's also a shift happening from the industry perspective. People are going more towards traditional plans after having gone through with the experience in past. Focus is more on promoting protection or meeting up the financial goals of life.

Q- What kinds of plans are mostly sold through the 'Mallassurance' channel?

A- We sell all types of products through the channel. Basically 'Mallassurance' is about reaching out to customers those who walk into the malls, get their contact details and then we go and meet them, talk and sell them. As an organisation, we are definitely looking at selling more of traditional policies. First, it is more in the customer's interest. Second, it has a good sustainable period of relationship with the customer and it is very specific to meeting goals of the customers.

Q- How much of the business comes from 'Mallassurance' channel?

A- It is a very recent initiative and currently contributes about 3-4 per cent to our total revenue. It is not something which we have been doing from the day one. Yes we were the first company which came up with the idea and we are definitely looking at it for the bright future. We are still very small in terms of penetration and in future, it should contribute significantly to the overall numbers.

Q- Considering that life insurance penetration is still low in the country, what changes are required on the distribution side?

A- You have to be innovative in terms of designing your distribution strategy and have multiple outlets, instead of depending only on one or two channels. We are putting a lot of effort in building up all our proprietary channels. First is our agency and then Future Generali Direct. We are spending a good amount of time and effort on building up both the channels.

At the same time we are also looking at opportunity where some innovation can really help us: like the one we have in the agency organisation model. We have recently come up with new design of agency model where those agents those who have been called super distributors can start recruiting advisors themselves. They have gone through the lifecycle of an agency or agent's life so they understand the pain points, they are experienced and picked up the learning so that model is something which is we are seeing as an another innovative idea. We are looking at 'Mallassurance' as another opportunity. We are looking within our organisation where we have a lot of platforms and trying to build a synergy within the organisation's capability to complement the efforts.

Q- Apart from increase in FDI how has the industry changed after the implementation of the Insurance Act?

A- There is delight. I think this is one of the most awaited decisions. Things are now shaping up well and this definitely would endorse more commitment from the both side that is our Indian partners as well as the foreign partners.

Q- What are some of the concerns for the life insurance industry?

A- The regulator is still doing a lot of things. They are silent for quite a long time now and that's also a sign of things coming up so we are looking at the regulator. But I am happy that whatever has happened in the past has happened for the best in the best interest of the customer in the best interest of the organisations as well as the industry. So I hope the regulator (IRDAI) will bring more excitement around the industry. We are not seeing anything as a challenge we are looking at things as an opportunity.

Q- The industry faces the challenge of high withdrawals and lapsation. How is your persistency ratio?

A- We did see some challenges initially last year. In the last 10-12 months, we have done a lot in that direction. We have reached about 43-44 per cent as an agency and as an as an organisation we are around 42 per cent. We are looking to take it up to around 60 per cent by this year-end and thereafter taking this percentage to the higher levels. So we have done lot of checks and balances, we have put measures in place in terms of quality of acquisition, quality of service, quality of issuance even at the acquisition stage.

Q- Is there any requirement by the regulator for minimum persistency ratio to be maintained?

A- Yes there are regulatory requirements of 35 per cent. We are above the mandatory limit.

Q- How is your company's claim ratio?

A- Our claim ratio has gone up to 85 per cent this year from 75 per cent last year.