With the current economic crisis casting a dent on the prospects of certain industries, it is turning out to be a testing phase for many players. Not the one to be spared, the insurance sector too has been jolted by the sudden turn of events. Adding to its woes is the recent shift in policy decisions that have been issued by the government in streamlining the industry, but the industry players are responding positively to the new diktat as it would ultimately mean netting in more customers. One of the players who is doing everything right to face the future is Bajaj Allianz.
As Head-Product Development and Market Management, Bajaj Allianz Life Insurance, Rituraj Bhattacharya is taking the onus on himself in adding new customers but not without doing enough ground work and coming up with solutions tailored to meet the needs of the customers. In conversation with MXM India’s Johnson Napier, Mr Bhattacharya shares the reasons behind launching new schemes and why ULIPs would be a suitable investment option for most customers, especially those from the tier 2 & 3 towns and cities, in the future. Excerpts:
Q: As Head of Product Development & Market Management what are your key responsibilities at Bajaj Allianz?
It is relatively a difficult time for the industry at large. The new regulation that has come in is customer-centric and has resulted in insurers reassessing their business models. Some of the basic practices that were being followed by retail insurers are being revisited. So it is a period for a lot of consolidation in terms of business models, where players will be forced to develop long-term practices in the organization. A lot of emphasis in our organization has gone in training our work force and preparing them for the future. Once this entire process of training and consolidation is over, we expect better results to come out of the exercise.
Q: How have the insurance players responded to the sudden shake-up in systems and practices?
The industry is still in a learning phase and therefore the regulations as a practice will also have to keep evolving. It’s part of the ecosystem. I don’t think it’s only the regulator that is to be blamed; there is some amount of uncertainties in the consumer’s mind. Inflation, fuel prices, etc have taken its toll on the consumer. And where the insurance players are concerned, they too have not been able to replenish their product basket. This has led to consumers being exposed to lesser product offerings from the players. All these factors put together have contributed to the current situation.
Q: Despite the decibels, insurance is still perceived as a ‘fragile’ investment option. Why are customers still apprehensive about opting for an insurance policy?
I don’t think that’s the case. If you see, globally, insurance has been a successful offering. It has survived two world wars and other natural calamities where Allianz has settled so many claims. In India, most insurance players like us are financially very stable. Our capital is high, we have a higher solvency than what the guidelines prescribe, etc. So the issue is not about financial stability, it is about the current economic situation that affects different practices as well. It’s just a matter of time before we overcome this crisis.
Q: What are the investment trends you foresee from the tier 2 and tier 3 towns across India?
One thing that can be said with certainty is that the insurance penetration is definitely high. Recent studies conducted by IRDA reveal that the awareness levels around insurance products are on the up. People see insurance as a tool, device, instrument that helps them diversify their risks, assets and at the same time get adequate coverage for life. In fact, insurance is the only device which a person with a low disposable income can use to diversify his portfolio. If you see a person with low income around Rs 10-15,000 he finds it difficult to manage his assets around so many different instruments; but he finds it easy to do that within various offerings of a single insurance company.
In Bajaj Allianz we are happy to cater to the tier 2 and 3 cities. Around 75 per cent of the business comes from these two segments. That’s because we have been able to develop a personal relationship with the consumers from these belts.
Q: Could you share the growth pattern that has been observed at Bajaj Allianz?
We have consistently added new customers to our portfolio. In the last financial year, we have issued around 2.2 million policies. We have a total customer base of 8 million insurers. We currently occupy a market share of around 2.8 per cent.
Q: Could you elaborate on the objective and need for launching new ULIP schemes recently?
GMIP is a completely new offering from us. We are trying to cater these offerings to certain new growth pockets where we are trying to offer solutions that suit these segments of the population. As a company, we are keen in doing a more stable business. We are not keen in chasing numbers; we hope to deliver quality products with emphasis on strong customer satisfaction.
Q: What do the newly unveiled commercials seek to propose to the customer?
If you look at our current communication campaign including the one around GMIP – I think we are more keen on what we as a brand want to deliver to the customer. We want to tell the customer what is the very essence or the insight behind our products that we offer. It is about learning facets about the customer and offering him products tailored to meet their needs. Our latest GMIP commercial talks about uncertain situations that we face in our lives and how we can overcome the same. Given the uncertainties that exist today, is the common man willing to go back to traditional ways of investing? We don’t think so. He is aware of the complex regulatory policies and is therefore on the lookout for products that are simple and address his needs. That’s what we seek to address through our communication.
Q: Apart from regulations, what are the other challenges facing the industry?
Changes in regulations are not a challenge as such; it is ultimately being done for the betterment of the industry. It has come as a jolt in the short term because that will mean change in systems and processes. The real challenge is not regulations, it is about how we do our business and develop products for our customers.
Q: With the coming of several new private players, do you see the dominance of the country’s largest insurance player LIC on the wane?
LIC is and will continue to be one of the strongest players. We are very small compared to them but customers have opened up and are keen to try out other insurers as well. Most of the customers who have tried us have an LIC policy also, but they are also satisfied with what we have to offer.
Q: What would be your core focus areas for 2012?
Over a period of time, I see ULIP getting more preference amongst customers especially those with lower incomes as it promises them more options to save and manage their money. If you see Bajaj Allianz, we have already lined up many products under ULIP. That’s because our focus as an organization is to cater to the masses. So the plan is to increase our portfolio of ULIPs while at the same time we will keep our portfolio of divisional products equally prominent. This will be our key focus in coming years.
Bajaj Allianz Life organised the fourth edition of #Plankathon in Bengaluru’s Sri Kanteerava Outdoor Stadium to celebrate the Indian Space Research Organisation’s (ISRO) achievements with Chandrayaan and the Solar Mission, Aditya L1.