Indian consumers need to crossover between pure protection & savings
14 July 2009

Bharti is a strong brand with a 100 million + consumer base from its strong presence in telecom and retail sectors. Given this strength what is the USP of your offerings and how does the Bharti brand help?
We have done lot of product innovation. That said, being part of the service industry we concentrate on superior delivery experience. There are extensive internal score cards which measures our service delivery experience on many consumer facing metrics. We also have a comprehensive request tracking system where every single request of the customer is addressed in the time frame of ten days. Besides product innovation, we ensure that what we deliver to the customer is truly superior.
 

Bharti helped us a lot in setting up distribution channels. There are around 700 Airtel relationship centers where our advisors are available. We did a lot of database-oriented work with them. We are closely working with Airtel consumer management cell and looking at consumer connect mechanisms other than the telephone call like email based campaign.

 

What were the challenges when you started in 2006?

A very compressed business cycle was a big challenge. When we entered in 2006, the market had just doubled and then grew by almost 35% in the next year. So as first entrant of second wave, the major challenge was how to build the robust business model around the principals espoused by AXA. It is a great company to understand insurance business. We had to open new channels and new branches possibly a little too soon to create a sense of momentum. However our preference was to have greater understanding of Indian market and then to build robust principals. It was a challenge to set up the business model with eye on long-term profitability rather than short term.

 

Insurance regulator is contemplating the idea of insurance bureau, where customer’s information/ history will be shared. What do you have to say on that?

It will be good, as far as health conditions are concerned. As the industry is evolving, it has to come up with a common pool of data on mortality (death claims) and morbidity (health claims) to create the right kind of products. It’s all a question of creating a systemic solution, within an environment and in that sense if there is an environment of positive health oriented declarations by customers or certification, then that has more meaning in terms of protecting the privacy of their data. At the same time it is about creating mechanisms where you create a standard product and reduce the premiums if the health of the consumer is in excellent shape and load the premiums if the health is not so good.

 

You mean the pricing should be done in accordance of one’s state of health.

There will be a need to look at regulations around it. But the question is how insurers will perceive it as different segments are evolving. We at Bharti AXA evaluate the portfolio of the customer, and then we create a promise specifically for him by taking into account different mortality expected experience. If you are referring to individuals information sharing is concerned it is a long distance away as people resist sharing that kind of information. As far as data collection goes, it is important because mortality and morbidity tables have to be updated.

 

It is interesting to note that mortality tables have been updated till 2006, which show that mortality charges are falling. Please comment.
 

After all we are in the business of managing risks, and if the underlying factors of risks indicate too much returns, it certainly can happen. The competition is leading to low product margins/ solvency ratios.

 

Talking of consumers here, they do not even know what to compare and how to compare whereas premium is only a part of that knowledge.
 

Understanding about the insurance industry is still in its infancy.

It is not right when ULIPs get compared with Mutual Funds, as both are different products. You will never buy a Mutual Fund with a time horizon of 15-20 years, if you do that, then you should be buying ULIP. ULIP should never be bought with the time horizon of 3-4 years. The problem arises when cross over happens. The element of flexibility given to the policyholder should not be misused.

 

What role do you foresee for On-line media as far as insurance sector is concerned as an information vehicle and advertising media? What larger role it can undertake in the near future? Do you think there is a need of comparison service like ours and how does it help consumers and companies?

 

As India’s legal atmosphere has changed, and electronic signature is acceptable to create a contract, it is a good move. Another aspect, which we are discussing in the life council, is the ability to dematerialize the insurance policy. An electronic contract law will work but the problem lies at the proposal form stage, which needs to be physically signed off.
 

The work, which you are doing at ApnaPaisa, is benefiting consumers in a big way, as you are giving consumers host of comparative products and making sure that people compare price points and other features as well. Large part of distribution in India is tied distribution including that of banks. Another way where web based mechanism can help is in servicing the policy. This is one area where we are currently focused - allowing fund transfers and sharing information about the funds. More and more people are looking at net to find their requirements. Direct business will continue to grow, but e-commerce has the capability to take off very rapidly as we have noticed in some sectors.