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Insurance slowdown to continue for now: V Philip, Bajaj Allianz Life Insurance

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At a time when the lifeinsurance industry is going through readjustments, Bajaj Allianz Life Insuranceis focusing on cross-selling to improve agents' income. V Philip, who took over as managing director and chief executive officer of the company earlier this year, spoke to ET's Shilpy Sinha on his strategies. Excerpts:

How do you look at growth in the life insurance space? The slowdown would continue for sometime. It will take at least two more quarters to get to normal growth. There was a phase when traditional products were sold and then whenUlips were sold. There have been significant changes in Ulips. The revised Ulips were launched 3-4 months after the guidelines came into force, which has taken sometime for distribution to adapt and understand real benefits of new Ulips. This has hit growth. We are in the process of strenthening our distribution on the enhanced benefits of the new Ulip structure. Commissions have come down and agents can't look at it like a full-time career. We have to put efforts in retraining people. This is a long process and once it is completed, prevailing trends are expected to reverse.

Are you looking at alternate channels? We are one of the large insurance companies and a leading non-bank-promoted insurance company. We have always promoted a multi-distribution network. We are looking at recruiting new agents. In the first quarter, we hired 7,000 agents. We will recruit 2,500 more agents and will continue to recruit. We will concentrate on how best we can increase income of agents by raising their productivity and efficiency.

What kind of restructuring have you undertaken? We have decided that even if the branch is not profitable, we will retain it as a point of servicing our agents and walk-in customers. If there are 3-4 branches in one area, we have tried to consolidate them. On the staff perspective, there are regular performance appraisals and there have been some performance exits this year also like every year in addition to natural attrition.

Do you think lower growth will impact penetration? If you start having a significant attrition in distribution, it will affect penetration and there are costs associated with distribution in rural areas. If distributors don't make sufficient money, then their motivation to sell and service customers would come down and so penetration may fall. Lower growth will anyway impact penetration, because there is a significant effort involved in reaching the customer and selling insurance. If they are not compensated adequately, they will not feel motivated to pursue with the customer. We are emphasising on having a balanced portfolio for customers and agents by selling protection as well as savings-oriented products. In rural areas, we operate through self-help groups and co-operatives. We have tied up with 42 such partnerships, where the average ticket-size is about Rs 2,300.

Irda has issued guidelines on outsourcing. Are you looking to outsource most of your non-core activities to bring down costs? We have outsourced our collection, computer maintenance and storage of policy documents. We outsource activities that don't add too much value and which are within Irda guidelines. We are evaluating options of data entry as it is one area which we would like to outsource.

PSB ties up with Bajaj Allianz to market low cost insurance product
Announcement / Banking December 23, 2010, 19:02 IST

Punjab & Sind Bank (PSB), one of the leading PSU Bank has inked a pact by signing an MOU with Bajaj Allianz Life Insurance to market its low cost insurance product across all its branches in the country. The product caters to the needs of rural mass markets, economically weaker sections of the society and would help the bank in providing insurance solutions for financial inclusion. On signing the MOU, Mr. P K Anand, Executive Director, PSB, said, "We are happy to partner with Bajaj Allianz Life Insurance to distribute the exclusive product SSS. With this partnership, we would be able to provide the much needed life insurance protection to the economically weaker sections of the society. The MOU was signed by Mr Vijay Srivastava, General Manager Priority Sector, PSB from the banks side. Click here to visit SME Buzz

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Mr. A. S. Narayanan, President Institutional Business, Bajaj Allianz Life Insurance, said, "Our association with PSB, helped us to develop an exclusive product to suit their requirements for low income customers. This will enable us to play a small role in the banks goal of financial inclusion and protection." Under this policy the insured can pay a premium as low as Rs. 500 Per Annum or Rs. 45 per month. Punjab & Sind Bank, headquarted in New Delhi, was founded in 1908 in Amritsar with a principle of social commitment to help the weaker section of the society in their economic endeavours to raise their standard of life. Punjab & Sind Bank was founded with the far-sighted vision of luminaries like Bhai Vir Singh, Sir Sunder Singh Majitha and Sardar Tarlochan Singh. Decades have gone by even today Punjab & Sind Bank stands committed to honor the social commitments of the founding fathers. The Bank envisions emerging as a strong vibrant Bank through synchronization of the human, financial and technological resources. This was one of the six Nationalised Bank in 1980. Punjab & Sind Bank has a PAN india presence with 936 Branches 6.5 million customer and have total business of 88000 crore Bajaj Allianz Life Insurance is one of the leading private life insurance companies has a range of need-based life insurance products with a pan India presence. Bajaj Allianz Life

Insurance was one of the few profitable life insurers with a Profit of Rs.360 crores in H1 as on 30th September 2010. About Bajaj Allianz Bajaj Allianz is one of the leading Private Sector life & general insurance companies in India. Bajaj Allianz is a union between Allianz SE, the worlds leading insurer and Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited, one of Indias most respected names). Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion Euros (over Rs. 55, 00,000 crores). At Bajaj Allianz, customer delight is our guiding principle. Ensuring world class solutions by offering you customized products with transparent benefits supported by the best technology is our business philosophy. Bajaj Allianz began its operations in 2001 and today has a pan-India presence with over with offices and presence in over 1100+ towns in the country. The companies have been constantly expanding its operations to be close to their customers.