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“It will be a gradual process and will be phased out. But we will launch all of the 25 products in the fourth quarter,” said Anup Rau, chief executive officer. Other players are also in the process of launching the new products. The country’s largest insurer, Life Insurance Corporation of India (LIC), is also planning to begin with 15 products on January 1, 2014, when the new product guidelines come into force.
While these guidelines were to be implemented from October 1, 2013, the regulator extended the deadline for launch of new products under the revised norms to January 1, 2014. This was to enable a better transition to the new regime and to ensure companies had adequate number of approved products for customers.
Reliance Life has received approvals from the Insurance Regulatory Development Authority (Irda) for its new products and will be launching them across India through its nationwide distribution and agent network.
“We will largely focus on traditional plans and continue to provide simple and need-based solutions to customers. Traditional plans will contribute 80 per cent while the unit-linked plans will contribute around 20 per cent to the top-line in the new product environment,” added Rau.
In terms of premium growth, Rau said the company expects to clock Rs 4,000 crore of total premiums, of which Rs 1,700-1,800 crore will be new business premiums. Reliance Life is also planning to file more products with Irda in the next few months to offer products across all customer need segments.
It had collected new business premium of Rs 509 crore for the quarter ended September 30, 2013, an increase of 58 per cent over the same period last year. Similarly, the insurer achieved a profit of Rs 136 crore for the quarter ended September 30, 2013, which was more than three times increase over same quarter in the last financial year.
According to Rau, profits in FY14 will be flat because the company has invested in newer channels such as Face-to-Face and arrested surrenders, leading to lower surrender profits.
The company has over 80,000 advisors and about 9,000 points of sale across India. Rau said the firm has achieved over 50 per cent growth in agent productivity as of September 2013.
With respect to bancassurance, Rau explained that although regulations have to be more enabling, the company will continue in double-digit growth in the next three years, with or without bancassurance. He, however, added that if bancassurance is opened up to a multiple partner model, it will be an added advantage.
At present, Irda norms say a bank can only tie-up with one life, one non-life and one standalone health insurance company to sell its products. Although the insurance regulator and banking regulators have separately floated proposals for banks to become brokers and sell multiple insurers’ products, industry sources say large banks will not be interested in adopting this model.
Besides the large agent base, Reliance Life has also hired over 1,500 people under its proprietary channels such as Life Plaza, Face-to-Face and Career Agency in the past year, to enhance its reach and supplement growth of agency channel.
Life Plaza centres across India offer financial and value-added service to Reliance Life customers, while Face-to-Face is a service-based sales platform, where women, mostly housewives, service orphaned policies. This refers to insurance customers whose agents have become inactive.
The Career Agency initiative gives a fixed stipend to prospective advisors, looking at insurance as a long-term professional career, during the training period. Apart from this fixed salary, advisors are also given commissions for any policy sold during that period. “The proprietary channels have started showing encouraging results and we expect them to contribute at least 10 per cent to the top-line, next year onwards,” said Rau.
The company has registered a 79 per cent growth in its new business premium during the April-September 2013 period, collecting Rs 1,022 crore compared to Rs 571 crore in the corresponding period last year.
