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We want to be an alternative to LIC: Anup Rau

Interview with CEO, Reliance Life Insurance

Anup Rau, Reliance Life Insurance CEO

M Saraswathy Mumabi
Reliance Life Insurance is looking to strengthen and build a sustainable agency force to achieve business growth. Anup Rau, the new chief executive officer, discusses the strategies for growth in an interview with M Saraswathy. Edited excerpts:

You currently have a five per cent market share among private life insurers. What is the growth target for this financial year?
I think we’ll grow faster than the market and we will improve our market position. We are ranked seventh in individual business. When I say faster than the market, this is sans bancassurance. In the past few years, growth has been achieved due to bancassurance. On the other hand, agency has continued to decline. But we have managed to arrest this.
 
But aren’t you losing out without having a bank partner?
It is important to set up your own proprietary channel. Bancassurance is welcome, but if you want to create value for your organisation, you need to have your own distribution, be it agency, proprietary or online. Yes, we are not back in spot in time but we do have several branches that are deeply penetrated. We are a ‘Bharat’ company and not just an ‘India’ company.

We would want to be a private alternative to Life Insurance Corporation of India (LIC) in the agency model. If we get opportunities to tie-up with bancassurance partners, we would be happy to do it.

Is this why the company has shifted its focus to the agency model and has 124,000 agents?
We will continue to invest in agency. We are not cutting down people or shutting branches and, hence, will continue to grow this model. One should look at the number of active agents. The idea is to get more agents, while increasing the number of active agents. In the industry, agent mortality is high. We want to add numbers every quarter but want to ensure this is a sustainable and active number. If you look at LIC, it has done a very good job of adding agents consistently. They have a disciplined termination process as well. What happens is that they weed out the low performers at a very early stage.

While your net profit is up, premium collection has fallen. Why?
The premium numbers are down but not just due to the economic situation. If you look at any other companies’ numbers, sans agency, that is where you will see growth. The top three-four in life insurance have grown on the back of the bancassurance tie-ups or are backed by banks. We are confident that we will reverse it and start growing this financial year.

Now that the re-filing of products has begun, do you view it as a challenge for the sector?
The incentive for distributors is going to drop. Insurance is a push product and there is a lack of appreciation of the fact that it is a difficult product to sell. Incentives need to be adequate and if it isn’t, people will drop out of this profession. The challenge in the second half of the financial year is that after the guidelines come into force, people might say it is difficult to sustain their family or expenses. In the longer time, people will take a long-term view and persistency will improve. Renewal premiums will also increase.

In terms of products and service innovations, what models have been adopted from Nippon Life (an equity stakeholder?
Nippon Life is a great service organisation and is an agency company; so are we. Their persistency is close to 100 per cent. We have adopted some models from them. Reliance Life has introduced concepts like face-to-face in India, where an agent goes to a customer only to service the customer. This includes areas like switching funds and changes in the existing insurance policy, among others. We also have a career distribution model where we have only fulltime agents. We are experimenting with these models currently. We also have a lot of women in the agency force. In Nippon Life, most agents are women. We are trying this in India as well, in the face-to-face models. Here, the focus is to service the customer and not to sell. However, we have sold policies in this model, too. We are also opening additional branches to solely cater to these models.

In terms of product segments, will health insurance be a conscious focus in this financial year?
We do sell more health policies than any other private life insurer. Health, pension and term are ‘pull’ products.

The others are ‘push’ products. These three products would eventually take a higher share of business. We also believe, eventually, health will become a product that will be demanded by customers.

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First Published: May 22 2013 | 12:49 AM IST

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