Hardselling foreign banks lift private insurers' sales

The aggressive marketing culture of retail-focused foreign banks such as Citibank, Standard Chartered Bank, ABN Amro and HSBC has come as a big blessing for private insurers.

So much so, the risk firms say this bancassurance route has given their sales the biggest boost of all.

To wit: Standard Chartered Bank mopped up Rs 170 crore in premium income, accounting for 75 per cent of total premium (Rs 225 crore) collected through the bancassurance channel.

Bajaj Allianz Life's total premium income amounted to Rs 1,001 crore in 2004-05, of which 25 per cent came through its tie ups with 5 banks.

"The volume of life insurance policies sold by Standard Chartered through its branches has become a benchmark for bancassurance," said Mukul Gupta, CFO & head bancassurance at Bajaj Allianz Life.

Similarly, Citibank's contribution accounted for 50 per cent of the total premium income generated through the bancassurance channel for Birla Sunlife Insurance Company.

Forty per cent of total premium collections, which amounts to Rs 240 crore, was through tie ups with 10 banks.

Nani Jhaveri, CEO Birla Sunlife pointed out that foreign banks bring the same kind of aggressive zeal in all their business segments and is not something unique in the sale of life insurance products.

"Foreign banks in India on account of their having a limited branch presence in the country, have invested in sales people and have an existing culture of sales orientation embedded. This makes it easier for them to sell insurance products," said Joydeep K Roy, director alternate channels, Tata AIG Life Insurance Company.

He contrasted this with public sector banks which having a large spread of branches across the length and breadth of the country, do not necessarily have the same culture of selling.

Tata AIG has tied up with four banks including HSBC, United Bank of India, Orissa State Cooperative Bank and Sangli Bank.

Sale of risk products through bank branches, popularly known as bancassurance, today accounts for an average of 30 per cent.

In the case of Aviva Life Insurance and SBI Life Insurance, about 70 per cent of sales come through bancassurance.

At the same time, insurance companies are not underestimating public sector banks. State Bank of India for instance has contribute about 67 per cent of the Rs 601 crore premium income of SBI Life in 2004-05.

The private insurer is extensively using the massive reach of its parent SBI to ramp up business volumes.

SBI Life Insurance's Company's chief sales officer, S Muralidharan, said the bancassurance channel is also a cost effective way of enhancing reach.

"The cost of acquisition of a customer is in excess of 100 per cent of the first year premium income when it comes to selling policies through direct sales agents. It is far cheaper using the bancassurance model.

At the same time, foreign banks have an edge over their public sector counterparts looking at the customer profile. "Foreign bank customers are more aware and financially savvy," said Jhaveri.

He added however, that it is also a combination of organisational objectives, employee attitude and employee remuneration structure in addition to customer profile.