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Life insurance companies are pulling out all stops to ensure the transition to the new regulatory regime by October 1 is smooth. Also, products are being developed such that business is protected and customers aren’t inconvenienced.
The Insurance Regulatory and Development Authority (Irda) had asked all life insurers to re-file products for individual segments that didn’t conform to new norms on traditional products, before October 1 — insurers wouldn’t be able to sell existing policies after the deadline. Life Insurance Corporation of India (LIC), India’s largest insurer, has started developing new products. Thomas Mathew T, LIC’s interim chairman, said the company’s actuary and product development departments were developing products with new features. These could be filed with Irda. Mathew said he expected the second half of this financial year to generate good business.
Life insurers have started securing approvals for revised products. For instance, HDFC Life has launched a product, HDFC Life ClassicAssure Plus (a protection-cum-investment plan), with a limited premium payment term. This is compliant with the revised Irda norms. Sanjay Tiwari, vice-president (products), HDFC Life, said, “We have a dedicated persistency team that tracks renewals on a regular basis. We are also providing additional training to our sales team.”
Private life insurers are also focusing on customer initiatives to push renewals. Anup Rau, chief executive, Reliance Life Insurance, said the industry might lose a few customers due to the fact that the first few quarters wouldn’t see new products. However, he added in the long run, most of the regulatory changes would pave the way for sustainable growth of the sector. “Apart from our focus on agent productivity, our customer contactability initiatives such as Reliance Life Plus, Life Plaza and Face-to-Face would help us significantly improve renewals. We are also taking a lot of digital initiatives, including SMS/email alerts on renewals, to improve customer services,” said Rau.
As of March 31, Reliance Life’s persistency rate was 54 per cent for the 13th month, 80 per cent for the 25th month, 30 per cent for the 37th month, 70 per cent for the 49th month and 72 per cent for the 61st month. Insurance companies are also prioritising products. G V Nageswara Rao, managing director and chief executive of IDBI Federal Life Insurance, said after identifying the features in a product that had to be modified, the company focused on re-filing products that saw high sales. While the company has re-filed a few products with Irda, it is yet to receive approvals.
According to Irda’s annual report for 2011-12, for life insurers, while the renewal premium accounted for 60.31 per cent (56.66 per cent in 2010-11) of the total premium of life insurers, first-year premium accounted for the rest.
