Interview with Sandeep Batra, Executive Director, ICICI Prudential Life Insurance Company Limited
Sandeep Batra, Executive Director, ICICI Prudential Life Insurance Company Limited has been a founder member of ICICI Prudential Life team and has worked with the company till 2006 and joined back in January 2014. His current role encompasses the functions of Investments, Actuarial, Finance & Accounts, Taxation, Business Intelligence & Strategy, Enterprise Risk Management, Internal Audit & Compliance, Legal & Secretarial, Operational Risk, Policy affairs & Corporate Communications. Before moving back to ICICI Prudential Life, he served as the Group Compliance Officer & Company Secretary of ICICI Bank. In his last role, he was responsible for regulatory compliance for ICICI Group including its Banking, non-Banking subsidiaries and overseas offices. He was also responsible for Internal Controls over Financial Reporting (SOX) and the Payroll Administration unit. He also serves as a non-executive Director on the Board of ICICI Prudential Trust Ltd.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, India's largest private sector bank, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life's capital stands at Rs 4,796 crores (as of March 31, 2014) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the financial year 2014, the company has garnered total premium of Rs 12,429 crores. The company has assets under management of over Rs 80,000 crores as on March 31, 2014. For the past decade, ICICI Prudential Life Insurance has maintained its dominant position (on new business retail weighted basis) amongst private life insurers in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.
Replying to Anil Mascarenhas of IIFL, Sandeep Batra says, Claims settlement is the moment of truth and the ultimate service differentiator for a life insurance company. For FY14 our claims settlement ratio stood at 94.1% and majority of our claims have been settled within 30-days of intimation.
Give us an overview of the changes that life insurance industry has undergone in recent years.
The Indian life industry has undergone several changes. We believe these changes are positive for the industry as they are customer friendly and what is good for the customer is good for the industry. The first set of regulatory changes were effected for the unit linked category of products. Some of the notable changes are:
- Capping of the surrender charges and Reduction in Yield (RIY), which is the gap between what the customers funds actually earn and what the customer actually gets after deduction of charges moving monies from discontinued policies to a fund that mandatorily earns 4% p.a.
- Distribution network incentives linked to the term of the policy
The Endowment or Traditional category of products too have undergone changes in the recent past. Some of the key changes are as follows:
- Increased surrender value
- Higher life cover
- Mandatory benefit illustration
A milestone for the industry has been the introduction of the dematerialisation of policies. This offers immense benefits to customers, as it does away with all the challenges of holding a policy in the physical form. For the benefit of our customers we have tied up with all the 5 (five) insurance repositories. As of September 2014, the company has created more than 9000 electronic insurance accounts (eIA) and has facilitated more than 21,000 electronic policy conversions.
Why does one need insurance? What are the types of insurance plans available? Which is the best plan to buy?
The need for insurance cannot be overemphasised as it ensures that the family stays protected financially, in case of the death of the breadwinner. Life insurance offers consumers an array of products, from pure protection to products which offer protection as well as a route to build a corpus over the long term.
Ideally, to begin with, every individual should buy pure protection or a Term plan as this is the cheapest form of life insurance product available, other products can be bought subsequently. The life insurer, pays out a pre-defined amount or sum assured to the nominee in case of demise of the policyholder. Once the basic protection plan is in place the individual can commence building a financial portfolio and evaluate other products. The other categories of life insurance products include unit linked and endowment or traditional plans. Depending on the life stage of the individual, products can be chosen to meet specific financial goals. These goals could planning for childs education or marriage, retirement, buying a house etc. However, customers should not just purchase a product purely because it has a low premium, one should evaluate the claims settlement ratio before purchasing a life insurance product.
Comment on your distribution set up.
As a deliberate strategy to provide convenience to customers, we have built a multi-channel distribution set-up. This comprises of brokers/ distributors/ agents, the digital platform and bancassurance. We have handed over tablets (sell-online platform) to our distribution network, which has not only enabled them to provide better customer service but has increased efficiency levels too. For FY2014, a little over 80% of all our new business applications were routed through the digital platform. Our sell-online platform has empowered customers to make informed buying decisions. Additionally, it gives our distributors the ability to reach out to geographies which were earlier inaccessible due to lack of physical infrastructure. Each tablet is a virtual branch for us.
To what extent are you able to leverage technology to further enhance the customer-experience? Tell us more about ICICI Prudential Lifes Sell Online platform? We all know that technology simplifies processes and facilitates smooth operations. We have leveraged technology to virtually iron out all the challenges faced by a customer during the buying process. Every individual needs life insurance, it is just that they need to be made aware of it. The need analysis tool in the sell-online platform does just that. All the steps of the buying process are completed in the presence of the customer, right from presenting the relevant products, to uploading the documents and conducting a KYC validation on the basis of the customers Aadhar card, PAN No. or ICICI Bank account an instant KYC validation can be done.
What is your claim settlement ratio? How do you ensure that settlements are addressed timely and efficiently?
Claims settlement is the moment of truth and the ultimate service differentiator for a life insurance company. For FY14 our claims settlement ratio stood at 94.1% and majority of our claims have been settled within 30-days of intimation. Our claims philosophy is that of first time right. What this means is that all relevant information regarding the documents and processes is given to the claimant at the time of intimation. This significantly reduces the processing time and ensures a hassle free process for the claimant. The idea is to provide convenience and ease the process at a time of their distress. We have an online claims settlement process through which claimants can provide us with digital copies of required documents. This significantly speeds up the settlement process.
In certain instances, for example, the Uttarakhand tragedy in 2013, and more recently, the Jammu & Kashmir floods, we waived the need for submitting certain documents so as to enable claimants to get their rightful dues. We believe in fulfilling the promise we make to customers when they purchase life insurance from us.
Interview as published in India Info Line
AEGON Religare iCI Rider - On line Critical Illness Rider from AEGON Religare
AEGON Religare Life Insurance (ARLI) has launched the online critical illness rider under the caption AEGON Religare iCI Rider. This rider can be attached to its online term insurance plan iTerm. This rider is available for both new and existing customers.
The iCI rider allows customers to get cover against critical illnesses at a very nominal cost. Religare iCI Rider covers critical illnesses such asCancer, First Heart Attack, Open Chest CABG and Stroke. The rider pays out the sum assured upon diagnosis of any of these critical illnesses. Upon payment of the rider benefit for any of the diseases covered the rider stands terminated.
The iTerm policy can be purchased from https://buynow.aegonreligare.com and the iCI rider can be attached to the new policy or the existing policy.
Bancassurance practice needs to be inspected: RBI
It is observed that there are complaints from many customers that the banks are forcing them to buy insurance when they apply for loans of availing any other banking services. Following this, the Government and RBI have decided to inspect the practice of banks involved in bancassurance. The inspection will be done both for the private and public sector banks.
The complaints also include mis-selling of the products.
IRDA recommends 49% FDI in insurance intermediaries
An internal committee of IRDA has recommended hiking FDI in all insurance sector intermediaries like brokers, surveyors, third-party administrators (TPAs) and web aggregators to 49% from the present 26%, according to a media report.
The panel, headed by joint director Suresh Mathur, has submitted the report to Insurance Regulatory and Development Authority (Irda) chairman last week, the report further said.
The report has also charted a three-year roadmap to see how FDI can be raised to 100 per cent for intermediaries, the report added.
Source: India Infoline
Birla Sun Life AMC acquires schemes of ING Investment Management
Birla Sun Life Asset Management Company Ltd, a part of Aditya Birla Financial Services Group, an investment manager for Birla Sun Life Mutual Fund announced the completion of acquisition of all Mutual Fund schemes and Portfolio Management accounts of ING Investment Management (India) Pvt Ltd. BSLAMC has now taken over the rights to manage the schemes and investors accounts from IIMIPL as investment manager.
Following the acquisition, 6 equity and 6 debt schemes acquired from IIMIPIL have been merged with existing schemes at BSLAMC as per no-objection received from SEBI. A few schemes including multi- manager funds have however been retained in line with BSLAMC's strategy to grow and serve even more investors. The acquisition has also added 3 new products to BSLAMC's suite of Portfolio Management Services offerings.
The closing of this acqusition underscores BSLAMC's commitment to help to grow the mutual fund industry, increase investors outreach and penetration. It also enables the company to build on the growth of its PMS business, add to existing distribution capabilities and expand investor base.
Source: India Info Line
New MD CEO for Tata AIA
Mr. Naveen Tahilyani has been appointed as the Managing Director and Chief Executive Officer of Tata AIA who is currently associated with McKinsey & Co., as Senior Partner and Head of South East Asian Insurance and Banking Practice.
IIT Chennai and MBA from IIM Ahmedabad, Mr. Tahilyani will assume office effective January 2015.
Return of ULIP era to hurt insurance industry: Reliance Life's CEO Anup Rau
As ULIPs or market-linked insurance plans make a big comeback, leading private sector life insurer Reliance Life's CEO Anup Rau said this reversal of trend would hurt the industry and the regulator is already looking into the matter.
Before the meltdown of 2008, ULIPs were very popular, including through large-scale misselling, but plunge in stock markets led to huge losses for investors as also for fund managers.
As markets gain momentum, investors are again being lured into investing in ULIPs but they may face the heat in case markets fall.
Industry data shows that all companies, including LIC, selling purely traditional products have registered a decline in sales. On the other hand, ULIPs have been driving growth for some players including some large insurers and those promoted or supported by banks.
"After the 2008 meltdown, almost all companies swore not to sell ULIP products and stick to long term traditional products.
"However, with markets showing healthy gains, this trend is infact reversing. Unless the policies are bought with a long term horizon, when the cycle the turns, we will see erosion in the AUM and a drop in persistency. This will also hurt the industry," Rau told PTI.
Asked whether the regulator needs to intervene so that there is no over-dependence on ULIPs, Rau said, "The regulator, IRDA, had introduced major changes in the ULIPs, sometime in 2010, making it more affordable for the investors.
"From the regulatory point of view, that's the best it can do. Some of the changes included cap of charges which restricts the cost to customer, minimum lock in for five years, ceiling on surrender charges, discontinuance fund concept, and capping the difference limit between charges in the five years.
"All this has made ULIPs relatively safer but the choice of taking or not taking ULIP is with the customer.
" Rau said investors should first get adequate protection cover - usually 8-10 times their annual earnings - followed by long term savings options where ULIPs come in.
"However, ULIPs get sold as short term gain/investment products which pose a problem. For an insurer, the appropriate yardstick to measure the exposure to ULIPs should be the average vintage of the policies in the portfolio. However, a major chunk of business share from ULIPs in an insurers portfolio may not be good for the customers," he added.
Asked whether Reliance Life, as a major player, will take up the matter with IRDA with regard to growing dependence on ULIPs in the sector, Rau said, "I think IRDA is already sensitive to this growing trend".
"They have already defined guidelines and are monitoring these trends for appropriate actions," he added.
Source: As published in Economic Times
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