Monday, May 25, 2015
Chief distribution officer, Aegon Religare Life Insurance, Amit Kumar Roy tells ET Wealth why companies should launch simpler products and what more foreign ownership in insurance means for us.
Term plans used to be simple products. Now there are several variants of term insurance. What benefits do the new plans offer?
When we launched our online term plan in 2009, the objective was to make it simple for the consumer to understand and decide. It has clicked with buyers because the whole procedure is so simple. However, the new trend of adding variants to make the cover more comprehensive ends up complicating the product making it less buyer friendly.
Is there a need to dejargonise insurance communication?
Absolutely. As insurers, we should not only offer simple products but we must explain features to the buyer in simple terms. Too much jargon and complicated features give scope to mis-selling. How does your sales force look at the trend of more and more buyers going online? We have always told our agents not to chase premiums, but build a relationship. If you are able to build a relationship based on trust, the premiums will follow. Our sales force encourages protection even if the buyer wants to buy it online.
Your company pioneered the online sale of life insurance. Do you think technology will one day replace the intermediary?
Technology is playing an important role in distribution but it will not completely replace the intermediary. There is a market for both. On one hand there is the savvy buyer who understands insurance and will go online to purchase it. But there are also people who need help or who cannot be bothered with such activities. For them the agent is the medium for buying an insurance policy.
Foreign ownership in an insurance company can go up to 49%. What does this mean for policyholders and future buyers?
This is an extremely positive move. With more capital and domain knowledge flowing in, insurers will be in a better position to offer more competitive products. This will see the insurance industry mature as there will be product innovations and better technology. This will be a win-win situation for existing and potential customers.
The 2010 guidelines slashed commissions paid on Ulips. Though commissions are down for traditional policies as well, they are still high in comparison. What are your comments in this regard?
There's nothing wrong in paying commission. The debate should be how that cost of distribution should be divided over the policy period. For instance, rather than paying a high commission in the first year, can that get distributed over the first five years so that the seller remains in touch with the customer