ULIPs Play Very Important Role In The Insurance Space: Anuj Mathur,Canara HSBC Oriental Bank of Commerce Life Insurance

To begin with, please tell us a bit about your business philosophy of “Insurance Inclusiveness in Life and Health Insurance”.
We are a customer centric organization and strongly believe in providing protection and creating value for the customer at every stage of their life cycle. For all the services & propositions created within the organization, it is our endeavor to consistently create solutions which are customized to the consumers need and helps in meeting the objective. As a Company we fully embrace the idea of insurance inclusiveness, both for life protection and health/ critical illness covers.
We firmly believe that unless life protection is provided to the masses at the bottom of the pyramid, the true insurance penetration cannot be achieved. On the health side, our philosophy has been to offer low cost, relevant, and very competitive solutions to cover major illnesses related to Heart, Cancer and other life threatening illnesses. Therefore, our aim is to have products and solutions that appeal to all segments of customer and specifically to masses which are also very affordable. Prime Minister’s schemes like PMJJBY has been a big boost towards insurance inclusiveness.

What’s your distribution model like? Are you focused more on channels, banca or direct to customer? 
We started business in 2008 and for the past ten years, we have been operating on a bancassurance model with each aspect of the business tailored to the specific needs of the vast customer base of distributing banks spread across the length and breadth of the country. However, in recent years digital has emerged as one of the channels for future. We have begun our journey on digital and it will be a focus area for us in addition to Banca. We have also started direct sales force last year and will be selectively growing the same as well. Also, we have been working on taking significant initiatives on the distribution front along with our banks on how to use customer segmentation, closer integration with bank's systems and processes, and leveraging the non-branch customer interfaces of the bank for insurance distribution.

How do you see the digital distribution of insurance products influencing the market over the next five years?
The Digital platform has seen positive momentum in the recent past and we see encouraging trends, in terms of growth. To capitalize on the opportunity available in the digital space, product innovation will be the key.  While the market for pure protection products has grown over the years, the launch of low-cost online ULIPs has added an impetus to the commercial opportunity available. The ISNP (Insurance Self Network Platform) guidelines released by the regulator would encourage more customer centric solutions to be presented on the online platform of the partner banks as well. I see a visible inclination of the customers towards buying products online and this is bound to further increase.  

How do you see the resurgence of ULIP’s playing out over the next few years? Anecdotal evidence would suggest that clients are still sceptical about ULIP’s as a product.
We see ULIPs playing a very important role in the insurance space. With multiple positive changes to ULIP regulations (in favor of the end customer) over the past decade, this category of product has come of age. The new age ULIPs fully compete with other alternate investments available, and many a times turn out to be a better package overall (considering comprehensive benefits of ULIPs in long term).

ULIPs inherently have an advantage of long term disciplined investment, tax advantages, in-built life cover, and low charges (new age ULIPs offer very competitive charge structure) and the flexibility offered in terms of partial withdrawals and switch. However, we must keep in mind that ULIPs are not meant for all. One needs to have a risk appetite for market linked investment equity/debt investment (read as volatility) and a medium to long term horizon to see desired growth. Some customers are still skeptical about ULIPs due to historical perception (high cost), their lower risk appetite and un-willingness to take a long term view of their investments.

Has there been a marked increase in awareness about pure protection products of late? Do you feel this is a positive sign?
Over the last few years, awareness around the need for protection has grown exponentially, thanks to internet, social media, and easy availability of protection products at very affordable price points. Consequent to such increased awareness, the online pure protection market has grown significantly and there is far greater recognition for the need for an all-round protection cover. Given the attractive price, the basic pure protection term plan still draws considerable attention. Also, as mentioned earlier schemes like PMJJBY have also been a big boost in increasing the awareness of insurance among the masses.

Increase in protection awareness and take-up rate is surely a positive sign as it marks an entry into the very basic form of insurance. In a country like India where motor insurance is compulsory, there’s still a very low penetration of life insurance. This is both concerning and an opportunity to be tapped. As people at large (thanks to PMJJBY type of government mandated schemes) have also started understanding the importance of insurance, the awareness is only going to go up and slowly move towards other insurance solutions as well (savings, health, retirement, child planning etc.).

Lastly, do tell us a bit about your business goals for the upcoming fiscal.
Our vision is to have 1 million customers on-board by the year 2020. Our partner banks have a branch network of over 10,000 branches and a cumulative customer base of 115 million. We have aggressive growth plans to reach out to these customers so that we could offer them our products. The next wave of our growth will also ride on the Digital platform which addresses needs of a specific segment which prefers to deal in a non physical manner and has a huge potential. Our focus is to deliver wider insurance penetration and is working towards strengthening our digital and physical channel to reach out to customers in Tier-2 and Tier-3 cities.