Whole Life Term Insurance Is An Ideal Product For The Indian Market: Souvik Jash, Appointed Actuary, Aegon Life

What key trends do you see emerging in 2019 in the life insurance space? Are we witnessing a definitive shift towards pure risk products such as term insurance?

Life Insurance will continue its pivot towards digitally enabled sales practices and products. I believe, analytics will become more incisive and will enable us to fulfill unmet customer needs and open new markets. To answer the second part of the question, yes, we are witnessing a definitive shift towards pure risk products due to increased levels of insurance awareness amongst young Indians and higher profit margins for insurers. In the next year, companies will continue to vie for market share in a heavily commoditized term insurance market through product and process innovations.

In your viewpoint, what are some of the underwriting challenges that are peculiar to India as a country?

A key underwriting challenge that companies face currently is to identify organized/unorganized frauds. Insurers do not have a large appetite for frauds and such instances result in insurers losing a lot of money which indirectly impacts future price of insurance. Insurers are working towards a Blockchain-led fraud management system to cull out these frauds. We also hope for UID-ADHAAR based verifications to come back in some form to help us underwrite lives non-intrusively.

At Aegon Life, how to do manage the fundamental conflict of interest at any insurance company, that exists between the sales force and the underwriting team? How do you ensure transparency and full disclosure from your clients at the proposal stage?

Aegon Life has taken a direct-to-customer digital approach for majority of its sales. This approach involves engagement with customers to understand their needs and provide solutions to cater to those needs. With this approach, we have observed that if customers understand the need and mechanics of their insurance product, the level of disclosures are very transparent and forthcoming. Customers prefer certainty of payment of claim in the event of unfortunate claim, on any given day and understanding this influences the customers to engage truthfully.

How do you contain moral hazard in your portfolio? Do you see that as a significant issue?

Fraud linked adverse selection is a bigger issue for insurers as compared to moral hazard. Moral hazard plagues health & motor insurers more than Life Insurers.

A lot of insurers are now pushing whole life term insurance, as a sort of “guaranteed bequeathment”. In your view, is this the right approach? Is this not a suboptimal financial solution?

Whole Life Term Insurance is an ideal product for an Indian Market that looks for a high probability of return on investment even under term insurance products. There is definitely a market for such products in India and it is evident from the sales numbers that such products are garnering. The product also enables customers to optimize estate management. It is definitely not a sub-optimal financial solution where the monies that a customer invests in such plans end up earning a decent return over a long period of time. 

Lastly, do tell us a bit about your new product launches planned in 2019.

We have a very exciting product launch plan for 2019 where we will focus on innovations in the protection space. We have a couple of product ideas that will look to open new markets whereas the others will look to go deeper into the existing market space and innovate on customer experience and benefit options.