<div><strong>Tarun Chugh</strong> – Managing Director & Chief Executive Officer, PNB MetLife Insurance talks to BW|Businessworld's <strong>Sunil Dhawan</strong> about industry trends, company’s online presence and the impending danger from frauds in life insurance industry.</div><div> </div><div><strong>At a time when the digital is getting a push, are insurance companies making use of technology and how?</strong></div><div>If you look at the capital deployment and cost spread of an insurance company, bulk of the expenses for the insurance company is at the front-end and the balance at the back-end. However when we look at the capital deployment for technology, the bulk of the investments is towards the back-end for most companies, including ours. </div><div> </div><div>While that may have been required earlier to set up systems, but now we need to invest more in building technology to develop the sales and post sales processes. Of late, huge progress has been made in this area. We have started to pilot tablets in Delhi and Mumbai, for filling up application forms and are doing the KYC requirement online. We are linking up the form-filling stage with the back-end including that of medical underwriting. We will soon incorporate the ‘need analysis’ section into the system.</div><div> </div><div>Last week we launched our e-commerce platform. The premium is lower when one purchases directly from the company website as the distribution costs are minimal. This is in line with IRDAI guidelines.</div><div> </div><div><strong>Being a life insurance company, what made you launch an online health plan? And you do not have an online term plan? </strong></div><div>I wanted to start a little differently. Everybody has a term plan but we thought of initially launching a health plan online which by itself is an innovation inthe market. It is a critical illness plan with return of premium feature, which helps a family replenish their finances in case of a critical illness. It covers 35 critical illnesses and the total premium is returned to policyholder if there is no claim during the period. </div><div> </div><div><strong>Life insurance council is considering setting up a fraud unit. How serious is the fraud in Indians insurance industry?</strong></div><div>Fraud is a very serious issue in the BFSI sector. In 2010 when insurance guidelines changed and sum assured (life cover) had to be minimum ten times of the first year premium to get tax benefits under section 10 10(D), we suddenly had instances of fraud go up. Frauds around death claims is a huge concern for the industry. To combat this, all companies are getting together and working together to create a centralised database of such frauds. </div><div> </div><div>There has also been fraud around surrenders that the industry is suffering. We recently discovered this in North India and filed an FIR which led to some of these people getting arrested. On surrender, proceeds typically go through NEFT to policyholder’s account. Due to our Risk Management Framework, we found that this was getting diverted to a different bank account. </div><div> </div><div>As per available industry data, complaints on unfair business practices was pegged at 1,68,482 for FY1012-13 for life insurance sector. This has shown an increase of 10% over the same period last year. </div><div> </div><div><strong>Going forward, what should be the role of regulator in shaping the future of insurance industry from here? </strong></div><div>I think the regulator is in a very sweet spot after a long time. With the Insurance Bill coming through, the Regulator is more empowered. We can already see that in the recent guidelines around distribution and penalties. And for the first time in years IRDAI is fully staffed. Our product approvals are faster now. I believe that the industry can record a growth of 5-7 per cent only by introducing operational efficiencies. </div><div> </div>
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