Private life insurer Max Life Insurance has recorded a growth of 15 per cent during the first nine months of 2013-14, in a flat industry environment. In an interview to Business Line , Rajesh Sud, MD and CEO, said for the life insurance industry, which is facing a series of regulatory changes, there is a need for stability. Excerpts.

How do you see growth for this fiscal year?

Several new products have been introduced. I think it will take some time for the distributors to understand the new products; there is a lot of training involvement so it is not just about informing a few corporate or institutional sellers. I think it will continue for a couple of more months after which we will see the real results in terms of customers being able to understand the products. Growth has been flat for the private industry in the last nine months except the last two where there was a rush. If you take those two months out, the industry has actually shrunk. So, my outlook for this year will remain flat.

The life insurance industry is facing heavy agent attrition? What are you doing to retain agents?

We have a supervision model, so we don’t just bring people in, license them and then say do what you want. We work with them and we have a defined structure — sales and development mechanism — which our agency development managers work on with the sales force. There are reward recognition schemes, top-ups and benefits based on principles that if you sell better quality, you will get better.

We do a lot of work on the training and retention side but what doesn’t help is the overall environment in the industry and the frequent changes that we have had to deal with.

There is a limit that individuals can live with and this is not the only job they have. Many of them have come back to say this is too tough and the reward equation has turned adverse.

What are your views on the compulsion on banks to become insurance brokers?

It is a substantial and structural change in the industry. From a longer-term perspective, I am a lot more focussed on what the customer should get — like good advice, suitable products and reasonable prices. Those outcomes, I completely agree with, but it is simplistic to say that by becoming brokers you will get there automatically. For instance, in China, where they tried the model, mis-selling complaints actually went up when banks were allowed to sell multiple insurers because it became a fish market. Life insurance is a complex business, so comparing us to any other business like mutual fund is a mistake.

If customer centricity is the goal, make us accountable on persistency. But to interrupt the system where many joint ventures have invested is disruptive especially on the back of four years of policy change that we've had. The real context of the industry is that it is battered right now and it is really feeling the pressure. There is a need to promote it and give it some stability.

Do you have any plans to look at overseas operations?

We evaluated that. At this point in time I think there is enough challenge in domestic quarters. I am still very hopeful for the long-term success of this business, especially with the demographics of the country and the need for financial security.

Also, if you look at numbers, if we can get just 10 per cent improvement in penetration, it can mean a lakh crore of new premium, so that’s the size where we are. So going abroad for select segments where there are NRIs can be an option to evaluate, but we believe there is enough here.

Is the private industry shifting away from ULIPs?

In a broad sense, the answer is yes. We have done some work on that and read the customer faster. What we heard from Indian customers was that they don’t associate life insurance with too much of volatility as far as returns are concerned. They are used to the old traditional products and we did an analysis and asked them to trade off between high returns and high volatility versus reasonable moderate returns and low volatility. This is the classic construct difference between a ULIP and a traditional product. There was an overwhelming preference for stability rather than volatility in life insurance products.

Do you see this as a phase of consolidation for the industry?

The overall environment in the last five years has tested people in terms of both their resolve as well as their capabilities to run a successful business. We will evaluate every option that comes our way for inorganic growth because we are in a position where business is doing well including our financial solvency, which is at 530 per cent. We have a lot of surplus cash on the balance sheet, which can be used for acquisitions.

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