The Hindu Business Line : ‘We have no plans to bring down rates further’

We have a basket of three term-plans and two ULIPs, along with two riders. Our strategy is to keep it simple for the distributors and be among the best in terms of customer value.

RAJIV JAMKHEDKAR, CEO, AEGON RELIGARE LIFE INSURANCE

Suresh Parthasarathy

With the opening up of insurance sector, as many as 17 private players are fighting it out trying to enhance their market share in a relatively under-penetrated Indian market. A majority of them have tied up with foreign partners, with the result that many innovative insurance products are now on offer. In an interaction with Business Line, Mr Rajiv Jamkhedkar, CEO, AEGON Religare Life Insurance, shared his business plan, products pipeline and his outlook on ULIP products.

Excerpts from the interview:

Could you outline AEGON Religare’s business plans over the next five years?

We are here to serve millions of Indian consumers and help them plan their life better. Our business plan for the next five years is to simply build an outstanding company that delivers on that promise.

We have set higher-than-industry targets in our business model: higher productivity of our financial advisors, a new channel of full-time financial advisors, faster branch roll-out and a more balanced distribution mix.

Please tell us about your partners.

AEGON’s businesses serve over 40 millions customers in over 20 markets throughout the Americas, Europe and Asia, with major operations in the United States, the Netherlands and the United Kingdom. With headquarters in The Hague, the Netherlands, AEGON companies employ more than 30,000 people worldwide.

With Euro 271 billion in assets under management, AEGON has more than 160 years of experience, its roots going back to 1844. It currently ranks as the fifth largest life insurance company based on revenues, according to the Fortune 500, July 2008 survey.

Religare has a truly pan-Indian footprint, going well beyond Tier-1 cities, and is present in more than 1,550 locations spread across over 450 cities and towns. Religare’s business is distributed across three key verticals — the retail, institutional and the wealth spectrum.

Existing insurance players have tied up with banks to market their products, and Bancassurance has started to contribute major chunk of new premiums. How will new players tie up for this channel?

AEGON Religare Life Insurance has a multi-channel distribution strategy. The company’s products will be distributed through a 6,000 member tied-agency force, 300 company-employed financial counsellors, Religare’s over 600 branches and corporate agency and brokers.

We will evaluate our option on the Bancassurance channel in the future.

Your product basket is seems to be smaller compared to peers. Are there any innovative product coming from Aegon Religare?

We have recently launched our operations and have a basket of three term-plans and two ULIPs, along with two riders.

Our product strategy is to keep it simple for the distributors and be among the best in terms of customer value.

AEGON Religare Life Insurance has rolled out innovative and customised products as against the competition, and will continue to do the same with each product offering. Some innovative features in our products include:

Auto-rebalancing: At the end of every policy year, this feature automatically rebalances the allocation of our customer’s investments in various funds to the original proportions he/she had chosen.

Invest Protect option: This option aims to protect the customer’s money by systematically shifting the fund from a higher equity-allocation fund to Secure Fund – investments in fixed interest securities and money market instruments.

Enhanced Sum Assured: This feature allows one to increase their life cover at two stages (upon getting married and the first child birth) without the hassles of undergoing medical check-up or filling up any health-related questionnaires.

With reduction in the solvency margin for term products, are you planning to reduce premiums on such products?

Our term product premium rates are highly competitive and are currently among the lowest in the industry. There are no plans to further bring down the rates.

Going by the premium structure for shorter tenures, your premium appears competitive, but for higher sums insured, say Rs 50 lakh, and longer tenure your premiums are on the higher side. Please comment.

Our premiums are still among the most competitive, even for a higher sum assured or a longer tenure.

With the markets undergoing a very volatile phase, what is your short-term outlook for ULIP products?

ULIPs (unit linked insurance plans) are still a good insurance option for the average, long-term oriented, middle-class customer. ULIPs fill the need of protection along with market-linked returns that are definitely beneficial.

They are better than other instruments in the long run. As long as the customer evaluates his/her goals and needs carefully and then proceeds to purchase the right product/scheme, ULIPs are a good buy.

As mutual funds have started to offer risk cover products with their existing products, do you see any slowdown in the sale of ULIPs?

No. We do not see any impact on ULIPs as yet.

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