The life insurance industry in India has been witness to a number of changes in recent years; however, what has not changed is the ‘perception’. Though there are some products, particularly in the ULIP space, which can perform better than certain systematic investment plans (SIPs), investor perception is not too positive. All this is likely to change once the proposed ad campaign comes out highlighting the importance of insurance. In an exclusive interaction with BusinessLine , Tarun Chugh, MD and CEO, Bajaj Allianz Life Insurance, spoke about the way forward for the Indian insurance industry and Bajaj Allianz Life’s plans to create a well-diversified product line and distribution network to grow its business. Excerpts:

Life insurance in India is still construed as a product that comes into play only when something goes wrong, thereby focussing largely on the mortality aspect. How do you see things evolving, going forward? What would be Bajaj’s focus areas?

There are four basic areas where life insurance can work – one is the risk of dying early – mortality; the risk of living longer covered through pensions; the risk of health in critical illness called morbidity; and the risk of not being able to save enough for your long-term requirements, or creating long-term wealth. These are the four areas where insurance companies can operate as they have licence.

Our focus is largely on helping customers achieve their long-term goals. For us, the order of preference would be creating long-term wealth and achieving health and pension goals. We will also be focusing on coming up with innovative products around mortality.

But the pension side of insurance is largely underserved and underpenetrated even in terms of products. What do you think should happen from the regulatory perspective to take this forward? How big is pension as a category for your company?

Pension products are grossly undersold and underpenetrated. There are draft product guidelines from the IRDAI, which are favourable towards pensions. We are hoping it will help if they get implemented soon. Pension is a big space, a lot of people meet those needs through various other products. But the risk of living longer, which is annuity, is only covered by life insurance companies. The industry should come out with innovative products to help grow this segment.

For Bajaj Allianz Life, close to 7-8 per cent of our customers have been buying products to meet their pension needs. The figure is much lower for the industry as a whole. But we expect things to improve and, for our company, we expect the share of pension to grow to 20-25 per cent. However, it might not happen in a year or two, it takes a long time to develop a sector.

What are your plans to strengthen your distribution channel?

We have a very strong network of around 638 branches. This apart, we have a robust digital platform where we have seen good growth. We sell a lot of ULIPs (unit-linked products) online, and we are the largest in the market now. We have already done about ₹160 crore of online ULIPs so far this year, which by itself is changing the look of the sector. We have also launched a new channel called proprietary sales force (direct face-to-face sales).

On the bancassurance front also we have some new tie-ups, such as the one with India Post Payments Bank, Bandhan Bank and Kerala-based ESAF Small Finance Bank.

You said the the insurance industry suffers from ‘perception’ issues. How do you see things changing, going forward?

Yes. If you look at the life insurance industry, a lot has changed in the last few years, but what has not changed is the perception. But now the industry is coming together and investing in building consumer awareness. There has been lot of advertisements from the mutual fund sector, and they have done a good job. IRDAI has been telling us and guiding us to do something ourselves as well. So, all companies have come together, and we are going to start an ad campaign not too far away in the future. This is likely to come out sometime in January 2019.

IRDAI is working on adopting a sandbox approach to promote innovation, thereby improving penetration and reach of insurance. What is Bajaj Allianz Life doing on this front?

On sandboxing, I am happy that IRDAI has come out with more clarifications on the practical aspect of regulation. We are looking at sandboxing largely in the area of fintech.

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