Despite reducing premiums, revenues have surged 70-80%: Ceo of Aegon Life

In a Q&A, Vineet Arora speaks about the company's journey, lessons and implications of going completely digital

A little over two years ago, Aegon Life Insurance Company decided to reinvent its model and go completely digital. The company's chief executive officer and managing director Vineet Arora speaks to Advait Rao Palepu on the journey, lessons and implications of going completely digital. 

What were the implications of scaling down the agency business while re-inventing Aegon Life as an early mover to the omni-channel model? 

Aegon Life took the digital route couple of years back and went direct-to-customer (D2C). Our sourcing channels are largely digital and we are the pioneers in offering term plans online. We service customers through our own branches and our relationship management team who also up-sell/cross-sell as per customer needs. We have seen growth bounce back, we grew our premiums by 78-80 per cent in FY2018 on the low base of last year. Therefore, there was curve and recovery. More than the cost side, what it means is that the organization actually needs to shift the way it thinks about customers. That is a more difficult aspect than just looking at costs, because we have changed how we culturally look at the customer. Traditionally, the intermediaries play a big role in influencing customers. (But) when you go direct, this changes things completely. Now we are listening/talking to customers directly and understanding their needs, which required changes at our end in terms of beefing up our technology and proactively servicing them. When this call was taken there was an obvious reduction in our numbers on the premium side as certain channels had stopped sourcing customers. We are primarily a protection company, and our protection business grew manifold by about 80 per cent last year and in the first six months we have seen a growth in excess of 30 per cent over last year.

What are some of the notable trends for the company as a digital-only insurer?

Actually there is a large segment of customers which is digitally savvy. A 50-year-old customer who is comfortable transacting online and does internet banking or books tickets online, is digitally-savvy for us. However, some customers do prefer a little more human interaction, which we are happy to facilitate. Our target age-group is 30-35, given our product offerings, as someone in their 30s is at that phase in life where a term insurance product becomes of interest.

Does being a digital-only insurer attract a skewed demographic of customers, the younger lot?

As a trend, digital transactions will only increase in the future with the next generation coming of age. You can see this shift in many industries like banking, broking and travel. As the generations shift this will only accelerate. That is the broader trend we are focused on, it could be one year or five years. If we can create simplified products without much industry jargon, customers will happily buy online.

As an investment company, how do you view the  rising volatility in the financial markets, both in equities and debt?

We have to do our credit-risk underwriting more so in volatile times like these. If bond markets face pressure, then equity markets will definitely face pressure too. We have to look at it as a systemic shift that has happened in the last few years. A lot of credit has moved from banks, as they were not lending enough, to money market instruments or bond funds, and money markets are more prone to liquidity pressures. IL&FS default is a big event and we will have to watch for the next couple of months on how this event pans out. At Aegon Life, we have been very fortunate to take the right decisions. We are conservative on our investments and every month we keep reviewing them. Investment regulations are well designed and define how such situations need to be handled.