 "Profitability with high persistency will be our focus area: Munish Sharda")
Future Generali India Life Insurance had a drop in net losses for the third quarter of 2013-14 and is moving towards break-even. Munish Sharda, managing director and chief executive officer, who joined the company in January, talks to M Saraswathy about its profit strategy. Edited excerpts:
The company had a net loss of Rs 33.4 lakh for the third quarter, compared to a Rs 7.1-crore loss in the same period last year. How have the losses been curtailed?
We have managed our expenses well and have looked at the operating efficiencies. In this market, you have to run the business tightly and in a focused manner. Further, we have had a well-run and productive agency force, running good direct business. Every year, we are moving towards break-even. We will take steps towards profitability but our focus will be to have profitable and customer-focused business with high persistency.
Are you launching products for the rural market as well?
We are combining the bancassurance guidelines with others and are increasing the business development effort, looking for opportunities in that space. The company is looking for tie-ups with more banks in the rural market, whenever the opportunities open for distribution.
The company has seen an improvement in its persistency ratios. What steps have you taken for this?
This starts with the right product construct, right sales procedure at the front-end and talking to every customer before a policy is issued. It also involves rewarding people for long-term good behaviour and high persistency.
It is also crucial to set up enabling infrastructure. We have set up infrastructure to pay, we are tying up with banks to collect premiums. The company has also enabled customers to transact online and pay through phone.
In the sector, net premium, after minusing surrenders, has been low for several insurers. Is it a challenge?
The net premium has been a challenge for many companies and surrenders have been high. But, with the sector’s focus on persistency and customer satisfaction, the business will deliver long-term value to the customer. Persistency has been an important element for all insurers.
With the Future Retail-IITL deal being completed, has the company undergone any changes?
We have not undergone any changes, though we have gained from IITL being made a part of the joint venture. IITL brings strength to the company.
The company had an advantage of selling through malls of the Future Group. Has this channel been utilised to its maximum potential?
We have a large distribution footprint through the Future Group’s Big Bazaar and other retail formats. It is a large opportunity and Future Group understands this customer segment very well. They have a rich database that can be segmented and products can be made for tailored to the appropriate segment.
Since you also have a general insurance company in the group, will combo products of life plus health cover be on the anvil?
It is work in progress for us; we are understanding the customer segment. Combination products should be simple for the customer to understand and easier for him to buy and beneficial for the long run. We have plans to do it. Though these combo products have not done well in the past, there is an opportunity. We will cross-leverage the strengths of our non-life business to see what we can bring for our customers.
The key is is to make it simpler for the customer to understand.
The company had a net loss of Rs 33.4 lakh for the third quarter, compared to a Rs 7.1-crore loss in the same period last year. How have the losses been curtailed?
We have managed our expenses well and have looked at the operating efficiencies. In this market, you have to run the business tightly and in a focused manner. Further, we have had a well-run and productive agency force, running good direct business. Every year, we are moving towards break-even. We will take steps towards profitability but our focus will be to have profitable and customer-focused business with high persistency.
Are you launching products for the rural market as well?
We are combining the bancassurance guidelines with others and are increasing the business development effort, looking for opportunities in that space. The company is looking for tie-ups with more banks in the rural market, whenever the opportunities open for distribution.
The company has seen an improvement in its persistency ratios. What steps have you taken for this?
This starts with the right product construct, right sales procedure at the front-end and talking to every customer before a policy is issued. It also involves rewarding people for long-term good behaviour and high persistency.
It is also crucial to set up enabling infrastructure. We have set up infrastructure to pay, we are tying up with banks to collect premiums. The company has also enabled customers to transact online and pay through phone.
In the sector, net premium, after minusing surrenders, has been low for several insurers. Is it a challenge?
The net premium has been a challenge for many companies and surrenders have been high. But, with the sector’s focus on persistency and customer satisfaction, the business will deliver long-term value to the customer. Persistency has been an important element for all insurers.
With the Future Retail-IITL deal being completed, has the company undergone any changes?
We have not undergone any changes, though we have gained from IITL being made a part of the joint venture. IITL brings strength to the company.
The company had an advantage of selling through malls of the Future Group. Has this channel been utilised to its maximum potential?
We have a large distribution footprint through the Future Group’s Big Bazaar and other retail formats. It is a large opportunity and Future Group understands this customer segment very well. They have a rich database that can be segmented and products can be made for tailored to the appropriate segment.
Since you also have a general insurance company in the group, will combo products of life plus health cover be on the anvil?
It is work in progress for us; we are understanding the customer segment. Combination products should be simple for the customer to understand and easier for him to buy and beneficial for the long run. We have plans to do it. Though these combo products have not done well in the past, there is an opportunity. We will cross-leverage the strengths of our non-life business to see what we can bring for our customers.
The key is is to make it simpler for the customer to understand.