If an automobile must have an insurance policy, why not an individual?

In India, an automobile has to have an insurance policy but not an individual. Perhaps it is time each individual should have a term life insurance policy based on his income levels, says a top official of a private life insurance company.

"When an automobile is mandated to have an insurance policy why not an individual mandated to have a term insurance cover. The premium outgo will be very small," Anup Rau, chief executive officer at Reliance Life Insurance Company, told IANS.

"It is only an idea to increase the insurance penetration in the country. Many of those who have a policy are actually under insured," he added.

Rau also demands the insurance regulator to derecognise banks as corporate agents so as to force them to become insurance brokers.

As an agent a bank represents the manufacturer. The bank customers do not have a choice of products as there are more than 20 life insurers in the country, he added.

Meanwhile at Reliance the focus is on developing individual agency force, having a personal rapport with the policyholders, selling traditional polices, offering complete solutions and improving policy persistency.

The company also continues to train its eyes for business in small towns.

"We were hit by the regulatory changes in respect of distribution. It is to be made clear that what we were following was allowed by the insurance regulator who later scrapped that. Now the focus is on building the agency force the old way and improving the policy persistency (renewal ratio)," Rau said.

Faced with sliding renewal ratio, Reliance Life has focused its efforts on stemming it and achieved reasonable success, Rau said.

At the end of the first six months of the current fiscal, the company's 13-month persistency ratio stood at 53.3 percent down from 55.2 percent.

According to him, the target is to increase the overall policy persistency to 60 plus percentage.

"The persistency (renewal ratio) of policies sold by agents is 60 percent which is fourth in the industry. Following a financial solution based approach the productivity of our agents have gone up. The per policy size has now increased."

The average policy premium size has gone up to Rs.18,432 from earlier levels of Rs.13,419.

Rau said the average earnings of the company's agents have gone up to Rs.9,018 per month from the earlier Rs.6,825.

One of the interesting aspects of women advisors is that they stay invested in the profession for longer then men.

"If the women agent is married she uses her husband's network more effectively in getting business than a male agent using his wife's network," Rau remarked.

On the reasons for Reliance Life getting most of its business from Uttar Pradesh followed by West Bengal, Rau said: "We were one of the first companies to invest in branches in small towns."

He said the Japanese joint venture partner Nippon Life looks at the long term and is focused on setting and getting the processes right to rope in new customers and retain them over longer period.

"Nippon does not want the company to suffer the same problems faced by the company four or five years down the line," he said.

"The focus on building an agency force and having a large policy-holder base is the right way to build a life insurance company. Only such a player can be considered as true competitor to Life Insurance Corporation (LIC)," a retired senior official of LIC told IANS preferring anonymity.