& #39;Different Sales Models Needed In India & #39;

Graham Morris is a director at the Asia Regional Consulting Web, which speacialises in consultancy services on distribution of financial products. He spoke to Business Standard about distribution of insurance products in India.

Excerpts.

How is India different from other markets?

There are issues like regulation, stage of development of the financial system, the sheer size of the country, great differences in terms of income groups and the geographical spread. As someone said selling in India is like selling in 25 different countries. In such a situation you would need lots of different (sales) models and there is a need for insurance companies to have an adaptation of a variety of different applications for different areas in the country.

 

How difficult would it be for the insurers to sell to consumers who are only used to agents?

There are various channels of distribution from call centres to tele-marketing, direct marketing, work site marketing, bancassurance and agency.

The good thing about India is that people are open to new things. The traditional approach is not necessarily the best approach. When people have more choice in their hands they would realise the advantages. At times, consumers find the agents too pushy. But when policies are available in banks the approach is not very pushy but a very pleasant one.

Do you think bancassurance is the right strategy?

It will take a long time to establish its presence because both the people and banks are not used to it. For banks it is a move towards selling financial products and not just banking products. Private banks such as ICICI Bank and HDFC Bank have moved but it is a bigger challenge for state banks.

How prepared are the public sector banks?

They are very well served in terms of reach and coverage but the practices employed by them would be pretty traditional. Their ability to change would be limited. They would find it a big challenge but the change has to come from the top. It won't happen overnight. It could take five or ten years to change.

It's a long slow process. But if they have the will, leadership they can do it. It's the oil tanker syndrome, it takes a long time to change the oil and move the tanker. So, the state banks have a strong base but the danger is if they change too slowly then the private banks will benefit.

How are the state-owned insurers placed?

They are positioned strongly. It is always difficult to knock off people from the top, specially when they are in a commanding position. The best competition come from state banks which have stake in insurance companies.