Max Life Insurance rewards its customers

For a policyholder of Max Life Insurance, there is a reason to be happy this New Year. The private insurer has announced a special one-time bonus for its active policyholders. The estimated amount to be distributed in this special award would be around 130 crore. The bonus shall start from February 1^st 2013 and shall be awarded at the policy anniversary of each policyholder.

The parameters on which the respective bonuses would be calculated are

 1. The bonus is calculated as a percentage of annual premium.
 2. Policies with higher term of insurance would earn higher percentage in this special bonus
 3. A reinstatement which causes a policy to be active will be eligible
 4. Surrendered policies will not be eligible

The CEO and managing director of Max Life Insurance expressed his gratefulness to the loyal policyholders and said that a share of their robust growth must also be given to their customers. Max Life Insurance is a joint venture between Max India and Mitsui Sumitomo Insurance, a member of MS&D Insurance Group.

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Healthy Growth Figures for both Life and General Insurers in India

The first half of this financial year (April 2012– September 2012) has registered growth for both life and general insurance companies. As compared to the same period last year, Life insurance companies have registered a growth of 11.2 % in new business premium collection while non-life insurance premium collection grew by 24.70%. The total collection for life insurance companies stood at Rs 26,889 crore while that of non life premium totaled at Rs 34001 crore.

The growth in the life insurers was primarily driven by individual regular premium policies which showed a growth of 21% during April 2012 – September 2012 as compared to April 2011 – September 2011. On the other hand single premium policies registered a negative growth of 9.6% for the same period, the possible reason being these policies are less attractive to prevalent tax exemptions.  The frontrunner in premium collection is once again Life Insurance Corporation of India (LIC). The premium collected by LIC helped to boost the overall figures in the life category while the private players suffered a negative of 13.7%. Among the 23 private life insurers only six insurers managed to show an increase in premium collection.

On the other hand the non life insurance category had a completely different story with the private players faring better than the four state owned general insurance companies. General Insurance companies like Max Bupa Health Insurance, Bharti Axa General Insurance and HDFC Ergo witnessed a healthy growth of 65%, 48% and 40% respectively for the period under consideration. Star Health and Allied Insurance was the only private general insurance firm to report a decline of 38% in premium.



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What the Insurers Need

The insurance business in India has come a long way since the Insurance Act of 1938. Some of the key milestones in this sector since independence of India would be the merging of all life insurance companies to form Life Insurance Company of India (LIC) in 1956, the merging of all general insurance companies to form four General Insurance Companies (National Insurance, New India Assurance, Oriental Insurance and United India Insurance) and the deregulation of the Insurance Sector in 1999 allowing foreign players to operate in the market. So is this market movement from monopoly to oligopoly really proving to be worthwhile for the Insurance Companies?

The ironclad regulations thrown by IRDA from time to time, economic and political pressures and tough competition has made it difficult for the insurance companies, especially the private players, to make any meaningful business out of it. This year we have already witnessed the exit of New York Life Insurance from Max India Limited. Others following suit might be ING and HSBC. Future group also plans to sever its ties with Generali while DLF wants to exit its tie up with Pramerica. Nine of the 23 private sector life insurers, including units of HSBC, Italy's Generali and Dutch life insurer Aegon, lost money in the year ended in March. The joint venture between France’s Axa and Bharti Enterprises, owner of India’s biggest cellular carrier, has never made money. 

So to revive and attract more investors and foreign partners certain flexibility must be introduced so that the insurers would be able to compete for higher margin and aim for higher penetration. Currently the penetration is only 4.4% in India against 8% in Japan and 9.5% in Britain. Business margin for India is also around 10-15% against 20-25% in China and 30% in Hong Kong.  A helping hand would be the recent proposed hike of FDI cap to 49%. It must be allowed to pass without any political mess up. Additionally the IRDA must have a more benevolent approach towards private players. Because of strict regulations, insurance products are mostly similar and hence competition is high. Without the option of product differentiation margins for insurers would continue to be meager. 

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Max Life Insurance disinvests 5% stake from Mitsui Sumitomo

The Insurance industry has started showing the first sign of reaction to the proposed decision of increasing the FDI limit to 49% from the existing 26%. Earlier this year in April 2012, Mitsui Sumitomo had acquired New York Life Insurance’s 26% stake in Max New York Life Insurance (Then a joint venture between Max India and New York Life Insurance). Since then the Insurance Company has be renamed Max Life Insurance. The deal was estimated to be around Rs 2700 Cr.

However unlike New York Life Insurance, Mitsui Sumitomo doesn't enjoy the privilege of increasing the stake from 26% in case the FDI limit was relaxed (as proposed now to 49%). Now when the Government has decided to increase the FDI limit, Max Life Insurance has disinvested 5% stake from Mitsui Sumitomo.  With Indian promoters having invested Rs 21,000 Cr and foreign investors putting in Rs 7000 Cr in the past decade in the segment, the new FDI cap raise is expected to draw in another Rs 30,000 Cr in the next five years, given the approval in the parliament.

Max India and Max Life Insurance chairman Analjit Singh stated that the disinvestment is a move aimed at unlocking the valuation from their life insurance business and that the decision is purely commercial. However with the above mentioned figures in terms of proposed FDI investment, can this stake disinvestment be also seen as a planned move for welcoming further foreign investments?

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India First Life Insurance Launches MagicBoard

The days of cumbersome sales meeting, extended paperwork and mis selling may soon come to an end for the Indian Insurance industry. For many years now, insurance companies have been brainstorming with their IT to bring out the cutting edge technology which addresses the above mentioned hassles surrounding the insurance industry.  A solution to this would automatically lead to a drop of expenses for both parties viz. the customer and the insurer.

A leap towards this idea has been taken by India First Life Insurance, a joint venture between two of India’s largest public sector banks- Bank of Baroda and Andhra Bank along with UK’s leading risk, wealth and investment company Legal and General. They have launched MagicBoard - a one-of-its kind integrated portable fulfillment device for a fully compliant, truthful and efficient Customer sales and service process that has a potential to be a force multiplier in sales productivity, customer delight and cost efficiency.

The device is an automated sales engine where a customer, distributor, employees and the insurance organization shares an integrated platform at real time to ensure honestly, transparency and agility of the sales process. Each of these stakeholders would have a single page view in his handheld tablet PC for real time access. Thus all the business processes viz. B2B, B2C and C2B are integrated and processed together. A sales person can now complete a sale on the spot (with or without access to internet) within 15 minutes. And instantly thereafter, the sale data is picked up by the MagicBoard command center at Mumbai and a verification call is made to the customer to cross check the information and the call is recorded for future reference by the customer. Once the data is verified, instantly a PDF file of the policy is pushed into the customer email and the summary printout is given simultaneously by the sales person through his blue tooth enabled portable printer which he carries along with him. A hard copy is also couriered to the customer to ensure that he has the same document through different delivery channels for cross check. MagicBoard also allows the sales person cater to customer requests, complaints and claims instantly through live video calls, instant access to key personnel in the corporate office etc.

Summarizing the MagicBoard has the following to offer to the Sales Executive and Customer

-       Helps optimize leads

-       Recommends the right product based on the customer needs

-       Details out the product key features and risk factors honestly through pre recorded product audio visuals

-       Eliminates cumbersome procedures - instant upload of documents, collection of premiums and policy printing

-       Provides business intelligence and MIS reports on a real time basis

-       Offers instant insurance at customer door step with end to end fulfillment

-       Uniform communications visually and verbally across all customer touch points

-       Complete migration of manual sales process to an integrated, IT enabled platform

Going by the habit of idiosyncratic investments by insurance companies in anything that boosts sales, we might be on the advent of witnessing some serious and revolutionary changes in the insurance buying process.

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