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We Offer A Balanced Product Mix Strategy Which Is Mostly Protection-Led: Tata AIA Life Insurance’s Bharat Kalsi

In an interview with BW Businessworld, Bharat Kalsi, Sr. VP – Corporate Strategy, Analytics, Marketing & Communications, Tata AIA Life Insurance, talks about digital trends in the insurance sector and more

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On the product front, do you see a firm and decisive trend shift towards pure protection products like term insurance? How does this bode for the Life Insurance industry as a whole?

There is indeed a clear trend in the industry veering towards pure protection.

The shift is clearly visible in the protection mix of the top 5 private life insurance companies. Tata AIA life for instance, had a retail protection mix of 18.4% as of FY ‘19

The protection trend includes pure term products as well as annuities. These essentially cover the risk of dying young or living too long. 

The primary objective of a Life Insurance policy is to provide protection cover to the policyholder. Customers buy Life Insurance policy because it essentially provides a financial safety net for the beneficiaries/ families in the event of the policyholder’s demise. A term insurance plan is the most affordable form of life insurance cover. Here the premium depends on the expected value of the claim.

What steps does your company take to facilitate and foster informed decision making from clients, and curtail mis-selling?

One of the key reasons why insurance penetration is low in the country today is because of low financial awareness. Life Insurance companies are individually and collectively working towards making customers more aware and therefore better equipped to take decisions regarding policy purchase.

Today, many Life Insurance companies have need-analysis tools that help consumers evaluate their needs in a methodical and transparent manner. These include Financial Health review tools as well as Human Life Value calculators that help consumers assess their needs with total transparency and without individual influence. 

This helps the potential customer to understand his or her own financial needs and evaluate what works best for them.

At Tata AIA, we also use video Post Sales Calling that ascertains that the customer has indeed understood what is being purchased. This is a clear effort to eliminate mis-selling opportunities or claims of fraud at a later date. There are also methods like predictive analysis that help curb instances of fraudulent claims.

On the retirement products front, we’ve observed that the yield on most annuity products assuming a normal life expectancy, works out to barely 6-7%. What’s your take on this? 

Annuity rates are guaranteed for life and the level of such guarantees depends on the return of fixed income instruments available, primarily government securities. Given that bond yields are currently in this range, any guaranteed benefits product offering returns in this range is attractive. One has to note that by purchasing an annuity, they are locking into currently available annuity rates for life. So, if interest rates fall over the next 20-30 years, their annuity income will not reduce. The customer would be exposed to long term interest rates falling if they are invested in short term instruments such as bank deposits.

Aren’t Mutual Fund SIP’s and SWP’s a superior option? 

It depends entirely on what the customer is looking for and is comfortable with. Different people have different requirements, disparate payment capabilities and financial liabilities. The insurance plan needs to be relevant to their needs and situations.

Annuity products offer guaranteed benefits be it income for life or the amount paid on death. SIP’s and SWP’s for retirement planning have no rupee value guarantees so once retirement income is exposed to market risk. So, SWPs and annuity could supplement each other rather than completely replace each other.

What are some of the key digital trends that you foresee for Life Insurance in India, by 2025?

In the last two decades, the Private Life Insurance industry has grown exponentially. With 23 private players coming into the fray, the industry evolved very rapidly. But it is still a relatively new industry, especially when compared to others that have been around for much longer and are heavily reliant on technology, e.g. banking. There has been a fervent effort to become digitally advanced, especially because the end-user is now accustomed to a sophisticated digital experience and a life of convenience and ease

This has been made possible to a large extent through intelligent deployment of technology. All customer communication and touchpoints have become more transparent and accountable, along with improved speed, efficiency and customer comfort. Tata AIA Life best big on digital as it brings Ease of Doing Business for the customer.

We are easing the process for the distributors as well as for the consumer directly by providing technology enabled need-analysis tools that help consumers evaluate their needs in a methodical and transparent method. These include Financial Health review tools as well as Human Life Value calculators that help consumers assess their needs with total transparency and without individual influence. 

While purchasing the policy, how smooth and hassle-free is it for the customer to submit the necessary documents, the application forms or the KYC documents? How easy is it to have them do medical tests and how do Insurance companies assist them with that? We have created Apps that allow consumers to access, download and upload information on their smart phones. Technologies like Optical Character Recognition assist with document scrutiny bringing down drastically, the chances of human error and of course save precious consumer and Distributor time. Further simplifying the Consumer journey is the collation of customer data from alternative sources. API for instance, makes data gathering a seamless process. No consumer intervention is required for this and all critical data is collected from legitimate sources.

At Tata AIA, the use of advanced digital technology has enabled dynamic NPS which captures critical data at all the touchpoints in real time and therefore becomes an extremely useful tool to understand customer responses. 

Tell us about some recent innovations that have positively impacted claim settlement and underwriting, for the industry as a whole.

At TATA AIA, we do data-driven underwriting using predictive models for risk-assessment. Data sources like Credit bureaus for financial underwriting save substantial amounts of time reducing the time from days to hours.

Technologies like OCR [Optical Character Recognition] and Video tools in the buying journey not just reduce on-boarding time but also prevent mis-selling and fraudulent claims at later dates

Lastly, do you foresee a re-emergence of ULIP’s over the next few years? (ULIP 2.0)

At Tata AIA we are primarily focussed on protection. We believe the primary objective of Life Insurance is to offer Life Insurance protection cover.

We offer a balanced product mix strategy which is mostly protection-led.

Having said that, the general market looks buoyant and those who have the propensity to take market risk, will opt for ULIP products owing to the current improved market performance. 

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