Direct agents channel needs to improve: M Ramadoss

Even as the de-tariffing (free pricing of products) move has just begun to take final shape, India's four public sector general insurers have been revamping their corporate structure and business practices.

One of the four — Oriental Insurance — has already kick-started moves to improve operations under the banner of project 'Nayee Disha' (new direction). The pathway to this direction has been laid in consultation with Boston Consultancy Group (BCG).

Three of the four PSU general insurers have hired BCG for the remoulding process. DNA Money's Khyati Dharamsi got a sneak peek into the areas of overhaul that M Ramadoss, chairman and managing director of Oriental Insurance, plans to undertake.

What is the first initiative suggested by BCG?

The study found that our operating officers were spending just 15% of their time in marketing products, while more than 35-45% time was consumed by the claims-settlement process. So we are segregating the claims process to separate offices. We have already established claims service centres in cities where we have more than 7 branches, and have now started focusing on cities where we have more than 5 branches.

What are the other suggestions of BCG apart from enhancing the claims settlement process?

The direct agents channel too needs to improve. Presently, direct agents have to fend for themselves. Even their commissions are delayed and there are no technical inputs, if they need any. There is no one to accompany an agent in case he is dealing with a big client. We need to ensure that he has adequate stationery to clinch a client. To execute all this, we will appoint agent managers. Each will be given 20-25 agents to handle. We have about 35,000 agents and we plan to expand their number.

Any other measures planned?

We plan to set up a centralised office for policy issuance. We also plan to set up a portal for web-based policy issuance. Also, we will enter into more tie-ups with car dealers and manufacturers and add some more distribution channels.

Are the higher commissions offered by life insurance products a hurdle in recruiting agents?

Yes. We cannot offer commissions as high as 40% that life insurance firms can. General insurance commissions are in the range of 5-15%. Moreover, the agent has to ensure that the client renews every year as general insurance products are structured on renewals. In addition, there are several issues when claims are not settled. It is more a regulatory issue. We have asked for an incremental premium. It requires an act amendment.

What has been the effect of de-tariffing on your company?

There was an expectation of an 80-90% fall in premium. But the fall was not to that extent. The fall in premium has been 17%. The fall was offset by people taking extra covers and also as volume rose.

Take for instance an existing 'good' fire policy holder, whose premium was reduced. He was suggested to take extra covers to the extent of which his premium has dropped. In these times, we were more worried about bottom line than top line. The premium on the group policies had gone up. But we lost some premium in the retail segment as competitors offered lower premiums.

Who are the major clients that you clinched this year?

We have entered into a three-and-a-half year deal with Tata Ultra Mega Power Project. We have been able to retain most of our big accounts. IOC is yet to come and we lost Mangalore Refinery and Petrochemical to Iffco-Tokio even though the difference in premium quoted was minor.

What growth are you targeting this year?

We have committed a growth of 8.6%, but we are targeting a growth of 10%.

Any actions that are planned on the third party administrator (TPAs) front?

We are planning to create a separate vertical to handle TPAs to ensure better management. There are operational issues with regards to TPAs. They are not making settlements in time. Our control on them is not very strong. We need to improve this situation to contain losses. Hospitals are losing faith in the organisation.

Some insurers are planning to form a separate division in their own organisation and discard the TPA. Do you have similar plans?

There are no immediate plans to set up a separate division. But it makes sense to do so. Of the total claims settled by TPA, merely 30-35% were cashless, the rest were reimbursements. The huge advantage proposed in having a TPA is not being met. Reimbursement claims are something even our office staff can process.

This year, we will be reviewing the TPAs and then decide what aspect of TPA management can be looked after internally.

What are the new products that you plan to offer?

We are planning to introduce a product in the motor insurance category. We also plan to launch a family floater plan on the health front.

How has the response to the senior citizens mediclaim been?

The response has been good. Agents, who were not getting full commission for selling policies to elderly, have been given full commission. We plan to review the change.

Source:
Khyati Dharamsi/ DNA MONEY