On camp at Madrid, Spain Aviva Life Insurance Company, among the pioneers of the bancassurance model in India, will be focussing on a balanced distribution model, Mr Bert Paterson, Managing Director & CEO, said on Tuesday. He was speaking at the AvivaLife Insurance Summit at Madrid, where a team of journalists from India were taken by the company.
Explaining further, Mr Paterson said that the company would be ramping up its direct sales force (agents) this year. It would be doubling the force to 66,000 this year from 31,974 agents in 2007.
He said that the contribution of the agency force to the premium income had increased from around 30 per cent in 2004 to about 40 per cent in 2008. The company hopes to increase this to 50 per cent soon.
He added that the focus would be on improving the quality of manpower. The last year had seen an explosive growth in the agency force in the industry. All private players had added nearly 5 lakh to the agency force, representing an increase of 128 per cent over the previous fiscal.
Mr Paterson pointed out that the market share of the market leader, Life Insurance Corporation of India (LIC), had fallen by 15 percent and had gone below 50 per cent for the first time in 2007-08.
He said that the private players had gained market share at the expense of LIC. He said that the industry, which had 19 players in the field now, would double in 5 years.
Bancassurance trends Talking about key trends in bancassurance, Mr Paterson said that banks were becoming manufacturers from being distributors earlier.
This was a reference to the fact that many banks were entering the insurance industry directly rather than only functioning as distribution arms of other insurance players. He said that there were few banks which remained for tie-ups and this would lead to an increase in entry costs for bancassurance partnerships.
Mr Paterson said that the cap on foreign direct investment in insurance at 26 per cent would have to increase in order that the insurance industry had sustained growth. He said private players need over Rs 10,000 crore to maintain the current growth rate.
Later Mr Paterson also announced the launch of Aviva’s foray into health insurance with the launch of a new product ’Aviva Health Plus’ as well as two other unit-linked insurance plans - Aviva Sachin Century Plan and Aviva Lifeline plan.
Source: The Hindu Business Line
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