Malls on target

Future Generali to sell insurance policies in malls for a premium as low as Rs 49 per month. FUTURE Generali, the insurance joint venture between Kishore Biyani-led Future Group and Italian major Generali Insurance, yesterday launched Mallassurance, a unique initiative to sell insurance policies at the malls.

The policies, both life and non-life, will be available through kiosks and Future Money outlets in select malls for a premium as low as Rs 49, Rs 99 and Rs 199.The policies will include personal accident cover, house cover and also life insurance. They hope to create some history with these products and at Rs 49, Rs 99 and Rs 199; most Indian homes can purchase these policies and especially the young.

Their mission is to sell one lakh policies in the next 45 days. The products will be offered through 40 malls initially and will be ramped up to about 500 outlets in the next six months. The group is investing about Rs 185 crore in the life insurance venture and Rs 150 crore in non-life. Through the innovative marketing methods, the group can have a wider reach to the customers.

Source: Insuremagic

Insurance sale over the phone can help reduce premiums

Allowing insurers to conclude contracts over the phone will bring down the cost of insurance on low value covers. This channel would help the industry reach out to a section of buyers who do not want to deal with agents.

Concluding the sale over the phone makes it easier and more cost effective. The more cost effective it is, the lower will be the premium for customers. At present, direct marketing involves a two-stage process, where in the first stage, the prospect is convinced to buy a policy and at the second stage a representative approaches him for a signed proposal. This two step process makes it more expensive and reduces the rate of conversion.

The committee has suggested that the Indian regulator could consider allowing insurance companies to conclude a proposal through the telephone instead of insisting on a signed proposal form. The condition was that the conversation should be recorded and retained for at least two years. When insurance regulations were first drawn up, the technology for recording and storing voice conversations was not widespread. Today, most companies already record conversations between tele-callers and customers on grounds of monitoring quality.

Transactions over the phone would protect the interest of clients better as compared to a signed proposal form. For instance, in the case of proposal forms, there could be a case where the agent disregards material facts that are disclosed to him by the proposer. But in the case of phone contracts everything is on record. The insured has the option to change his mind as the 15-day ‘free-look’ period will be available. Also, cover begins instantly, the moment the payment is effected. In countries like Korea, such direct sales account for close to a fifth of sales. Insurance companies receive calls from prospective customers following an advertisement campaign. The tele-caller explains the terms of cover and concludes the contract over the phone and also receives payment by either credit/debit cards or through funds transfer.

Direct marketing is not expected to result in channel conflict between the agent and the company’s call centre. Direct marketing usually involves one or two simple products. The agent would have the full menu of products which would be much more complex than the ones sold over the telephone.

Source: Insuremagic

NIC banks on health biz

National Insurance Company (NIC) is in the process of an elaborate overhaul of its business processes to take on competition in the deregulated general insurance market.

Working on the prescriptions of consultants Price Waterhouse Coopers (PwC), the nationalised major is working on product and distribution led strategies with a projected target of Rs 4,500 crore premium collection in 2008-09, a roughly 12% growth.

As part of the restructuring, the company has relocated a few offices in Mumbai and Kolkata. It had hired PwC to work on its business re-engineering initiative last year.

Sharing some of the company's key initiatives this year, V Ramasaamy, NIC chairman and managing director, told DNA Money, "There are a host of recommendations from PwC, which we have started adopting in our processes as per our convenience. We are striving for a 25-30% growth in health insurance as part of the retail initiative.

Various such initiatives would include selling cheap flat and house insurance at discounted rates for which we are preparing sales campaigns targeting flat owners."

There will be a distinct focus on corporate clients this year. NIC has selected a few regional offices in Mumbai, Delhi, Chennai, Kolkata and Hyderabad to deal exclusively with corporate clients who pay annual premiums in the range of Rs 25-50 lakh.

"Cross selling of our products with our agency force will be significant this year." Ramasaamy said. "We have projected that 20% of the business should come from agents this year from 9-10% till now. The potential available in bancassurance is huge and the focal point would be encouraging agents to go to banks and drive businesses."

Following a PwC recommendation, NIC has introduced a centralised claim settlement system. As a pilot, it has started the process with one of its offices in Kolkata. This exercise, according to the chairman, has halved the time for settlement of motor claims from 40 days to 20 days.

The second-largest general insurance company by premium income and market share, NIC mopped up Rs 4,030 crore of premium in the financial year 2007-08, registering a growth of 5.7%.

"In 2007-08, the decline in insurance rates was lower than anticipated, down by almost 60-70%. We do not expect rates to come down any further this year," Ramasaamy said.

FY08 was a tough year for general insurers, as the free-pricing regime saw heavy discounting. Growth in premium collections fell at most companies as the sector grew just 12%.

In FY 08, NIC saw its premium from fire decline 22% to Rs 377 crore from Rs 481 crore the previous year. Motor insurance premium increased 6.6% to Rs 2,143 crore.

Owing to increase in rates, health premium grew 46% to Rs 685 crore, contributing close to 15% of the portfolio mix.

How has FY 09 year been so far?

"This year started on a good note with a 15.7% growth in April," Ramasaamy said. "We were able to clinch a group mediclaim in Andhra Pradesh and good support from bancassurance."

Source: DNA Money