CEO SPEAK — ANUROOP SINGH

‘The market can take many more players’

Anuroop Singh

Anuroop ’Tony’ Singh is a man who has always been in the hot seat. In the past, whether at American Express, Bank of America or ANZ Grindlays Bank, he has presided over assignments which have catapulted him into the limelight. Today, as the chief executive officer and managing director of Max New York Life Insurance Company, he is playing a pivotal role in the rollout of the company’s national operations. He is also the managing director (south Asia) of New York Life International Inc. In an exclusive interview with Harjeet Ahluwalia of The Financial Express, Mr Singh talks about the insurance industry in India and Max New York Life’s India strategies. Excerpts:

How has the market developed in the one year that insurance has been liberalised?
I think there is a huge opportunity in the market. Twelve life insurance licences have been granted and all the players are getting ready to launch aggressively in India. But it is a big market and these twelve are not too many by any count. It can take many more. Those who got the licences in the first tranche have obviously launched earlier. These are still early times. But those who have very clear strategies, thought them through, calibrated their plans and are executing them well, will certainly do very well.

Do you believe that the market size was smaller than initially envisaged?
I haven’t scaled down anything. I have said that from a basic premise, every human life is an insurable asset. It can be very easily argued that all the billion lives in India are the market. But we need to interpret the data into short, medium and long-term market size in the context of time frame and within it what is doable in terms of profitability.

For example, how many aspirations can be supported on the rural and socially underprivileged side?
If you look at the affordability of life insurance for the one billion, then in many cases the cost of processing will be higher than the cost of the premium. Therefore, economically, it’s not a viable market in the short term. As technology and systems develop, distribution costs come down, accessibility and penetration will improve. As an industry, we should all target the one billion population eventually. But in the short term we must be careful how we quantify that size and make sure we execute carefully, build up a profitable business and add on more business and deepen the market. We can thus ensure that all life companies are successful and they will be so only if they are profitable. A lot of companies in India -in any business—tend to lose control over profitability because they target too widely.

From a marketing point of view, this is 25 markets rolled into one is and a very heterogeneous society, very price-sensitive. That is why I advocate a step-wise approach.

Do you foresee problems in rural insurance vis-a-vis urban selling?
We have to look at the two markets separately. The marketing challenges, distribution channels communication vehicles-all have to be different. So treatment of the two is not absolutely synonymous. Within the rural market too there are two segments- commercially profitable and commercially unprofitable, but a very deserving case from a social responsibility perspective. And we have to separate that agenda because that requires different treatment altogether.
So there will be ample divergence in approach?

Over a period of time, life insurance companies will begin to segregate markets like some purely rural in a geographical sector and others only as urban players. A lot of specialisation will come as experience develops. But there’s lots to be done and if properly done, all the people responsible can make it affordable to those who can’t afford it today.

Being new in the business, what are the handicaps that private companies face today?
I’d like to divide this question into two: private and new players. Being private, we’d like only one even playing field. That is, the sovereign guarantee available to only Life Insurance Corporation should go. Because at the end of the day, the government is the final conclusive factor in any business in India, especially which needs tremendous financial reinforcement. We look for something similar to the role it plays for banks, nothing more, nothing less.

If you look at it from the perspective of new players, the challenges are similar to any place where insurance is opened the first time. Availability of data, systems and processes is also a challenge.
Those collectively built in a scalable way will mean a good quality business in the long run. Further, for knowledge to be assimilated with actual experience, for example, there is only that much you can pre-empt in the beginning.

It takes time to bring that confidence and bring new dimensions of value propositions to the market and different things happen when industry is nascent and when it matures.

How has Max fared in these last six months or so that it has been in the market?
Max New York Life (MNYL) was among the first to get licence and launch initially in eight big cities. Today, we are in nine cities. We certainly regard ourselves as the one of the front-runners in this game.

But what has been MYNL’s experience in the market?
The response to MYNL has been phenomenal, better than our internal expectations. We’re selling better than we anticipated. Our calculations were based on the Asian experience. We’re very delighted.

It’s too early to make an assessment but sheer numbers that have come into existence and their statutory capital means that industry as a whole has capital which can be driven to create more jobs, employment and coverage of community.