How do you see the sub-prime crisis affecting life insurers in the US over the medium- and long-term
As portfolio lenders, we expect the situation among life insurers to be dramatically better than the commercial and investment banks. That being said, a weakening economy will expose other weaknesses in all of our portfolios, which are hard to anticipate.
Liquidity and capital are the two keys to thriving in this environment with the demutualisations over the last decade or so, the industry is not as highly capitalised as might be preferable, but certainly the few remaining mutual companies are extremely strong, and the stock companies look okay from what weve seen so far.
How is the international life insurance industry changing in terms of products and distribution channels
Historically, the life insurance industry has focused on products that provide protection. Theres simply no other product in the financial services world that delivers the same benefit and peace of mind that life insurance delivers.
Of course, as public awareness about the benefits of life insurance grows rapidly, this will translate into a wider variety of products, value-enhanced services and tailor-made solutions for the Indian consumer.
The role of agent advisors has evolved as well. Traditional life insurance agents have evolved into financial planning and wealth management advisors who need to address a comprehensive range of consumer needs.
In terms of distribution, a strong career agency system remains a strategic foundation for New York Life in the US, India and around the world. Although we believe well trained agents are the most important means for serving customers, we have supplemented agent distribution with bancassurance and other means.
There is clearly a role for alternate distribution but companies that have ceased to support their agents in the U.S. and in other markets are less able to meet consumer needs and build market share now.
Are guaranteed products in the global life insurance industry on the decline Is the life insurance industry more focused on pension products
We expect guaranteed products to continue playing an important and growing role in the marketplace. Strong, well-managed and well-capitalised life insurance companies such as New York Life are well suited to provide long-term guarantees and these guarantees are more important than ever to consumers.
In the US, for example, long-standing sources of guaranteed retirement income such as corporate pensions are under stress and lifetime income annuities (immediate fixed annuities) are playing a pivotal role in helping consumers manage risk and establish the foundation for a secure and fulfilling retirement.
In fact, recent innovations in income annuities have helped elevate the products to a desirable asset class in retirement. As a result of Indias aging population, we expect the demand for guaranteed products to continue to increase.
How do you see the Indian insurance market, in terms of innovative products and the number of players Since so many banks are entering the insurance market with their vast customer base and distribution channels, will this make it tough for other non-banking players to do business
India is a large and diverse market that requires an innovative approach to distribution and product design.
Theres no question that banks have a strong distribution channel but they will need other strategies to be truly successful.
We also believe its critical to offer a broad range of products and services.
How do you see the insurance regulatory framework in India What more should be done, especially with regards to terms of financial instruments in order to maximise the return on the premium
India has a strong insurance regulatory regime commensurate with its growing political and economic status. Irda has been progressive and proactive in liberalising many aspects of the Indian insurance market, including by issuing licenses that open up the entire country for new entrants to the life market.
As a company with a strong, well-trained agency force that is considered the best in the industry for its quality of advice, we want to see the regulator maintain a strong focus on agent licensing requirements across the industry. In addition, we are pleased to see the regulator exploring agent compensation arrangements.
We believe compensation must be adequate not only to support acquisition of customers, but also to reward persistency and ongoing customer service via long-term renewal.
This is particularly important with respect to the life protection products that have been Max New York Life's traditional focus and whose growth Irda wants to encourage in India.