The spate of regulatory changes by the Insurance Regulatory and Development Authority (Irda) in the last one year has benefited the policyholders. Rituraj Bhattacharya, head of market management, Bajaj Allianz, in an interview to FE’s Saikat Neogi says that within insurance, a policyholder should diversify his risk by taking a traditional plan, which will hedge against market fluctuations, and invest in unit-linked insurance plans for higher returns. Edited excerpts:

How have the regulatory changes in the last one year helped policyholders and how should customers look at Ulips now?

The recent regulatory changes have benefited the customers. Prior to the new guidelines, there were certain flexibilities in Ulips, which the customers failed to understand and the industry failed to explain the products to the customers.

The current guidelines have curtailed some of the flexibilities. Under the new norms, a Ulip holder will have to stay invested with the product for a longer time, which is beneficial to the customer in the long run.

Secondly, charges have come down drastically which is good for the customer and is beneficial both in terms of cover and accumulation of funds.

Now, there are certain changes that are expected in pension Ulips as the insurance regulator has come out with draft guidelines, which talk about some implicit guarantee. Once the final guidelines come through, there will be new pension products in the market.

How do you see the pension Ulip market developing in India and how would private insurance companies look at annuity?

We have been offering immediate annuity with competitive rates, but, now, we want to get into deferred annuity. We are comfortable in the pension business and we will start offering deferred annuity products as soon as the new guidelines are put in place by Irda.

The real potential lies in pension as India currently has a large young population who will look for pension after retirement. So, pension will be a very exciting area for all insurance companies in India.

There are certain challenges in terms of investment for pension and annuity, but there will be a way out as the industry matures and there will be innovation by the insurers.

Now that one can renew a lapsed Ulip within two years, how do you think that will benefit customers?

This is a very thoughtful decision by the regulator because we have seen customers coming to us explaining that they have some problem with the cash flow, but would like to continue with the policy. Such problems are very genuine and can happen with many of us. So, the new norms on lapsed Ulips will improve customer retention.

After a series of regulations on the product front, how do you think that the regulator should now look at training of the agency force who sells the product?

As far as we are concerned, we have agents who are very serious about their business. All the guidelines that have come out will aid serious business and, in the long run, improve customer services.

We have to work towards better percolation of information from the insurers to the policyholders and the documents should be structured in a simple format, so that the customer can understand them.

What are the new products that you are planning to launch?

We are looking at some innovation in Ulips. We are trying to offer a Ulip product where we start with a low ticket premium, say a minimum premium of R7,000. In fact, Ulip is the only window, which we can offer in Tier-II and Tier-III cities, where people can invest in market-linked products to generate high returns.

But insurance products should be purchased to cover risk, not generate returns…

Given the current inflation rate, if you are not invested in market-linked products, how can you grow your money? In Tier-II and Tier-III cities, people expect some agents to come and explain the product. We feel that just being market-linked doesn?t help and one has to also see the downside protection so that the policyholders’ capital is protected. We are trying to offer a Ulip product, which has reasonable cover, some elements of underlying guarantee, at least on the capital, and some element of health insurance.