Just half a decade of competition has turned the insurance industry in India upside down. What kind of changes have you noticed in the last five years in terms of marketing and distribution in this business
Customers today have varying requirements and need specific plans to fulfill those requirements. So marketing is focusing on customised solutions rather then mass selling. Marketing activities have increased today because of the competition in the insurance sector and various mediums are used to win the attention of the customersbe it in urban areas or in rural. Not only mass media but on-ground activities have also increased helping players come in direct contact with customers and offer them need-based savings and insurance solutions.
Of course, the entry of private players has improved the customer experience and services in the industry. The private sector of the industry has grown over 100% for the last few years. In the process, private players have taken over 30% of the life insurance market. In fact, in some months in this financial year, the private sectors share was as high as 50% of the total market. The growth and the acceptance of the private sector is increasing rapidly and would continue to do so because of the innovative, flexible and customised products and services.
How does the brand Bajaj Allianz compare itself with its competitorsin terms of recall, sale of policies and premium income
Bajaj Allianz Life Insurance is the largest private sector insurance player for this FY (financial year) in terms of policies issued. We have issued over 25 lakh policies this FY alone. Since inception we have issued over 55 lakh policies. In premium income, we are the second largest private sector player and have logged in over $1 billion in new business premiums this FY alone.
Bajaj Allianz has also strengthened itself as a brand and leads on key parameters in independent surveys. It has been declared the Most Preferred Private Sector Life Insurer in the CNBC Awaaz Consumer Awards 2007. The previous year Bajaj Allianz Life was not even among the top 5. It is among the top 50 service brands in the AC Nielsen Most Trusted Brands survey, one of the youngest brands in the list. The brand also had the highest recall among private sector life insurance companies in the CNBC TV18 and IIMS research. Bajaj Allianz has the most effective life insurance advertising as per an independent industry survey mapping all insurance company ads.
Globally, Allianz has a more pronounced retail approach compared to its rivals. Are you following a similar strategy in India
India is a mass market with volumes and we have adopted a multi-channel strategy across urban and non-urban areas.
We currently have one of the largest distribution networks in the private sector with over 1,000 offices in over 900 towns and have over 2.5 lakh agents. We have tie-ups with leading banks like Standard Chartered Bank, Syndicate Bank and over 200 other different types of banks (co-operative banks, district co-op banks, rural banks etc), NGOs, SHGs (self-help groups) and financial institutions etc.
Bajaj Allianz Life Insurance was the first private sector life insurance company to enter the non-urban markets with our own offices in 2004. We started the Bajaj Allianz Banyan Tree distribution modela hub and spoke distribution strategy to enable penetration across the country, which is now being followed by most others to penetrate the non-urban areas.
Can you elaborate on this unconventional distribution strategy Bajaj Allianz has used in the country Small towns and local recruits seem to be the major planks of this strategy.
We have a decentralised model of expanding distribution across the country. In a vast country like India reach is very important to growunless one is able to reach the customer at their doorstep it would be difficult to get more people to buy insurance. As we all know, insurance is sold and never bought. Agents need to create the need for the product especially in emerging markets like India. Research has shown that for the middle class the list of future purchases has all kinds of luxury brandsbecause they have the disposable incomebut life insurance is the last thing on their minds.
Hence there is the need for extensive reach and distribution depth so that agents can reach out to customers and explain the need and long-term benefits of life insurance as a product. This model will ensure that penetration of life insurance in India could reach double-digit figures from a low 2.6% now.
All the employees in these offices are local recruits and this helps create stronger confidence, trust and faith. This is a very low-cost model for India, which is easy to roll out and empowers the employees. It creates loyalty for the company as well. India in general has low average per capita income; this means we would be selling lower-priced products to the masses. We need to keep our costs low to be profitable.
How has this model benefited the company and the brand
This model has helped the company in retaining talent, expand reach and thus grow the business. The model helps identify emerging leaders within the system and gives them the opportunity to mature as entrepreneurs. Employees also see long-term growth potentialthey now run their own offices and lead a sizeable team. This in itself is a strong motivation to stay with us.
Bajaj Allianz has come up with an online game, Time Out, where people are encouraged to save early. Given the accent on an online presence, one gets the feeling you are targeting a young audience.
The focus of the online game is to encourage youngsters to start planning earlyin fact, they have to save very little if they start early.
One of our target segments is the new emerging empowered youth in the country. The youth constitute the largest portion of the workforce and they have very high disposable incomes. We have created a special package for the youth called Future Income Generator that gives income even after people retire.
There is a strong need for continued income after these young people retire as they are used to a certain lifestyle and would need strong income flow to maintain that lifestyle after retirement. For as little as Rs 1,000 pm invested by a 25-year-old in the Future Income Generator plan, he/she would give as much as Rs 18,000 per month on retirementtruly a substantial income. I guess Rs 1,000 per month isnt too much of burden for a youngster to secure his/her retirement years.