Monday, August 10, 2015

Need of the Hour for the Life Insurance Industry in India

This article was first published in the IIB Bulletin, Vol 2, Issue 1, pp4-5

Mr. Ian J. Watts is the Senior Vice President and Managing Director, International Operations for LL Global, Inc[1]. As head of LIMRA and LOMA’s International Operations, Watts is responsible for developing and expanding business opportunities in Asia, Latin America, the Caribbean, Europe, Africa and the Middle East.

Prior to joining LIMRA and LOMA, Watts was Global COO at ACE Life International, where he was responsible for day-to-day operations and new business development. He has held CEO positions in India and China for AIG and AIA and has extensive global experience in the UK, EMEA and Latin America. Watts was educated at Loughborough University College, earning a Business Education Council Diploma.

In a conversation with Dr. Nupur Pavan Bang of the Insurance Information Bureau of India, Watts talks about research in the Life Insurance sector, in India and globally.

In what way can the Life Insurance companies in India benefit from being associated with LIMRA and LOMA?
We can bring to the Indian Insurance market the global best practices and also world class education and development programs. Insurance companies in India still have a lot to achieve in terms of improvements in distribution productivity and profitability. We can bring quality experiences and proven systems from around the globe and help the situation here.

LIMRA does not do much research on the Indian market.
Yes. The historical research is primarily US based. In the US, there is decades of experience on trends. We can even track generation wise exposure and experience. Many US research studies now include global data. But now, strategically we will do more of international research, including surveys and studies in India.

What would be the focus of your research in India?
The focus in India is on Consumer trends and preferences with regards to purchasing Insurance.  As we work more closely with the Insurance Companies in India we will be well placed to conduct research that helps the industry continue to grow and develop. India has a large rural population and selling to this sector is a challenge but also opportunity for the Industry in India. Understanding the India Consumer purchase preference will be a focus of further research.

Distribution Channel plays an important role in determining the purchase behaviour for Insurance. What is the preferred distribution channel for Indians?
We found that while many Indians (same as the Chinese) might go to Facebook, Twitter, and other social media sites to do research on which Insurance product to buy, they still prefer “face to face” purchase of Life Insurance. This is because the products are perceived as complicated and need explaining by the Advisor.

What are the challenges with Distribution Channels globally?
Agents are still the most preferred distribution channel even in the US and Japan which are amongst the most matured Insurance markets. And you know that it is the most preferred channel in India. However, the challenge is that most of the Agents are now in the age group of 55-65 years. There are fewer agents joining the agency force every year but Consumers still prefer to purchase Insurance from an Agent. The older Agents may not know how to communicate effectively to Gen X & Y Consumers. Companies are focussing on how to attract and retain Gen X & Y Agents.

You have been both in India as well as China with AIG and AIA. What has been the experience? How do the two countries differ with respect to the Life Insurance market?
There are many differences and similarities between both important and large markets of India and China. A large population with a growing middle class, good economic growth and lower Insurance penetration rates are some of the similarities highlighting the opportunities for both markets. In India companies require only one licence to operate across the country whereas in China each Province requires a new license. Agency productivity is generally better in China as the companies there have been adopting global best practices for many years. Consumers in China are more comfortable purchasing Insurance via the internet than any other Asian market including India.

What are the global best practices that India must adopt?
LIMRA and LOMA can bring many proven global best practices to help the Indian Insurance companies improve their productivity and therefore profitability.

Scientific selection of Agents and sales staff helps companies identify those candidates most likely to succeed in an Insurance sales role. This then allows companies to invest in their best talent.

Effective and regular training and development of producers and employees improves their productivity and increases retention rates.

Compensation is a major driver of behaviour so aligning compensation to required behaviours is an effective best practice.

It is important to establish a management process and recognition framework within distribution channels and the organisation as a whole so lower performance is corrected early and higher performance is recognised effectively.

Technology plays an important role for Insurance organisations to reduce operating costs and connect closer with Consumers and customers.

[1] LIMRA, a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge; helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Together, LIMRA and LOMA provide the most comprehensive competency-based training solutions in the industry.
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