ET BureauExide Life Insurance has lost ING Vysya Bank as a distributor, a year after the bank exited its investment in the insurer by selling stake to joint venture partner Exide Industries. In an interview with ET, Exide Life managing director and chief executive Kshitij Jain says bancassurance isn’t cost effective unless it is captive. Edited excerpts:
How has ING Vysya Bank’s exit affected the business?
The management team that we had since the ING days is still with me. The chairman of the board has not changed since 2005. If you ask my employees, they would not say there is any change. We have been very consistent. We did not have any wild gyrations.
How has ING Vysya Bank’s exit affected the business?
The management team that we had since the ING days is still with me. The chairman of the board has not changed since 2005. If you ask my employees, they would not say there is any change. We have been very consistent. We did not have any wild gyrations.
How important it is to have a foreign partner?
If a company is young, it makes a difference. Our company is 14 years old. We are comfortable in terms of product, technology, investment and maturity. If the market is to change completely, and say variable annuity would become a very big part of the business, then you would like some expertise. But you can buy expertise off the tap. There are enough product and technology consulting companies here. The good thing is Exide (parent) is extremely cash rich, 100% debt free. In the long term, it is their intention to bring in a shareholder but, in the short term, there is no hurry.
What are the challenges facing the industry at the moment?
There are three issues. First is the current business model and the operating efficiency where they are right now is not going to create a value that is required. So the industry needs growth but needs to do it in a far more efficient way than in the past. The other big challenge is that we are not able to generate as much business from existing clients and that is the reason why we spent money in acquiring new customers. If we can get the entire trust and customer engagement going properly, we will be able to kill two birds from one stone for the simple reason because cost of acquisition will come down and customer satisfaction will go up. The other big challenge is to be able to attract best and the brightest to the industry, as we were doing in the first five and seven years.
How do you attract talent to the sector?
I don’t think salary is the answer. The reason why agency has succeeded internationally as the variable cost channel is the need to differentiate between the high performers and under-achievers. The problem with fixed salary is it dumps down everyone to one level. Agency should become more and more variable. Some experimentation is called for. This misselling is being talked about for a long time. The scope of creativity in product design is restricted to a large extent. If people are under the impression that customers do not know, then they are wrong. We do a large number of business with trusted agents. In any channel, we insist on connecting with the customer directly. At times it slows down sales process, but that is the right thing.
How long will it take for the industry to go back to the earlier growth numbers?
Earlier growth numbers are not going to come back. The earlier growth numbers were fuelled by selling to a segment that did not belong to life insurance. A large portion of growth that happened between 2004 and 2009 was investment-oriented business which should not have come to the life insurance industry. We will not go back to the 60-70% growth rate, but to grow at double the GDP, say 10-20%, is certainly possible.
How has ING Vysya Bank’s exit affected the business?
The management team that we had since the ING days is still with me. The chairman of the board has not changed since 2005. If you ask my employees, they would not say there is any change. We have been very consistent. We did not have any wild gyrations.
How has ING Vysya Bank’s exit affected the business?
The management team that we had since the ING days is still with me. The chairman of the board has not changed since 2005. If you ask my employees, they would not say there is any change. We have been very consistent. We did not have any wild gyrations.
How important it is to have a foreign partner?
If a company is young, it makes a difference. Our company is 14 years old. We are comfortable in terms of product, technology, investment and maturity. If the market is to change completely, and say variable annuity would become a very big part of the business, then you would like some expertise. But you can buy expertise off the tap. There are enough product and technology consulting companies here. The good thing is Exide (parent) is extremely cash rich, 100% debt free. In the long term, it is their intention to bring in a shareholder but, in the short term, there is no hurry.
What are the challenges facing the industry at the moment?
There are three issues. First is the current business model and the operating efficiency where they are right now is not going to create a value that is required. So the industry needs growth but needs to do it in a far more efficient way than in the past. The other big challenge is that we are not able to generate as much business from existing clients and that is the reason why we spent money in acquiring new customers. If we can get the entire trust and customer engagement going properly, we will be able to kill two birds from one stone for the simple reason because cost of acquisition will come down and customer satisfaction will go up. The other big challenge is to be able to attract best and the brightest to the industry, as we were doing in the first five and seven years.
How do you attract talent to the sector?
I don’t think salary is the answer. The reason why agency has succeeded internationally as the variable cost channel is the need to differentiate between the high performers and under-achievers. The problem with fixed salary is it dumps down everyone to one level. Agency should become more and more variable. Some experimentation is called for. This misselling is being talked about for a long time. The scope of creativity in product design is restricted to a large extent. If people are under the impression that customers do not know, then they are wrong. We do a large number of business with trusted agents. In any channel, we insist on connecting with the customer directly. At times it slows down sales process, but that is the right thing.
How long will it take for the industry to go back to the earlier growth numbers?
Earlier growth numbers are not going to come back. The earlier growth numbers were fuelled by selling to a segment that did not belong to life insurance. A large portion of growth that happened between 2004 and 2009 was investment-oriented business which should not have come to the life insurance industry. We will not go back to the 60-70% growth rate, but to grow at double the GDP, say 10-20%, is certainly possible.
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