news bulletin - NFIFWI

in premiums was over 40 per cent. Many privateplayers are growing at rates above 70 per cent.Insurance premium collections have touched 4.1 percent of the GDP. Growth in life insurance premiumsstill come primarily through the efforts of individualagents. But another channel that is fast emergingas a significant source of premium income isbancassurance - especially for private lifeinsurers.Bancassurance currently contributes closeto 35 per cent of the premium collected by privateplayers. In 2006-07, that figure was about 17 percent. The growth in the bancassurance for insurancecompanies entirely rests on the number of bankbranches that actively distributes these products.For HDFC Standard life insurance, bancassurancecontributed 38 per cent of the new business incomein 2007-08, while for Kotak Life and Birla Sun Lifethe figure was 27 per cent. For SBI this segmentcontributed close to 41 per cent of the new premiumcollected in 2008 and grew at over 100 per cent.SBI sold 7 million policies through this channel lastyear.On the other hand, ING Vysya Life Insurancewitnessed 71 per cent growth on year-on-year basis.In 2005-06 ING Vysya had a tie-up with 37 cooperativebanks and it mopped up Rs 7 crore. Today,the number of tie-ups stands at 162 banks and itbought revenue of Rs 46 crore. Asked about theprospects of bancassurance for ING and for theindustry, Mr Rene Van Poel, Director AlternateChannels, explains that according to a recentanalysis, bancassurance is likely to generateapproximately 35 per cent of private insurers’premium income by 2008. However, growth inbancassurance in India will fall short of its potentialunless the perceived lack of sales culture and visionbegin to get addressed by the banks, he said.Bothbankers and insurers are bullish about the futureoutlook of bancassurance and expect that it wouldcontribute about 50 per cent or more in the lifesegment in the year 2010. Mr Ajay Srinivasan, ChiefExecutive, Financial Services, Aditya BirlaManagement Corporation, said that in India, thenumber of bank accounts is not even half of thenumber of mobiles. If further penetration of bankstakes place it will bring more business to the entirefinancial services industry and increase thecontribution of bancassurance, he said.Chidambaram’s request for simplicity getscomplex answersFinance minister P Chidambaram fired a salvo atthe insurance industry asking for simple products tobe designed that can be understood by commonpeople. He was speaking at the launch of the HSBC-Canara-Oriental Bank of Commerce launch of theirlife insurance venture.“Plain vanilla is still the best flavour for an icecream,”he said quoting an analogy. “People in Indiaare simple folks, who work hard and save. I believethat simpler the product, better will be the reception.”Those selling insurance products to rural customers,should understand their language, attend to theirconcerns, he said while stating that products shouldbe such that they could easily comprehend and claimbenefit quickly.“The finance minister’s quest for simplicity is wellreceived,” said SB Mathur, chairman, Life InsuranceCouncil and former chairman, Life InsuranceCorporation. “Life insurance companies have reachedout to rural parts of the country, unlike the mutualfunds industry, whose revenues and subscribers aremostly based in cities and towns.”Servicing such a network, he said, involves costs.“One has to depend on agents for reaching out torural parts of the country.”That products need to be simplified is well understoodby the industry. “We are already simplifying ourproducts and working on it further,” said P Nandgopal,chief executive officer, Reliance Life Insurance. “Ourmicro insurance product which we are working onwill be fairly simplified.”A top insurance industry official, not willing to bequoted, was more candid: “Insurance products arebeing launched keeping agents in mind due to theirunreasonable power and influence.”What consumers need while buying insuranceproducts is protection, which only a term policy offers.“Insurance companies must sell term insuranceproducts to people who are looking for insurance,”said D Sundararajan, a Mumbai-based financialplanner.21