Insurer Plans To Save On Acquisition Costs & Distribution Of Infrastructure
INDIAFIRST Life Insurance — the three-way joint venture between Bank of Baroda, Andhra Bank and UK's Legal & General is targeting an early breakeven within 5-6 years.
Break-even within 5-6 years is seen as early by life insurance industry standards, as most companies have failed to turn in a profit even after nine years of operations. Speaking to ET, P Nandagopal, MD & CEO of IndiaFirst said: "Our target is to be a mid-sized company, and personally I feel that we should achieve break even within 5-6 years."
The youngest life insurance company in India has already commenced operations having received its final licence from the regulator last month. Besides Mr Nandagopal, the top management includes AK Sridhar as chief investment officer. Mr Sridhar was earlier director with UTI and had subsequently headed the mutual funds international operations out of Singapore. The company has also taken on board Chandan Khasnobis as its chief actuary. Mr Khasnobis was earlier with Aviva India.
IndiaFirst aims to break even early by saving on acquisition expenses and distribution of infrastructure. "We should have 50 branches by the next fiscal. We are looking at a network of around 200 branches. But will be present all across the country through the branches of Bank of Baroda and Andhra Bank," said Mr Nandagopal. He added that while the branches would facilitate sales of policies and collection of renewal premium, the bank would employ third party administrators for medical underwriting of proposals in places where it does not have a branch.
"By the end of the fiscal, we expect a third of the 4,500 branches of both banks to be actively selling our products, and we expect to record a premium income of Rs 100 crore through them," said Mr Nandagopal.
"More than anything, our objective is to emerge as a respected player in the market place. Towards this, we are taking all possible steps to ensure that there is no mis-selling" said Mr Nandagopal. To ensure that there is no misselling, the company has devised a three-stage process.
The first involves the use of simple English in policies and literature, explaining what the customer is getting. "We have also made a three-minute video, which has to be shown to every agent which very clearly explains what the policyholder should expect from his policy. After that, he will receive a verification call from our call centre to ensure that he has seen the video and has understood it," Mr Nandagopal added.
