The life insurance industry is facing an unusual slowdown now as retail participation is dwindling since November, compared to the earlier months this year.
While the entire sector grew 6 per cent on individual annualised premium equivalent (APE) basis, Aditya Birla Sun Life Insurance (ABSL) stood out as an outlier since it performed much better.
According to Insurance Regulatory and Development Authority (Irdai) and Life Insurance Council data, individual APE of ABSL between April and November 2018 was up 62 per cent to Rs 93.81 billion, whereas the average growth among private players stood at 11 per cent for the same period.
While several analysts have pointed to a slowdown, Pankaj Razdan, managing director and chief executive office, ABSL, said, “When I took over in 2014, we decided to transform the company and build a business that could absorb all shocks that may come at any point in time. You have to re-design the entire business model…”
One of the fundamental shifts at ABSL was building instruments to measure ‘trust surplus’, which means focussing on “qualitative and sustainable” aspects rather than just the numbers. The strategy back in 2014, Razdan said, was introducing changes throughout the company for improving capacity, productivity and sustainability at every level.
“We wanted to create a new business model which was isolated from the normal ‘push and pull’ of the insurance business,” he said.
A natural result of this was that over the past few years, there have been layoffs at ABSL as several areas need fixing to boost productivity. Explaining that insurance sales and the agency channel has had its history of flaws, he said, “Instead of saying ‘take this product’, we are asking customers what they need. Therefore, as they ‘discover’ the product or policy, there is a higher chance of them buying it. We are opening options for customers based on their preferences.
“We found through our research that only about 5 per cent of advisors were trusted by customers. Therefore, there were large un-served pools of customers and a large pool of advisors who were not aligning themselves with each other,” he said.
By November this year, the private life insurance sector’s individual APE growth slowed down and in fact de-grew by 1 per cent in November compared to around 15 per cent in the preceding three months.
Razdan said that ultimately, rationalising and streamlining the sales processes is what helped the company achieve its growth this fiscal. Rather than ‘pushing’ the product, the customer finds their ‘right’ life insurance policy through the company, thanks to a ‘discovery process’ and artificial intelligence tools.
“Through our innovation lab, we have created ‘cognitive’ tools that are able to help customers find their blindspots while ‘discovering’ the product. These tools help the advisors address these ‘blindspots’ through specific strategies,” he added.
Razdan said that in the app and internet-based market economy, “Large successful service or experience-oriented organisations are essentially large communities of people. Ultimately, we want to create an experience and engagement-oriented business.”