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 Interview
of Raj Raman, Sr. Vice President (Marketing), Tata AIG Life
Insurance Company
1. What benefits has Budget 2002 -03 given the insurance
sector?
A. This year’s budget has given some indirect benefits to
the insurance sector. With the cut in small savings rate the
incentive to invest has been reduced and this makes insurance
an attractive proposition.
2. What will be the implications of the recently announced
service tax on insurance policies? How will it affect policy
sales?
A. One of the reasons for opening up the insurance sector
was to deepen insurance penetration by giving a wider choice
of insurance products to consumers. As of now, the Government’s
current move may not seem to be consistent with its goal of
spearheading growth in the insurance sector. But we’ll have
to wait and see.
3. Will the service tax be imposed on new policies or
existing policies?
A. The issue is being widely debated at various forums. We
have to wait and watch for the final outcome.
4. The Budget has reduced the benefits of Section 88
on policies. How far will it affect policy sales?
A. Right from the beginning Tata AIG has always emphasized
that insurance policies are about security and risk cover.
This move could possibly affect those insurance companies
who sell policies tailored as tax savings instruments.
5. Post budget, what changes in strategy do you plan to
adopt in marketing risk covers considering the reduced benefits
for policyholders?
The benefits of insurance policy per se has not changed
post budget. Our marketing strategies are formulated to aid
growth & we will work forward to grow the business.
6. LIC plans to change tack and sell insurance harping
on the 'pure risk' element. But considering that most individuals
purchase policies for tax benefits, post budget how far will
it be easy to sell insurance.
A. We cannot comment on LIC’s marketing strategies. However,
the time has come for all insurance companies to propagate
the need for insurance to be seen as covering risks and not
just an investment vehicle.
7. How many policies have you sold so far?
A. We have had a good growth record and have met our commitment
for the first 9 months of our business.
8. What is your target for this fiscal?
A. It’s barely a year since we started our operations. In
the initial period, our focus was on putting together systems,
technology and infrastructure in place. This has helped us
achieve our planned numbers in the initial phase and we hope
to continue to grow in the current fiscal.
9. What is your present market share?
A. As mentioned to you, it is barely over a year that the
insurance sector has been opened to the private sector. It's
too early to talk about market shares of private insurance
companies
10. What percent of your policyholders buy policies strictly
for tax benefits?
A. We have not done any independent research to segregate
our policy sales into categories like risk cover and tax savings.
11. It has been over a year and private insurers have
only been able to make a dent in the market. What are the
roadblocks you face in marketing?
A. Successful marketing of insurance policy is dependent
on an efficient distribution system in the economy. It takes
time to establish an efficient distribution network. Having
said that, issues like delay in formulating regulations for
brokers and capping of commission of corporate agents could
prove to be an obstacle for an efficient distribution system
in the insurance sector.
12. While awareness has been increasing it is still observed
that the slant is towards LIC products. When do you think
a situation will come when customers will ask for private
insurers products by name?
A. I don’t know on what basis you have formulated this observation.
However, one year is too short a period to build a brand for
any company. It will definitely take a couple of years more
before any private insurance brand becomes top-of-mind name.
13. How many claims have you received so far?
A. Our claims experience has been well within our norms and
the actual assumptions that we have made. It has been our
philosophy from the beginning to use a conservative approach
in building the business.
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