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Interview of Ms. Shikha Sharma, CEO &
Managing Director, ICICI Prudential Life Insurance Company
(Date: 1st April 2006)
How has the Budget 2006-‘07 affected the insurance
sector?
There are several commendable positive changes in Union
Budget FY07 - the thrust to enhancing social justice through
a variety of social sector programs, encouraging long-term
savings and as a corollary, infrastructure and rural development,
and maintaining fiscal discipline.
The removal of the sub-limit of Rs 100,000 for tax-free
contributions to pension policies, and making contributions
towards superannuation fund, upto Rs 1 lakh per employee,
exempt from the ambit of fringe benefit tax is definitely
a step to encourage and promote long-term savings and post-retirement
financial security.
With the exemption of superannuation scheme made
under Fringe Benefit Tax, how do you think it will affect
the insurance companies? How has FBT affected your superannuation
schemes till now?
FBT has had an impact on the growth of the business, as
no new superannuation accounts were opened. In the period
April-Dec 2005, superannuation has contributed 50% of our
group business.
The above moves are sure to boost investor confidence and
long-term savings, which can be deployed towards the thrust
area of infrastructure and rural development.
What are your hopes from the Comprehensive Insurance
Bill, which will be introduced in the parliament?
The government’s decision to introduce a comprehensive
bill on insurance industry incorporating K P Narsimhan Committee’s
recommendations is welcome. We believe the committee has
made many recommendations that will help in growth of the
insurance sector.
The insurance sector also stands to benefit because of the
thrust on long-term savings and pensions, as mentioned earlier.
If the FDI limit is hiked to 49%, how would it affect
the insurance industry?
Worldwide, the life insurance is a capital-intensive industry,
and hence only companies with deep pockets have thus far
ventured into this business. An increase in the foreign
investment level is certainly welcome, at least in the case
of some of the private companies, if they are to continue
to grow and flourish.
ICICI Prudential is fortunate to be promoted by two financially
strong companies – ICICI Bank and Prudential plc - and today
has a capital base of Rs 1185 crore, the highest for an
insurance company in the country. Both its promoters have
been able to regularly infuse the required capital into
the business, a clear demonstration of the commitment and
confidence of the promoters, and a massive impetus to the
growth of ICICI Prudential.
What strategies are you considering to tap the
rural market?
We are the only private life insurer to have covered 500,000
people in the rural and social segments since inception,
a clear testament to the positive customer response to ICICI
Prudential’s rural initiatives.
Distribution and servicing are 2 key areas in developing
the rural business. ICICI Prudential has a robust rural
distribution model, involving tied agents, brokers as well
as referral arrangements with NGOs, micro-finance institutions,
corporates, etc. We work closely with our partners like
Uttaranchal Co-operative Marketing Federation, Gramasiri
(an MFI), ICICI Bank and ITC’s e-Choupal, to educate people
about how life insurance can be used as a protection and
savings instrument. Through these relationships ICICI Prudential
is present in more than 15 states, including Andhra Pradesh,
MP, TN, Rajasthan and UP. ICICI Pru believes that if we
are selling a policy, we must be able to promptly and adequately
service it, and hence there must be a complete infrastructure
to service it. Presently, the focus is on developing the
infrastructure and channels across the length and breadth
of the country, and also on developing products suited to
various channels.
How do you maintain your number one rank in the
market?
The company has followed a customer-centric approach since
its inception, be it in product development, distribution,
servicing or claims. In line with customer’s key financial
needs – protection for their family, buying assets like
a house or car, providing for their children’s education,
and retirement, we have developed both traditional and ULIP
products that will appeal to a cross-section of people with
different risk profiles.
ICICI Prudential pioneered the multi-channel distribution
model, which encompasses bank tie-ups, corporate agents,
brokers as well as advisor. Today it has one of the widest
distribution networks in the country with a presence in
over 142 locations. For service, the focus is to create
a variety of touch points in order to enable customers to
easily interact with the company. Our service network includes
phone lines, fax, and SMS, Internet as well as premium payment
tie-ups with a number of partners. ICICI Pru has also instituted
a simplified claims process and our average turnaround time
for settling a claim is 7 days from the date of receiving
the complete documentation.
All these pioneering initiatives have helped us win confidence
of our customers, which in turn has helped us maintain our
leadership position.
How much does bancassurance contribute to your
business?
ICICI Prudential pioneered the multi-channel distribution
to give its customer the convenience of accessing the company
through whatever channel they are comfortable with. Currently
we have 8 bank partners - ICICI Bank, Federal Bank, South
Indian Bank, Bank of India, Lord Krishna Bank, Goa State
Co-operative Bank, Shamrao Vithal Co-op Bank and Ernakulam
Bank. We work closely with these banks and are always exploring
the possibility of partnering with other banks who would
like to work with us in building the franchise of our company
and the bank, and share a common purpose of trying to build
a strong customer proposition. Alternate channels contribute
a little over 30% to ICICI Prudential’s premium income.
What is your branch network?
ICICI Prudential has pursued a pan-India distribution strategy
and backed it up with a range of products that meets the
needs of a wide range of people. Today, we have 189 branches
in more than 142 locations across India, and have also further
expanded our distribution in partnership with NGOs and MFIs,
which work at the grassroots.
What are your expansions plans?
We believe that life insurance is an excellent long-term
protection and savings instrument so we look at how we can
extend this positioning to other segments by leveraging
our core strengths of customer focus, risk management, long-term
investment management etc. We were the first one to enter
the retirement solutions space a few years ago and continue
to invest heavily in it with the launch of new plans, consumer
awareness programs, etc. We now actively look at the health
insurance space; we recently launched Cancer Care, India’s
first comprehensive cancer care product which covers expenses
from the point of diagnosis to treatment.
Are there any more plans in the pipeline to be
introduced?
Recently ICICI Prudential became the first life insurer
in India to introduce a single premium product – LifeLink
Super – which is structured along the new ULIP guidelines
that were issued by Insurance Regulatory and Development
Association (IRDA) in December 2005.
We have also recently launched India’ first Annuity Card.
The Annuity Card will give pensioners the freedom to directly
use their pensions for round-the-clock cash withdrawal from
any VISA ATM in the country, or cash-free transactions,
making it the most contemporary and convenient option to
the decades-old system of receiving pension in the form
of cheques. We have also recently launched Cancer Care,
India’s first comprehensive cancer care product which covers
expenses from the point of diagnosis to treatment.
We will continue to introduce products to meet the emerging
lifestage requirements of our customers and to this end,
as mentioned earlier, we will be introducing more products
in the health space.
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