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Archive for July, 2010

LIC and life insurance in India

Mr. Dinesh Mehrotra took charge as Managing Director of Life Insurance Corporation in 2005 and has been with the organization for 33 years. His vision to make LIC a world class organization in people, products & process has seen him being entrusted with several pivotal positions spanning three Zones. Two of the biggest divisions  Dehradun & Ahmedabad excelled under his excellent leadership skills, able guidance and strong presence, and the trail blazing Eastern Zone bettered its own glorious performance during his tenure as Zonal Manager in-charge. He also has international exposure in the field of Insurance through his posting in the foreign office of LIC at Suva, Fiji. Prior to taking charge as Managing Director, Mr. Mehrotra was posted as Executive Director (International Operations) at Mumbai to lead the Corporation’s overseas thrust. Despite the demanding nature of his job Mr. Mehrotra makes sure that he spends quality time with family/friends and pursues his interest in Music.

Life Insurance is the fastest growing sector in India since 2000, after the Government allowed the entry of private players. How has the emergence of other corporate entities, Indian as well as transnational brands impacted the way LIC India goes about doing its business every day?

Leaving aside last year’s melt down, the Indian Life Insurance industry has been on the Bull Run over the past 7 years. The industry has experienced phenomenal growth, complimented by the country’s improving economic fundamentals. Mega forces of liberalization, technological revolutions and wealth creation so far have driven the changes. Opening up of the sector, in fact, worked wonders for us; it has unlocked our value in the areas of product innovation, distribution capabilities and claim process management. We have been able to offer innovative products, better returns to policyholders and have created unimaginable records in new business creation and claim settlements.

As head of the marketing Units, where have you seen the largest focus for LIC advertising spend?

LIC, the biggest brand in financial services, aims to reach every customer segment – right from young children to the pensionable adult via television, print, internet, radio, outdoor, digital signage and below-the-line activities. Our brand messages are aimed at building trust and emotional equity with customers. We recognize that both these aspects are extremely important when customers are making the decision to invest in a life insurance product. Since consumer needs and aspirations are changing fast, need for innovation remains constant and relevant as ever. Accordingly, our advertisement medium has undergone significant shifts. Technically, we ensure our presence through every conceivable medium depending upon the profile of the target audience; yet we are focusing more on the electronic media and internet. Social media’s massive viewership and instant reach to the internet savvy cash rich indi viduals belonging to all age groups, including women, makes it a very attractive avenue to market and advertise our products.

LIC is constantly offering innovative products targeted at different customer segments e.g. Unit Linked Investment Plans (ULIP). What are some of the future product offerings that LIC is considering?

Over the years LIC has designed its insurance, pension and superannuation products by anticipating the present and more importantly the future savings and insurance requirements of the insurable population of the country. We clearly differentiate ourselves in the Indian insurance market as a leader in marketing and selling innovative insurance and pension products. These unique products have not only been the building blocks for the company but also have redefined the way insurance, savings and pension needs are understood. Even after achieving historic highs in product sales recently, it appears that we are just at the beginning of an exciting ride. There is a huge untapped potential in health insurance and pensions, where life insurance players so far have no significant presence. India’s elderly population is already growing quickly. By 2016, the elderly pensionable population is expected to reach 113 million. In the health insurance sector, only 14% of the population is covered by health insurance of any form. Adjusting policy size for purchasing power parity shows that health insurance in India is about one-fifth the size of that in countries such as the United States, Germany and South Africa. Being a dominant player in the life insurance market, we believe that we can make a strong impact in the pension & health insurance sectors by offering tailored products.

What are your views on some of the emerging trends within the life insurance industry in India?

The role of insurance is undergoing a phenomenal change today as is evident from the product portfolio and advertisements. The emphasis lies on insuring oneself and one’s close family members for self-reliance more so because nuclear families are the emerging trend in the country today. To meet the varying needs of various individuals, the insurance players have a vast array of products in their portfolio. Besides this, almost all companies offer the flexibility to customers to choose the most suitable product for themselves by combining features of a number of products together. Thus the products can be customized to suit individual needs.  To reach out to consumers, various players in the industry today have widened their distribution channels and approach prospective customers through tied agents, brokers, banc assurance, non-bank finance companies and direct channels such as the telephone or internet.

LIC has been one of the pioneering organizations in India to leverage the use of information technology in servicing its clients. What were some of the challenges in managing the change within the organization?

Being one of the very first and largest users of IT, in terms of hardware and in-house developed software, LIC has embraced new emerging technologies to meet the changing needs of its clients. Our biggest challenge was the management of mammoth 400 million databases – the largest data warehouse in the BFSI (Banking, Financial Services and Insurance) segment in India to have a single and real-time source for its MIS. We have also initiated smart campaigns and used it as a spring board for major CRM (Customer Relationship Management) initiatives. We have initiated smart practices in data mining, profitability analysis and actuarial valuation. To be in sync with the changing IT environment, we embarked upon an ambitious project of moving towards a paperless office by digitizing 220 million policy dockets. In future, we plan to modernize our core insurance solution and centralize our databases across 2,048 locations. We are working on batch processing at central locations in order to have superior volume handling, quality control and operational efficiency in claim process management. Finally, we have opened Customer Zones at select centers to offer single window umbrella services for all policy needs.

Any plans to increase LIC’s presence internationally?

LIC already operates in more than ten countries, either through branch offices or JV companies. We are now in the process of establishing a wholly owned subsidiary (WOS) at Singapore. Once our operations at Singapore are successfully launched, we propose to make it a hub for expansion of operations to other ASEAN countries.  After Singapore we may plan a market research exercise to examine the feasibility of setting up a business office in Sydney, Australia. Internationally, we are also considering opportunities to grow horizontally by acquiring life insurance portfolios from companies that are selling their life insurance businesses. Expansion to the US is also on the cards. However, the decision to move into this market would depend on prevailing economic conditions and regulatory approvals.

Any advice for Kellogg students who might be looking to pursue careers in the insurance industry?

The Indian insurance industry has witnessed exceptional growth in the past couple of years. It has a mix of public and private players both in the field of life and non-life businesses. This sector not only provides a protective shield to the lives and assets of the nation but also generates thousands of jobs and career opportunities. A career in life insurance is rewarding. You help people realize and fulfill their financial goals, making their lives more satisfying than ever. What’s in store for you? A rewarding career, attractive remuneration, unbelievable career growth and the freedom to be your own boss if you work as an intermediary. It’s a win-win situation for our customers and you. I welcome everybody who is interested to come join our industry and to experience unimaginable growth, career enhancement, job satisfaction and rewardship.

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