Amity Institute Of Training & Development

Changing landscape of Life Insurance sector in India

Speaker: Mr. Manoj Jain, Managing Director, Shriram Life Insurance

Mr Manoj Jain is the Managing Director of Shriram Life Insurance and a partner in Shriram Group of Companies. He comes with a very rich experience of 31 years in the banking and financial services domain and over 20 years in the life insurance industry. During his tenure as CEO of Shriram Life, he transformed the company PAN India with consistent growth of 20% CAGR against the industry growth of 10% which is highly commendable. He has been chosen as World Leader Businessperson Award by the World Confederation of Business in the year 2009. He has also been chosen as CEO of the year at ABP News by Indian Financial Services and Insurance Awards for three consecutive years which is 2015, 2016, and 2018. He has also been chosen as the ‘Top 100 most influential people in BFSI Sector’ by World BFSI Congress in 2018.

Click below to watch the recorded conversation.

AITD: Well developed Insurance sector is the backbone of a nation as support even in unforeseen events not only healthcare consumers who are providing financial protection but also contributes to the nation’s economy. There is a significant relationship between insurance penetration and microeconomic development, and we will talk more about this as we progress. While the industry has made certain strides, big strides in terms of digitalization, COVID 19 encouraged and accelerated this journey on a faster track. This has seen many changes, daily consumer preferences, government regulations, new distribution channels. There is plenty of things that are happening and one interesting thing which I would like to share with our viewers which is India counts nearly 2% of the worlds total insurance premium indicating that the potential of this sector and that is what we have seen and we will have more insights as we go along, insights from our guest today Mr Manoj Jain. Before we start Sir, I would like to start with my first question to you:

Q. A well-developed insurance sector acts as the backbone of a nation as it supports the citizens even in unforeseen events which we have seen during Covid 19. It not only helps consumers by providing financial protection but also contributes to the nation’s economy, so it plays a very critical role in the nation’s economy. What has been the impact of Covid 19 on the Life Insurance Sector in India?

Mr Manoj Jain: Thank you Mr Ashish for providing me with an opportunity to speak to the audience. I know this is being globally telecasted. I can just say ‘Hi’ to all my young viewers. The question which you put up that is the life insurance sector or insurance sector is a very critical sector for any economy because it's more like a backbone like banking insurance and financial services. And as you rightly said that insurance provides big support in nation-building and India the population and the penetration India contributes only 2% of the global premium where the population of India is almost as high as 30% of the world population. So, you can just see the potential is huge.

With regard to your question that how Covid has impacted this industry I think Covid impact started in India in the last 15 days of March and you know in India the March is a very special month when it comes to insurance because historically and even now also in India people buy insurance particularly life insurance more as a tax saving instrument so it's very irony that 50% of the business comes in January, February and March and within that 50% close to around 30% comes alone in March and in that 30%, 20% comes alone in the last 10 days. The last 15 days got impacted by Covid and because of that the industry which is growing almost by 15% last year the industry who are just flat because the cream 15 days has just gone in the Covid. April was a completely washed away month but from May there’s a sharp recovery has happened, and I can just say the end of September the industry numbers are already there. In life insurance, we have just a cumulative de-growth of around 5% when it comes to health insurance it has grown by 25%. The general insurance industry has grown by 5% and there's a huge demand is coming now for a term plan. So while in Covid, the industries like hospitality, travel, tourism, hoteling, they all got impacted very badly but life insurance as I said was impacted for 45 or 60 days and then there's a sharp recovery and if everything goes well I think this year may be in next one or two months the industry will be on track.

AITD: As you were mentioning that several Industries are impacted very badly whether it is Hospitality, Aviation, Entertainment etc. But some industries have been doing well like Pharma, Telecom, FMCG and some others that are doing well. The unprecedented situation due to pandemics has put lives and businesses at a lot of risks. Nobody had imagined the kind of magnitude of this Covid. How does the Insurance Industry look forward to mitigating such risks and look at risk assessment from a fresh perspective because there are certain things which are unforeseen, nobody knows that what is going to happen? How do we mitigate such risks in future and do the risk assessment from a fresh perspective?

Mr Manoj Jain: Insurance is all about managing risk, we are in the business of risk, at best we can only mitigate the risk. I think all these, whether it is Covid or any sort of pandemic are already factored in the pricing of any insurance company. So just for the viewers, I can just say that all insurance policies which are sold by the life insurance company in India are covered for Covid also. It's not that we were knowing that Covid is going to come but everything is covered in the pricing and that's what we call it that take insurance and you will be away from your tensions but unfortunately in India, the awareness of insurance is very-very poor very-very low. This Covid has given a huge opportunity and huge visibility and huge need as now the people are coming and saying we don't have life insurance; we need to buy it.

So, coming to your question I think this Covid period has given an opportunity, as I said there is a huge surge in the demand for health insurance. People are buying now health insurance. They are aware that if they don't have a policy, how the family will be vulnerable especially in Covid. If the Covid comes to one family member, the whole family gets suffered and the industry and the regulatory particularly in India is very-very proactive and I think with a record time of just 30 days, the industry has come together and launched even the special Covid policies also. A customer can buy a Covid plan which is available for 6.5 months to 9 months on a very-very nominal premium amount. Even today also if I don't know whether you all have seen the newspaper, the regulator has come with a Saral Bima Yojana, a common insurance policy that can be bought by any individual.

Across life insurance companies, this plan can be bought so when it comes to mitigating the risk, risk will be there but it is already factored in the pricing so I don't see any reason for panic because whatever the premium the consumer is paying, its already given in the price and all the claims are getting settled on time and we generally say insurance is a business which is a very very long-lasting. Some companies are selling insurance policies for 30 years, 40 years, 50 years and insurance company takes care of all risks and eventualities and there is well establish Reinsurance market is also available in the country. So, from that angle, the health of all insurance companies is in very good shape. Just to give a perspective to everybody in India, we have close to around 57 insurance companies working, 34 life insurance company and the balance 33 are general insurance companies. Last year the total premium collected by the industry and I am talking about only the life insurance is around 7.31 lac crore. That’s the premium which is being collected and in that the 1st year premium is around 2.5 lac crore and the total fund which is managed by the life insurance industry alone is around 40 lac crores. This industry is huge although there's a large potential as I said, the market is very intact, there is huge potential knowing the fact that in the last 20 years industry has grown with a CAGR of around 10% and in the next 10-15 years also I think the same trend will continue.

AITD: Going back to you, like you are also partner to different Shriram Group of companies, how long it has been impacted, being a group company, how it has impacted employees, people regarding Covid-19. We would like to know more about the Group per se.

Mr Manoj Jain: I think just to give a perspective, Shriram Group is a 45, 4.5-decade-old group. Our DNA comes from truck financing. We are having one of our group company Shriram Transport is the largest truck finance company of India. We are the market leader in used vehicle finance. Every second vehicle on the road is funded by Shriram Transport and our DNA is we want to serve the unserved population, the common man. If you see our logo, the logo represents a common man who said that the Sky is the Limit. So that’s the vision which our Founder Chairman Mr Thyagarajan has envisaged 45 years back because getting finance even now also for a common man is not all that easy.

So we are having a largest truck finance company. We are having another company which is the largest SME finance company and a two-wheeler finance company. In the insurance business, we are around 15 years old and probably this is the only company which is making a profit from year one. And as I said that our focus is the common man so our penetration, our distribution, our reach is in tier 3 and tier 4 town. Rather every second policy which we sell is a rural policy. That’s what is the DNA of the group and just to give a perspective we have close to around 80,000 employees working in the company in the entire group and we have close to around 10,000 branches across India. So we are no longer a South-based company, we are PAN India footprint primarily in the rural tier 3 and tier 4 town and primarily serving the unserved customer. That's what is the DNA of the group.

AITD: Very interesting Sir. Like as you said the DNA is reaching out to the common man and it’s very interesting because this is something which is very very important for financial inclusion and a lot of Govt policies and everything has been done to reach out to the common man. As you have said that you are PAN India and no longer confined to South and moved to various parts of the country, one interesting thing which comes to my mind, as you are talking about reaching to the common man, tier 2, tier 3 and tier 4 cities. But now there has been a lot of digital disruption rather I would say digital acceleration which is changing trends in the Indian Insurance sector. How is the Shriram group which is a conglomerate of different businesses dealing with such digital circulation because as you move to the rural tier 3 and tier 4 cities, there will be challenges regarding getting internet connectivity and so and so? How does your company deal with this?

Mr Manoj Jain: I think it’s a very-very relevant question in the current scenario. I think we realised the need of moving to the digital platform maybe five years back. So the digital transformation in the entire group, we have started in 2016-2017 onward and I am very happy to say that in the last 5 months we must have sold close to around 20,000 life insurance policies. We have sold completely on digital platforms, completely paperless. Thanks to the Regulator that they have even agreed to a digital signature on the proposal form. So we have done completely paperless. Rather I am very happy to share that 3 years back we started a channel called ‘Phygital’ channel. Why I am using the word ‘Phygital’ because in India even though there is a huge platform available that you can buy life insurance policies across the counter, there are so many platforms, there so many web aggregators are there where you can get an insurance policy on a click of a button but my experience says insurance or financial services, trust is very-very important especially when the customer is looking for a claim, the insurance company should be around.

Historically in India or worldwide from that matter insurance is always sold, people have not bought it. So you require somebody who can give a touching feel, while the customer is accessing online but they expect that somebody should come and explain as well. So the 'Phygital’ channel which I am talking about is, the entire team is digital therefrom proposal form to policy to everything but there is an agent, he can go and explain to the customer. So not us, I think the entire industry has come a long way on digital transformation and even the Indian customer especially in tier 3 tier 4 towns, just to give you an overview, we have a total book size of around 6 lac policies. So on several policies, we are among the top 10 insurance companies in India and as high as 60% of the customers are paying premiums through online or digital mode.

So the digital transformation has gone much faster in rural India than in urban India. The customer is fully aware there are various platforms are there such as they can go to Paytm pay the premium, they can go to Google Pay and pay the premium, they can go to net banking, they can have Nach mandate. So as I said 60% of my customer are paying a premium through digital mode and as I said in the last 6 months almost around 80 to 90% policies we have sold digitally. When I am saying sold digitally means the processing is done digitally but then, an amount of element of advice is there because unless that is not there the customer doesn't get that comfort. So that's on the digital side but we have a long way to go. Although in a company, we have started using something called artificial intelligence, data mining all that is happening but then as I said it will take a little longer time because insurance per se is more a push product. Somebody has to go and talk because I think a normal Indian, a common man in India thinks that nothing is going to happen to me it's only going to happen to my neighbours or my relatives. So somebody has to come and explain to him why he should buy insurance. Why the sudden demand for insurance has come, even people are seeing, people are dying due to Covid and when the families are checking they don't have sufficient health insurance coverage. So people get insurance out of fear as well. The only challenge which is there in the industry is awareness, awareness and awareness.

AITD: Very interesting Sir and I think its a news or something which we are very excited to know that 60% of the policies have been bought online. And that is what I wanted to ask. Although most insurance customers still prefer to purchase through intermediaries agents, bank assurance or through branches.

Mr Manoj Jain: Ashish, Let me just correct you. 60% of the policies are not bought online, processing is done online. Still large portion of a policy, 90% of the policies are getting sold offline. Online selling requires a long way to go. So a personal feel and touch either through bank assurance or through an individual agent or branches, but a lot of customers are checking online, buying offline.

AITD: As you mentioned earlier also while talking about ‘Phygital’ and I also have seen by experience, we normally buy insurance policy because there is an element of trust involved and these are people who are known to us, they are family friends and attend all our functions and things like that. And that is very based on what that they tell us. So very very interesting which you said is Phygital part. So in that scenario, what is the position of digital sales and services offering because important is that the customer should be satisfied, they have a trust? Now how things are changing due to Covid and it’s more of a digital thing.

Mr Manoj Jain: As I said the inquiry level which was hardly 5% that has gone up but still as I said 90 to 95% of policies are getting sold offline because the customer doesn't get that type of satisfaction online although all the comparisons are there all data. Another thing as I said awareness. The customer himself is not aware of what type of policy will suit him, what is his requirement, whether a term plan is fine for him or he is looking for money back or he is looking for endowment policies or whether he wants a pension plan. Somebody has to go and advice, we call something called need analysis. We go and advise the customer and do his financial health checkup and check actually what is his requirement, what he is looking for, at what age he is, what is his liabilities, what income he is drawing because there is something called human life value. Each customer is having, individual is having different human life values. There is a labour in a factory, his insurance requirement is different, he is a manager in the factory his insurance requirement is different and the owner in the factory, his insurance requirement is different. So each one has to be something called human life value and then based on that and based on his age, we suggest that look this is what is an ideal cover you should have.

Generally, we recommend that an individual should have at least 20 times of his income as insurance, life insurance. So that if anything happens to him, the family will get that money and the family puts that money into a safe even bank deposit, the interest will given, that type of income to the family. Yes, emotional loss, nobody can make, nobody can fulfil that emotional loss but the financial loss, an insurance policy can do it. Just to make it simple if the salary of an individual say is around 5 lac rupees per annum, ideally, he should have a cover of around a crore of rupees, that’s a thumb rule. I know in India only 2% or 3% is a penetration. So we have a large number of customers who don’t have insurance and we have a large number of customers who are having insurance but they don't have sufficient insurance.

When I am saying sufficient insurance, just to give a more simple example, somebody is having a Mercedes and having insurance of Maruti. A Mercedes is costing say 30 lacs and he is having insurance of 3 lacs which is of Maruti. Now tomorrow if that vehicle meets with an accident. Same with an individual, if an individual should have the cover of 3 crores and he is saying no I have a policy but then he is having 30 lacs policy. So there that human life value comes in place and lot of awareness has gone but as I said we have still a long way to go.

AITD: In fact, my question was related to this only which you have mentioned a very interesting thing. You also mentioned Artificial Intelligence and Data Analytics. So what I wanted to ask you data drives are more highly targeted marketing and sales approaches, they are very targeted marketing approaches when we talk about data analytics and artificial intelligence. How much you earn, won't determine your worth anymore, as you rightly said now not for sure insurance companies anyway, they are now using data analytics and AI to suggest a policy based on the service or device that you are using. For example, if I am using an iPhone, if I logged in through an iPhone, the insurers will direct you towards premium policies which are of higher value. This is something which I was a little curious to know how to do data analytics and artificial intelligence take care of that as you mentioned about the example of Maruti?

Mr Manoj Jain: There are various insurance companies, there are some insurance companies that are using data analytics and artificial intelligence for prospective new customers but there is a large number of insurance companies currently using these 2 tools on their existing customer base. Whether somebody has bought a policy what is the propensity that customer will renew this policy and continuous policy for next 10 years or next 15 years because the other challenge, particularly in India, is a huge lapsation happens. People do buy policies but as I said 30% of policies get lapsed at the end of the first year. At the end of the fifth year, only 40 to 45% of policies are only in the books.

What does this mean, the customer has taken an insurance and when he is looking for an insurance company, by that time you realise that the policy has already lapsed and day in day out we are getting claims, intimation and when we go and check, the customer has taken a policy but then he has not renewed it. So a lot of work insurance companies are doing in educating the customer that why insurance and why he should continue once he has bought an insurance policy he should pay and then we are using all this data whatever we have of an existing customer that how we can use this just to drive that yes we have sold a particular insurance policy in a particular market segment, what are the chances of getting the renewal.

There are some companies including us have started using even for sourcing new business but as I said the online currently is around 5 to 8% of the overall business. So lead generation and all that happens but then we give those leads to our agents or intermediaries and they go and meet the customer because somewhere the customer feels that he doesn’t need life insurance, somebody has to come and push him. It’s not like that bank fix deposit that I have some money lying in my saving account and I feel oh let me just do a fixed deposit, not like general insurance because the car which I have, I cannot drive on the road even one day without insurance and I always say whether the car is important or the person who is driving the car is important but unfortunately people insure their car but the person who is driving the car is uninsured or less insured.

AITD: So my next question is related to this only. You are talking about that in the first year 30% of policies get lapsed. So what is the emerging trend in consumer preferences in Life Insurance in India? There is a paradigm shift in the consumer perspective. It is said that now it is no longer a product, it is more of the customer experience which the consumers are looking for?

And I also have read that many times when people used to buy life insurance earlier just for the sake of tax planning and tax-saving and they were not aware of the various features and benefits of Insurance Policy. Now they are also talking about “hame to kuch milna nahi”. Because of the only benefit that they will not get. So they are also looking for an investment angle into it. Like you have endowment policy, where you know if people survive, they will get back money and certain bonuses and things like that. What is the emerging trend out and why I am asking this is very important because I know that Shriram Life had won the CII Award for Customer Obsession in 2019? You know the customer than anybody else for that matter.

Mr Manoj Jain: It’s a very interesting and very good question. I can just divide it into two. India, itself, is a very-very diversified country. Generally, we say that one is India other is Bharat. Now if you see the demographic of India, we have a population of say 130 crores. If you see we have close to around 40 crore households. Now in 40 crore household, we have close to around 3 crore households, roughly a population around 15 crores, which we call a poor segment. They are fighting for their basic needs. I don't think insurance companies can do anything at this stage because, for them, they are looking for basic needs.

Then the second segment comes, where there is a chunk of close to around 12 crore households. Their income is ranging from 1.5 lac to around 4 or 5 lac rupees. We generally call that middle, the common middle or middle-class family. That is a huge segment, 12 crores. Now in that segment, what Shriram is working, if you see there is a need for insurance because, in the entire family, there is only one person who is earning. If anything happens and this is the segment where a lot of aspirations also there. So not only they earn, they have a plan to buy a house, they have a plan to send their kids for education, they take even loans also. Now in that segment, we primarily focus.

And the third segment comes, which we call, maybe HNI where income is ranging from 10 to say 25 lacs. Now that's a segment where is a very small market. And the fourth segment comes, maybe a rich or super-rich. Now the above two segments Shriram is not at all looking because we know those are the people, they have enough money, they don't know what to do.

So most of these customers are having a bank account in large private sector banks and then they buy insurance from there. So our focus is on the 12 crore household, which is a huge market and is completely untapped and there we are looking even the initiative which IRDAI announced today, Saral Bima Yojna, even before that Government of India announced two or three schemes which was aimed for the middle class and the lower middle class, ‘Pradhan Mantri Jeevan Jyoti Yojana’. I don't know how many of the viewers are aware that the Government of India has designed it in 2014 and made it compulsory for all insurance companies to sell insurance. There is the cover is of 2 lacs and the premium is only one rupee per day. So you end up paying even less than one rupee, you end up paying 330 rupees in a year. And if anything happens, 2 lacs rupees cover is there. The only thing that is required, you should have a bank account. Because the intermediary cost is almost negligible in that. So the customer has to have a bank account and he can just give a standing instruction, the bank will debit and the 2 lacs rupees cover is there.

The second policy that the Government of India announces ‘Pradhan Mantri Jeevan Suraksha Yojana’. That’s again 2 lacs rupees cover. If anything happens due to an accident, it's only one rupee per month, only 12 rupees a year. So in 350 rupees, an individual is having a cover of four lakhs, which is I think sufficient when it comes to lower middle-class people and quite affordable. Although I think combined policies sold by an insurance company in the area is roughly around 155 million policies are already sold. But you know the population of India. I think everybody should take that policy. So if I am saying 40 crore households, at least 40 crore people should go and buy that policy. That's what is our vision.

But coming to your question on particular segmentation, we have a lot of lifestyle policies as well. We have focus group policies like for the business category, we have something called Keyman Insurance for professionals. And housewives, we have policies taking care of the needs of that particular segment. We come from a common man and our mind always goes on the common man. So we had a dedicated insurance policy for the truck drivers. And I am happy to share that in the last 15 years, we may have covered close to around more than 10 lacs truck drivers on insurance. Because this is one segment where no insurance company wants to touch this segment. But then we have designed a policy at a very affordable rate. Just to give a perspective, a truck driver gets a cover of around 5 to 8 lacs rupees by paying a premium of around 5000 rupees in a year. And if nothing happens to him, he will get his money back at the end of 10 years whatever premium he has paid.

Another group which we tried using technology to the core. Long back there used to be a company called Telenor, which was a telecom provider company in India. So we had a tie-up with them and this product is very very popular in South Africa where our partners are there. Just by clicking a button, an insurance cover was available for the people and the cover was, you recharge because the Telenor was in the only prepaid segment. So from 5000 to 50,000 cover was there for a particular period. Again you recharge, your plan will again be valid. And this premium was paid at that time by Telenor. So a lot of other insurance companies have tried this. But then, what happened a large number of people get covered. We also had covered close to 2 crore people at that time, but the premium was very small. But then it was completely technology-driven selling, focus on a target segment and we have settled, I think a good amount of premium as well.

So in India, as I said there is a variety of customers are there, there are customers who are looking for a 10 crore insurance also but a large number of customers are looking for maybe 1 lac and 1.5 to 2 lacs life

AITD: So I would like to shift a little focus on what we have been talking about in the insurance sector then coming back to your organization as well. As most of the employees are working from home, working in virtual teams, this is something which is our interest, what we are strictly into a day in day out. Now this pandemic has brought this tremendous change in human resource planning and operating to ensure employee well being, how do we enable their performances so that as you rightly said that it is a ‘Phygital’ world where they have to physically also go. And how do we upskill employees for performing well in these unprecedented times as we have to be future-ready because we don't know how long this will be continued. What is your take on this about the current situation?

Mr Manoj Jain: I think it’s a very valid question. And most of the companies as I said, a lot of preparedness although. If you see, compare the insurance industry versus banks, banks are far ahead on the technology compared to an insurance company. But having said that in the last five years, a lot of work has gone by. I can just say that we are representing a company which works for the common man. But then we have developed certain apps which are there with our agent on his smartphone. And through that app, he can finish the complete sales process. Even his training, we are doing on that smartphone. He is talking to the customer on a smartphone. If required, he is going and meeting the customer. All of our employees on that angle are fully equipped. But as I said, insurance industry we may be having close to around 3 lacs employees, maybe around 10 lacs agents. 90% of that are responsible for business development. And as I said in the beginning, even they are all tech-savvy but then each customer expects that my agent, my sales guy should come and meet me, not virtually, one to one.

So while they are fully geared up with the technology, but that one-time human interaction is there. Although net banking is there, the premium can be paid through debit cards, credit cards and all that. But that one to one interaction is still there, but our back-office teams, people who are responsible for servicing the existing customers, people who are responsible for the policy generations, people who are responsible for underwritings, our actuarial teams, our finance and accounts team, our sales support team, they are all working from remote. And that is completely seamless working. Our challenge is that how we can put the entire sales process also virtual. Technology is there, a customer can solicit insurance, even on WhatsApp call, but it will take a little longer time. But it will surely happen, but the industry is ready. And most of the insurance companies are having those apps technology-enabled where everything can be done online.

AITD: Very very interesting Sir, what measures you are taking, you are talking about various apps. But you also said that customers would like to meet them physically and for that they need to be trained, they need to be up-skilled, how to handle the customers. Like we do a lot of research and we have been doing a lot of programs for organizations where they are asking us to design programs or how to work in virtual teams, in our situation, how to work, how do we enhance the productivity and things like that. This COVID has put a lot of stress on employees, so how do they come out and look forward as productive people. So very important and to some extent what you were saying that physical interaction is important and I believe in the insurance sector, service quality and its the impact of the customer's behaviour intentions and satisfaction is the new trend. And how are we showing, right now there are a lot of innovations which are going in place.

So would like to ask you about what are the innovations in terms of the part of the payment, in terms of servicing the client, taking care of the claims and other things because it’s all virtual. How you are coping with these things and how are the employees coping with these things.

Mr Manoj Jain: As I said that we have a very forward-looking regulator. And the preparedness for digital transformation has started 4 or 5 years back. So most of the companies are having all these tools available which at the need of the customer, intermediaries are using it and when it coming to impacting people, I will give my example, before COVID I was travelling at least for 10-15 days in a month because somewhere a mental block I was having that unless I will go and meet and talk to the people one to one, the influence and impact will not be there. But from theAbout last six months, we are all on the zoom call or Cisco call or Google call and we are conducting the meetings and the impact is almost the same.

So everybody is changing including me, like, even I don't see that for next three months also I will travel because the zoom call is very very effective. Earlier we used to plan meetings at least one and half months in advance, even sometimes used to plan a large meeting, a large gathering at least three months in advance to check the availability of the hotels, the venue, availability of the people. Now it has become so handy that now I decide that in the evening I want to have or I want to talk to all my people who report to me and we can all get connected. There are many technologies or telecommunication facilities there because we run a large team. All our regional managers are equipped that in just one dial, they can connect 200 people in one go. The message can go on a real-time basis to our people.

In the last six months, the kind of even audio calls, even I have done an audio call to 2000 people in one go. I had never addressed such a large gathering physically because 2000 people in one go will be difficult. But on audio calls 2000 people seamlessly we could connect to the last miles. I think political parties used to do this. I think nowadays because of COVID, the insurance industry how to connect real-time with our agents, with our sales officers, how we can tell them that we were concerned about their well being. So I think last six months, I may have done, close to around 1 dozen web calls just to talk to the team, connect with the team and it is happening at various stages. So you are right, Covid has given us a thinking and the plus side of all this is, close to around 5 to 7% of our overall expenses, used to go in travelling and these meetings. And if you ask me what are the expenses in the last six months, virtually it is negligible. Hardly people are travelling, hardly we are conducting any meetings. Even if meetings are also happening, there is no party after that because nobody wants to do it.

So Covid has really prepared each one of us from that angle and most of our employees, not even our company in their entire industry, especially the large back-office teams, especially when they have to settle the claims, maturity claims or the death claims and without meeting people, without doing physical investigations that have posted some challenge, but then the industry has very well accepted that, and we are working very-very seamlessly from that angle.

AITD: Very well said Sir, very interesting and what you said is building on that what you said is, the current economic scenario, situation is such that everybody is talking about creativity and innovation, We are innovating in every way or the other like who would have thought that people in rural areas would be taking online classes and so on. So what are the innovative strategies to catalyze growth as far as the Indian insurance sector is going on? I mean as far as your company is concerned because as you said, it has been happening for five years and the Covid has nothing but accelerated the innovation and digital technology which are coming in pictures.

Mr Manoj Jain: I think the big innovation which is there and I think people will see soon, the product innovation. Generally, people say that life insurance a very-very complicated subject, people don't understand. So a lot of work is currently happening that how we can simplify the product, give a simple product to the customer, and be easy to understand. So a lot of work is happening. And I think this Covid has accelerated that and put a little more pressure on the regulator and the industry that how we can go to the customer. Because a lot of customers want to buy insurance but then they are not sure what product to buy. If there is a simple product is available, then the sale can happen.

I think you can see, next 3-6 months, a lot of innovative products will be there, launched by various insurance companies. Even today’s newspapers are telling that from 1st January, all the insurance companies have to launch ‘Saral Beema Yojna’. It is nothing, a very simple product, same pricing. Customers can go to any insurance company and can buy. He will end up paying eventually the same premium and same product. So all that is there and I think thanks to Covid, that Covid has also given a lot of thinking to each one of us that how we can cut the processing cost. How we can bring efficiency in our processes. All the savings in some way or other will go to the customer only either in terms of reduced pricing on the premium or better bonuses or a better return to the customer. Because at the end of the day, what is insurance - insurance, we are the aggregators, we are the trustee of the premium paid by the customers. We are only managing their funds on their behalf and pulling that together and giving back to society after taking care of our expenses and all that.

So Covid has given a big room for all of us to think differently and see how innovative we are and how we can bring more efficiency, more lean organization and service customers seamlessly with the help of technology.

AITD: Very interesting Sir. And one question that comes to my mind that we are talking about that the expenses have gone down. It is more of remote working and people are working from their homes and not many expenses the company is looking at. What will it impact too, the premium will go up or premium will go down in that case? There is a lot of synergy in terms of cost-efficiency.

Mr Manoj Jain: I can just tell you, you have to see from the global perspective, the premium in India is the cheapest. The premium rate which Indian life insurance companies are charging is the cheapest. So there is nothing called the premium will go down or premium will go up. At the end of the day, if an X company is charging a little higher premium, the maturity of that company will be more because the mortality rate is the same across industries. Each company is using the same mortality table. Now, whatever this efficiency is coming in the system, which will definitely in some way or other, will go to the consumer. But as I said in the beginning SIS 80% of the sale in India is coming through an intermediary. Now, if they become more productive and at the end of the day if my intermediary who is selling three policies in a month if he starts selling five policies in a month then his earning will go. Although his per unit earning will go down and that benefit in some way or other will go to the customer because at the end of the day, the industry is not comprehensive and customers will not come to the life insurance companies. So all that efficiency, all the cost-saving, whatever is there definitely will go to the customer.

But just to give one more data point, there are 24 life insurance companies in India, and insurance has a very long gestation period, it takes 10 years for any life insurance company to reach breakeven. Because the biggest cost as I said in the beginning is a distribution cost. And unfortunately in India, we have to pay everything upfront where a policy continues for 10 years but all the expenses, I have to book in the first year itself. So if efficiency improves, if my agent productivity goes up, my branch productivity go up, definitely, the cost will come down. And that can only happen if a lot of awareness. I think the industry is also doing a lot of work, regulatory is also doing lots of work, the government is also helping because currently if the agent meets 10 customers, he ends up selling only one policy. I am looking for a day, I don't know whether it's in my lifetime, that my agent meets 10 customers and he ends up selling to all 10. And that can only happen as Even our economy is we are still down. So once the economy grows, the disposable income goes up then obviously the affordability will go up. And as I said India requires at least 10 large size life insurance companies like LIC of India. That potential is there and insurance as I said, 40 lacs crore that's the AUM which is there and almost 80% of that is invested in various government projects because the long term money only comes from insurance. So that's why I call it nation-building by the insurance industry.

AITD: It has been a very interesting discussion with you and there are so many things which we would like to know from you. Seeing the paucity of time, I will just take one question from the audience which I have. The question which they are asking is how life insurance is looking at 2020 and the future of insurance in the industry in the next 3 years because nobody knows how things will turn up, when the vaccine will be out and how Covid will subside and things like that. So how do you see the insurance sector in the next 3 years, Sir?

Mr Manoj Jain: See as I said this is a sun rising industry for the last 10 years. This is growing by around 10%. And as I said there was a temporary pause for 3 or 4 months. We are almost back to normal. Most of the insurance companies are working the way they used to work in past. Although we are down by around 5% life insurance health insurance is up by 25%, general Insurance is up by 5%. So if you see the overall industry is back to normal. Now next 3 years, even next 6 months, I think we will be back on track. And if everything goes the way things are moving, the industry will show growth of at least around 5% this year and next 3 years we will be growing at a pace of around 10-15%. That will happen because as I said, the potential is huge. We have not even tapped 1/10th of the potential.

AITD: To sum up as you said that penetration is very low, in fact, its only 2% and there's a lot of potentials to grow and the rate at which the industry is going, in the next 3 years we are almost back to normal, and we will only see the upsides only. Things will get better and we hope that the vaccine is out as fast as possible and things are better. So very-very interesting thoughts Sir about the group and the future of insurance sector, how you are taking care of the customers, how you are servicing to your customers, the sales part, a very-very interesting discussion we had Sir. Before we end our session so one last thought from your side Sir. What you would like to tell our viewers.

Mr Manoj Jain: I can just tell to all of the viewers because most of you are young. I think you should buy one insurance policy when you are young because if you are buying an insurance policy when you are 25 or 24, you end up paying a very less premium. Because once you reach the age of 40, 45 or 50, you will end up paying at least three times more premium than what otherwise you will pay when you bought the policy at a young age. And each of your students, if they can take an oath or they can make a decision for them that they will go and tell five people the benefit of insurance. Because insurance is always sold through word of mouth.

So if each one of you decides to tell five people why life insurance is important, I think this journey which has just started, can then go to many folds. India requires a lot of long term capital. If you look at any project, any infrastructure project, it requires a minimum of 10 years to 15 years to 20 years and those funds can only come from life insurance. So spreading the word of insurance, that's what and you will buy at least one life insurance policy. Take a protection plan or take a saving plan, it's up to you. But you must take it. That's important.

AITD: Sir, the earlier the better.

Mr Manoj Jain: Rather, Institutions like you, if you can make it mandatory to all your students that you will be enrolled in Amity if you just show a life insurance policy. From wherever they want to take, that's not an issue. But they should have a decent cover, I am not saying they should have life insurance, but they should have some decent life insurance cover and they should show that policy.

AITD: I am sure they must have heard you and have seen a lot of value and understood, there is a lot of questions they must be having in their minds. Thank you very much, Sir. It has been a fantastic discussion and I wish it could continue for a long but the paucity of time. Thank you very much, Sir, for giving your time and we all have enriched ourselves about various facets of life insurance and known lot of facts which people may not be aware of and coming from you being a veteran is something which is very very important for us. Thank you very much Sir for all the insights.

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