When the March 24 lockdown was announced in India, the insurance sector was worried. The concerns stemmed from the fact that agents won't be able to commute to distribute policies.
Bajaj Allianz Life Insurance was also worried, but the fifth-largest private life insurer in the country was prepared to tackle this unprecedented situation.
In an interaction with Moneycontrol, Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance, said considering that the pandemic had affected several parts of the globe, the company was better prepared.
Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance
"While we had a business continuity plan, this is something very different. But we were agile and were able to get up and running soon,” he said.
The insurer is a joint venture between Bajaj Finserv and global asset manager and insurer Allianz SE.
For the April to February period (FY20), Bajaj Allianz Life collected first year premium of Rs 4593.36 crore, showing a 22.8 percent year-on-year growth.
Talking about the business prospects, Chugh said it is difficult to predict impact of COVID-19 on the sector.
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"Everybody (in the insurance sector) is going to work on three scenario basis, best case, worst case and realistic case. It will take time to get back to normal. Whether it is July, September or January we don’t really know," he said.
The distribution challenge
For the life insurance industry, agency is the major source of distribution. These individuals are the feet-on-street who visit clients and sell insurance products. But insurers have been forced to suspend face-to-face sales.
"The last 15 days of March accounts for almost 12 percent of the life insurance industry’s annual business. We realized that the entire distribution has to work differently and things need to be virtual (or aided virtual) and video-centric," he added.
Chugh explained that the company now has something called a daily choreography where employees are given training on how to divide their day and how to pitch to customers over call.
“Insurance has a lot to do about personal connect. Hence, the company invested in an entire rehaul of the training infrastructure. Sales staff is being trained on how to pitch differently, how to strike a conversation over call and how to have a more empathetic discussion with customers,” he added.
How is employee management being done?
There is a lot of uncertainty in the market about the future of employment since there is no clear direction about how COVID-19 will pan out and how long it will take to be eradicated.
However, Bajaj Allianz Life is clear that it will stay invested in all of its 10,000 employees in the company.
“Normally this is a time of the year when the churn happens in the staff strength. But we are going to retrain employees who are on performance improvement processes. Not a single employee will be fired,” added Chugh. The company also paid salaries five days in advance in March 2020 (on March 25) to all its employees.
Despite the lockdown, since insurance is classified as an essential service, all services are up and running.
Out of its 10,000 staff, about three to five of Bajaj Allianz Life’s employees are required to go to office to handle the servers. These employees have special passes and travel to switch on/off the devices and servers.
How are customers being handled?
Policy sales continues to happen online across life insurance companies. The only difference is that customers do not need to interact through any intermediary.
Chugh explained that medical examination done before policy sales has now gone virtual. The idea, he said, is to waive lengthy underwriting processes.
"We have trained employees to medical underwriting using video. Customers talk directly to the underwriter and is willing to disclose a lot more. However, those will pre-existing ailments will need proper physical medical tests done which may not be possible right now," he added.
There is also a perception that considering the mortality rate under COVID-19, more Indians will realise the need to have a basic life insurance cover.
Chugh said that while there may not be an immediate demand, in the medium to long term, individuals will realise the need to buy a risk cover.
“The shift will be towards guarantee-based products. How soon? We will have to wait and watch,” he added.
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Traditionally, the June quarter is a slow period for the life insurance sector. More than half the annual sales is done in the second of a fiscal. Even if the lockdown is lifted on May 3, industry officials expect revival in business to take another three to four months from that date.
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