Bangalore: There is a flurry of activity at Brigade Seshamal, the multi-storied headquarters of MetLife India Insurance Company here. After an uneventful year, the life insurer is venturing into the lucrative Indian insurance market with a newly drawn-out battle plan.

MetLife India, to freshen your memory, is a three-way joint venture between Metropolitan International Holdings USA (an affiliate of life insurance giant Metropolitan Life Insurance, New York), Jammu and Kashmir Bank, M Pallonji and Co and other private investors. The company sold its first policy in January 2002.

After the mandatory initial enthusiasm, MetLife went into limbo while other private life insurers marched ahead. In the last fiscal the company closed with a premium income of Rs 6.20 crore - of course, not half as glamorous as its competitors'.

Now, it looks like, there is going to be some action. MetLife has chalked out a comprehensive strategy that includes launching new products, fine-tuning the existing ones, entering new markets, expanding the agency force, opening new branches in select cities and augmenting the ad spend. The company, sometime back, had also automated its underwriting activities by installing a common operating system.

So, why this sudden animation? "All these days we have been investing in our people and technology. Now we are on the verge of taking off," says MetLife India managing director Venkatesh S Mysore. In line with the performance and expectations, the company's capital base will be expanded by Rs 50 crore to Rs 160 crore. Till July this fiscal, MetLife India had booked a premium of Rs 4 crore.

The taxiing before the takeoff that Mysore refers to has started with the launch of a guaranteed money-back policy, Met Bhavishya, designed specifically to provide for a child's growing life-stages. And, yes, the company is once again visible with its print campaign.

Further impetus will take place once the company enters the institutional (group life insurance) and annuity segments, says Suresh Guhagarkar, appointed actuary. "We will look at unit-linked products next year." Presently, 60 per cent of the company's sales consists of endowment policies and the balance, money back and others.

"We are now fine-tuning some of our existing products in line with the market demand. We will customise products for niche markets," says Dr K Sriram, actuary. Sriram thinks there is a market for short-term endowment products. The revised thrust is towards making the company one of the top three insurance brands in India by the year 2010. Will the dream come true?

Targeting group business
One game plan MetLife India has in mind is to target corporates for its group insurance products. Indian corporates, as a welfare measure, used to cover their employees under a group personal accident insurance policy against an accidental death or incapacitation. So far, this used to be the preserve of non-life insurers.

Now, after the opening up of the insurance industry (life and non-life) the trend has changed; life insurers have been making a beeline to join the fray with their annually renewable life insurance policies.

"A life insurance policy with a personal accident rider actually makes a better social security measure unlike a vanilla personal accident insurance cover," argues Sundip Mukhopadhyay, director, institutional business. Mukhopadhyay, who was earlier with Tata AIG Life Insurance, managing its group business, was specifically roped in by MetLife to chart out its entry into the institutional segment.

The critical aspect of a group business starts with customising the product to suit a corporate, and ends in prompt settlement of claims. Any botching up in the latter will see corporates dumping an insurer without giving a second thought.

"We have a strong longstanding relationship with several multinational companies (MNCs). We will leverage that with the MNCs present in India. We will initially target the corporates located in four major cities - Mumbai, Chennai, Delhi and Bangalore," says Mukhopadhyay. In the US, Metlife Inc has the largest group business.

Compared to other business segments, MetLife has lesser competition in the group business. This is because Birla Sunlife Insurance, OM Kotak Life Insurance, Tata AIG Life Insurance and SBI Life Insurance are the ones present now in the private sector apart from the giant Life Insurance Corporation of India (LIC). And the other bulk segment MetLife plans to target is the group pensions sector.

Embedded glamour
It is true that MetLife India's topline numbers (the total premium and the number of policies sold) may not be impressive. This is because the company has so far been staying away from the single-premium market when other private life insurers were raking in money.

The company officials, nevertheless, are content at what is embedded in their policies sold by their 750-strong agency force. "One should look at the persistency ratio [the continuation of policies by the policyholder], the premium-per-policy and the claims experience rather than the topline growth," reasons Mysore.

"Sales quality is something we take seriously. Our policy persistency ratio is one of the highest in the industry," says Gaurav Suri, marketing director. This fiscal, the average premium per policy shot up to Rs 10,000 from the previous year's Rs 5,200. Most of the policies are annually paid; a good thing for a life insurer."

MetLife is also happy that though the industry suffers 30-per cent agent attrition, the figure is much lower in its case. And consider this with the fact that it costs a private life insurer around Rs 15,000 to put an agent into the field.

"The best way to manage is to keep the agency force under manageable numbers," says Mysore. "Most new players expand their agency force without looking at the attrition costs - the expense involved in recruiting a new agent, the cost of servicing a policy brought in by an agent who has quit the profession/company, and also the cost of losing a policyholder along with the agent. The name of the game seems to be new business rather than a combination of new and renewal business."

Unlike others, MetLife wants all its agents to be full-timers but working on a commission basis. This is something unique in India. "It is a tough model to follow here. Anybody might expect some sort of a fixed remuneration when asked to be a full-timer. I want to see how MetLife India plans to tackle this challenge," says an industry observer.

One way to face this is to blindly follow LIC footsteps; the corporation pays a stipend to all its career agents for the first three years - something certain private players do on the sly. For prospective agents, Mysore and Sanyog Jain, regional training director, Asia Pacific, are living examples of growth opportunities available with the company; both these officials started their career as agents of Metlife in the US.

Believing that a part-time agency structure will not work in the long run, Mysore rules out hiring agents on a massive scale. "Our span of control is small compared to others. For every 15 agents, we will have an agency manager. So we want to keep the total cost low."

As per plans he wants to increase the number of agents to 1,800 to meet the company's business goals. "Our agency selection process is quite stringent and only those who fit into the required profile bracket are chosen by us," says Jain.

The corporate way
Metlife is also seriously involved in expanding its corporate agency network. The company has bancassurance agreements with Karnataka Bank, Dhanalakshmi Bank and Jammu and Kashmir Bank. While the banks will take care of the rural sectors, MetLife's focus is on exploiting the life insurance potential available in cities.

"It is only in cities that the potential for life insurance exists. Further, people migrate from villages to cities," reasons Suri. Citing the census that puts the number of towns in India at 4,000 he says the top 64 towns house the target clientele.

Suri says the focus on semi-urban and rural areas will have a strong negative long-term impact. "Ten years later I cannot come to the city when others would have established deep roots." The company has also plans to enter the Ahmedabad and Pune markets.

On the issue of sliding interest rates and its impact on the investment income and business plans, Guhagarkar says: "Our average investment yield last fiscal was around 8.5 per cent. The downward reduction in interest rates has not affected us as our product pricing is made on the basis of the interest rate, realistic expense and the mortality rate."

Referring to the company's pricing strategy, Sriram says the participating products will be priced with a conservative mortality rate. "We don't find pleasure in a price war. We have settled all the five claims reported last year, thank you."