Om Kotak Mahindra Life marketing VP Ashutosh Bishnoi says patience and persistence in the insurance business will eventually benefit both the insured and the insurer

Chennai: For Ashutosh Bishnoi, vice-president (marketing), Om Kotak Mahindra Life Insurance Company, selling life insurance policies is like indulging in farming.

"It takes a lot of patience to sell insurance due to people's attitude towards death and understanding of risks. It also takes time to train and tutor people to sell well," says Bishnoi, 42, an MBA with 10 years' experience in the advertising industry (da Cunha Associates, Trikaya Grey, HTA) and another 10 years in the capital markets (DSP Merrill Lynch, JM Mutual Fund).

"But most of all someone, sometime will be extremely grateful that I was persistent with his father or husband," he is optimistic. Well, that could be true; no widow refuses a life insurance settlement.

The company earned Rs 26.13 crore from new business during the first six months of this fiscal. After taking into account the renewal business, Bishnoi says the total premium income has crossed last year's annual figure of Rs 40 crore.

The largest-selling plan is the Kotak Safe Investment Plan, which offers unit-linked investments and capital safety, he says. "In less than six months of its launch it has acquired a 25-per cent share in our product mix. With an impressive average premium per policy of Rs 13,000 this is not only above the industry standard but also up from Rs 11,000 of the last year."

Domain-b spoke with Bishnoi recently. Excerpts from the interview:

What is the trend you are witnessing in the market? Which is the business that is growing at a faster rate and what are the reasons for that?
The fastest growing is the unit-linked business. It is mainly because customers are discovering the value of controlling their own portfolio even in an insurance policy - something they have never done and enjoyed before.

The other segment poised to grow fast is that of retirement products. In less than five years there will be 100 million people in India above the age of 60. Today, of the three pillars of retirement savings, the first one (government-backed social security) does not exist in India except for a handful of government employees. The second pillar of publicly mandated, privately managed savings is on the verge of being introduced. And it is only the third pillar (self-financed retirement) that has to support the old.

Bank interest rates are dropping like a rock. In this scenario, the insurance products that can create regular cash flows, post-retirement, can play a substantial role in retirement planning.

What is your strategy to tackle this trend?
We, so far, have one unit-linked plan. One can expect at least half a dozen more in the years to come. At Om Kotak we understand investments better than most players; providing good-quality portfolios is definitely something we can carry out efficiently.

What about your bonus strategy?
We give bonus on the accumulation fund and do not follow the revisionary bonus system. An accumulation fund is the value of the total premiums collected minus the expenses. That way every customer knows exactly how much savings we are accumulating on his policy, and his bonuses are based on that number. Investors everywhere prefer clarity and predictability in their portfolios instead of sheer returns.

LIC [Life Insurance Corporation of India] is going strong, signing up agreements with major banks. Further, it seems, private companies are not able to match the insurance behemoth's quotes in the case of policies for the bank's customers.
We ourselves are quite active in the group insurance market. In fact, we have done the largest deal in group insurance in terms of the premium paid - with Oil India, where we cover more than 10,000 employees in a policy that carries a premium tag of Rs 3.25 crore.

We are also in talks with some of the large banks in India about a possible group life policy for their customers. As far as the relationship with banks is concerned we want to keep only a few - mostly at the top end of the market or at the bottom. And in the mid-market, we want to address them only through our branch and agent network.

How wide is your distribution set-up?
Currently we have 41 branches in 30 cities. It should go up to 40 cities and may be 50 branches in a year's time. After that we will slow down on the expansion and concentrate on consolidation. On the alternate distribution side we are exploring a deeper relationship with our parent bank and its subsidiaries. We believe our future lies in building a strong product-service customer proposition with our parent bank.

How many individual agents do you have now? And are there any plans to increase the number? How different is your training programme for your agents?
We are currently supporting nearly 5,000 life advisors in 30 cities. This is targeted to go up to 10,000 in a year. We are quite proud of our training systems. Working closely with Old Mutual [the foreign joint venture partner] we have designed an eight-level programme that takes the life advisors through not just the 100 hours of IRDA [Insurance Regulatory and Development Authority] licensing training but several other sales management and relationship management programmes.

The difference that we want to bring to insurance sales is that of good quality advice. We already offer some of the best quality of advisors in business. Our typical life advisor is a businessman or -woman, and is usually over 35. The education level in all cases is at least graduation, and many cases even post-graduation.

And your promotional strategy?
We have been focusing on both lead generation as well as brand building. According to an ORG-Marg study of insurance brands we were ranked fourth among all brands for awareness. We spend roughly half of our promotional budgets below the line in direct marketing and events in our 40 offices.

On the payout side, what is the number of claims that you have settled so far? Are they within your projections?
The number of claims so far is quite low. Totally we have paid 114 claims as of today, as against the number of lives covered running well over 1 lakh.