Would you like your insurance premium to drop by a third? Or policy benefits to increase without you having to pay an extra rupee? Insurance companies can do this easily, by getting out of their offices more often, i.e., insurers should spend significantly less on offices and headcount.
In my university days, reading social economist Amitai Etzioni’s Modern Organizations was sine qua non. Etzioni laid bare how organisations get self-serving and pile up costs, not to accomplish the purpose they are meant for, but for catering to the personal whims of the employees.
Insurance companies across the world spend huge amounts of money on offices and staff, which add no value to their customers.Worse, they make things more difficult and depressing for customers, who are forced to wade through layers of reckless bureaucracy. We know that customers rarely visit insurance offices to buy policies. Then why spend good money on things that are unrelated to business growth and quality?
Can insurance companies live without branches? The answer of course, is yes.
I recall the question I asked the first time I ever entered an insurance company office—not as a customer, but as a newly recruited officer of a large general insurance company—that why the company had so many branch offices, divisional offices and regional offices when the work of one was getting aggregated at the other, with seemingly no value added. My senior colleagues were candid enough to say, we needed structures to give us all opportunities for promotions.
The branch manager aspired to become the divisional manager and the divisional manager wanted to be the regional manager, moving farther away from the customer to get bigger office and higher amenities. The truth in the first place is, even the branch office was redundant—customers rarely walked—and the whole place was mostly a front for meetings of staff, who most of the time engaged in farcical work.
I shirked off the experience as a possible public sector malady and moved to the all-new and vibrant private sector. Cut to a decade later, I ended up as a chief executive officer (CEO) with a mandate to scale up the largest- and fastest-growing life insurance venture out of a struggling entity. But my nibbling thought—why we needed so many offices—still remained.
On the first day of my work as the CEO, I arrived unannounced not at a major regional sales office in a posh business district of Mumbai, to take charge of my work. I was promptly stopped by the security guard. Without revealing my identify, I asked permission to see the office in-charge. He was nowhere to be seen. The staff were enjoying an extended lunch time.
A lady eventually spotted me waiting for long and escorted me in. I greeted the staff with a beaming smile and promised that I would soon create more work for them.
I did. Business came pouring in but the problem remained. We had too many offices, too much staff. As business came gushing in, a false notion prevailed that more offices and more staff mean more money. I knew, that that was not the case, but as a CEO, I still had limitations.
To prove my point, one day I took a taxi and went alone unannounced on a road trip covering all the remote branches we had in one state. The results were comical. Except the ubiquitous security guards, at most places I found no staff in the offices. At many places, the branch manager hardly visited his own branch for weeks. All the so called “staff” we had on payroll, “managed” their work using mobile phones from shopping malls, movie theaters, among others.
I presented the telltale picture to the our Board for permission to shut these offices—but for different reasons, we could not.
I moved on to another start-up venture in life insurance, strongly determined to set up a branchless business. I succeeded largely in creating an enterprise from the start with a motto of ‘less is more’. Piggybacking on technology and partnership models, we cut capital spends and still managed to grow fast.
The other thing I managed was to do away with security guards; except standing up at attention to make you feel needlessly important—there’s no security to be provided.
Simple technology solutions make a compelling case, for insurance companies that having no offices, to makes business better. The only office you may need is MS Office and a smartphone, to effectively manage customer engagement.
So the next time you want to choose a policy and are wondering which is the right company, ask them how many offices and staff they have. You may find that less is actually more, for you.
P. Nandagopal, founder and chief executive officer, OpenWorld Insurance Broking Ltd