It has been almost two years since DLF Pramerica came into being, but we see no ads or publicity of the products. How do you reach out to customers?
We are primarily selling policies in Delhi, Haryana and Punjab. We would like to solidify our base before we go elsewhere. Hence, you wouldn’t see nationwide ads or publicity. But within these areas, we identify our customers and then do campaigns through radio shows or maybe in person. For instance, for our child plans, we put up stalls in schools during events so that we are able to reach out to parents.
Kapil Mehta, Managing Director and CEO, Pramerica Life Insurance Co. Ltd
In terms of products, what’s your focus? Do unit-linked insurance plans (Ulips) form a chunk of your portfolio or are you focusing on other products, too?
Ulips do form a large chunk of our portfolio. A major chunk of our sales happen through Ulips. Having said that, we are also focusing on pure protection term plans by making them more suitable for the customers. In our term plan which we call family income plan, we have staggered the sum assured payment over a period of 10 years. And the payment is monthly. The idea is to ensure that the policy is able to assuage the financial worries of dependants. If we give a lump sum payment, there is always the risk of the money being used immediately.
Most insurers focus on investment-linked products, but there is little focus on protection-linked products. Even if you have a good term plan, you need to incentivize your agents to distribute the products.
We do just that. To begin with, our Ulip has an average multiple of 11-12 times the premium. That means the sum assured that our customers choose is at least 11 to 12 times the premiums that they pay. The minimum requirement is five times the premium paid. That the focus remains on sufficient protection is ensured by incentivizing our distributors on the basis of sum assured that they bring. So, the way we recognize our agents is not only through the premiums they bring but also the sum assured.
In the last couple of years, the insurance industry has seen a sea of reforms. How is the industry evolving?
The way reforms are panning out, insurers are now forced to have a long-term goal in mind. It is no longer about grabbing a large chunk of the market. The focus is now shifting on transparency, customer service, disclosures and better products. This change in mindset is also enabling the insurance industry to move up the chain from tax saving to saving to invest. Now the focus is on investment and how insurance policies fit into one’s personal finance to attain a particular goal.
Clearly, the opportunity lies in long-term products and segmentation of the customers. The industry has been focusing on expansion up till now, but there is still immense scope for new players to come.
Kapil Mehta is the managing director & chief executive officer of DLF Pramerica Life Insurance Co. Ltd.