Plugging the mortality protection gap: building awareness for life insurance in an emerging market

4 years, 9 months ago

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Research shows a massive shortfall in life insurance cover in India. Tata AIA is striving to improve matters through media relations, technological solutions and by developing and promoting a high quality insurance agency force. By Arunava Khan.



In 2011 leading global reinsurer Swiss Re published an interesting report titled Mortality Protection Gap: Asia-Pacific 2011. Here Mortality Protection Gap refers to the difference between the life insurance cover people have and what they should have. The report created a fair amount of noise in the Asian insurance market as it highlighted a huge Mortality Protection Gap in the region.
 
According to the report, there is a startling Protection Gap of US$ 41 trillion in the Asia Pacific region. India takes third spot on the list at a staggering US$ 6.67 trillion. This implies that for every Rs. 100 that needs to be spent on life insurance cover, only Rs. 7.4 is actually spent in India on life insurance and savings put together – leading to a gap of 92.6% in a family’s financial protection against the ‘ifs’ of life.  To make things worse, this gap is growing at a CAGR of 13%. 
 
Most Indians are oblivious of this huge gap. It is, therefore, important that the Indian life insurance industry builds awareness on the issue so each one of us can delve into our personal Protection Gap and do something about it.
 
Often Indian life insurance companies limit their communications potential by focusing too much on promoting the product line. The use of words and images not only fails to resonate with consumers but also confuses them. It is about time that the Indian life insurance industry deviates from thisusual practice. Instead, it should adopt a strategy that highlights brand strength and how it addresses the Life Protection needs of India.
 
Three key elements 
 
The communications strategy for a country like India should revolve around the following three elements:
  • Create awareness about the Protection Gap so that people realise why it is important to have adequate life insurance cover
  • How the life insurance industry in India is making life insurance buying and selling convenient for the people &
  • How the industry is building a professional agency force to address the need of customers
According to recent census data, the young middle income group of India is the fastest growing segment in the country. They have fire in the belly and a craving for success. 
 
In terms of income band, this group is represented by people who fall under the income bracket US$ 16,000 to 61,000 per annum. This section of customers is also referred as ‘Gen Y’ or ‘Do it Yourself’ customers as they dislike being force sold any product or service. They like to work out their own solutions, but also appreciate assistance. 
 
Convenience starts with convenience of availability. The way convenience banking resulted in growth of the banking industry in the country, convenience of buying and selling life insurance could also act as a catalyst and help reduce the Protection Gap.  
 
Mobile selling technology 
 
To make the process of buying and selling insurance simple, the Indian life insurance industry is taking several steps with the use of technology. These include the launch of a fully mobile selling solution that also gives mobility to the sales force. 
 
This mobile solution makes the process of buying insurance faster and simpler for customers. Also, there are mobile apps for the ‘do-it-yourself’ generation of customers to motivate them to discover their Income Protection gap.
 
A professional agency force is the key to the future of the Indian life insurance industry. With this belief, the Indian life insurance industry is investing heavily in its agency force in order to make them more professional.  Agency will remain the dominant channel due to high rate unemployment in India.  Also it offers enough money to those who take it as a full-time profession.
 
I would also take this opportunity to mention how Tata AIA Life addressed the scenario and what communication strategy it has adopted.
 
Mass media awareness
 
At Tata AIA Life we acknowledge that the staggering protection gap is something that needs to be addressed immediately. One way it can be done is by creating mass awareness through media. Tata AIA Life used media extensively to communicate the message. More than 10 by line articles were placed in the leading business dailies on the income protection gap in India and how important it is for the financial wellbeing of the country. We organised media interviews with leading business and trade journalists to influence their opinion on the issue. Our effort resulted in more than 50 stories in the leading media.
 
Life insurance is still sold in India in a traditional way and as a consequence of that people find buying a life insurance solution very cumbersome. We decided that we would highlight in the media how we are making the process of buying and selling life insurance simple. 
This has helped us to take the message to the larger audience and made us look like a responsible life insurer. We travelled to various parts of the country and created media opportunities like special media alerts, press conferences and media briefings to talk about how we have introduced simple, hassle-free techniques using modern-day technologies.
 
Our Premier Agency model
 
We also talked about the importance of life insurance agents, which help Tata AIA Life provide the ‘right’ advice in the right way to bridge the Protection Gap. In relation to agents, our communication message was: only by having the best agents can we offer our customers the best life insurance solutions. We created media opportunities to talk about our Premier Agency model, which was built using internal best practices. Premier Agency helped us differentiate ourselves from the competition.    
 
The idea behind Premier Agency was to transform the Agency from scale-led growth to productivity-led growth through a comprehensive Distribution Effectiveness programme. Due to some recent guidelines that put a cap on the payment of commission to life insurance agents, retention of productive agents became difficult as their income levels had fallen.  
 
Those operating at the ‘entry-level Agent’ productivity level are essentially part-timers in nature and end up with insignificant incomes. Hence, they do not find encouragement to stick with the Agency career path. That’s where Premier Agency comes in. We have driven the growth of the agency channel by recruiting and developing a quality agency force that exhibits the following characteristics: 
  • They are consistent in their business activities 
  • Highly skilled and therefore productive 
  • Their incomes are comparable to other competitive jobs available at their levels 
  • Full-timers with Tata AIA Life Agency
On average we recruit around 2,000 agents per month.  I am not sure whether good press has helped us in attracting talented life insurance agents, but a good article on our product and service always helps the agents in a sales pitch as the newspaper stories have a large impact on clients. 
 
It is evident from India’s Mortality Protection Gap that there is an enormous need for long-term Savings and Protection Solutions. This is an important issue that needs to be addressed immediately. Government and the industry must work jointly on this for the overall financial well-being of the country.
 
Author’s Details
Arunava Khan, Assistant Vice President (Corporate Communications), Tata AIA Life Insurance Company Ltd. 
 

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The Author

Arunava Khan

Arunava Khan,Assistant Vice President (Corporate Communications), Tata AIA Life Insurance Company Ltd.

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