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Need-based sales, follow-up calls, bancassurance may help things "INDUSTRY should make efforts to weed out misselling by providing agents with superior training" Anisha Motwani Director & chief marketing officer, Max New York Life Insurance
A RESIDENT of Jalandhar, Punjab, R Sikka, happily agreed to invest in a traditional plan of a private insurance company, a recent entrant in the industry, after the insurance agent told him the product is almost similar to LIC's Jeevan Anand plan, but offers higher returns.
Sikka was told that by paying a yearly premium of Rs 5,353 for five years, he would be able to receive a corpus of around Rs 50,000 after 10 years apart from insurance benefits. He was also assured that he would be allowed to withdraw the fund any time after the fifth year.
But soon enough he realised that was not to be.
"First of all, even three months after paying the premium, I did not receive the policy documents.
When I obtained a duplicate copy of the policy from the local branch of the insurance company, I was shocked to see the terms and conditions, which said I was supposed to pay the premium for 20 years." said Sikka.
Sikka was a victim of misselling, a menace that has dogged the insurance industry for many years now. The problem has become acute with the entry of newer players as the race for premium growth increased competition among agents to get business.
The Insurance Regulatory and Development Authority has put in place strict policies and mandated practices to check misselling. Yet, gullible investors continued to be taken for a ride by insurance agents.
"Agents and advisors are the face of an insurance company and they contribute towards building brand equity. It is very important that the industry makes collaborative efforts to weed out misselling by providing superior training to agents/advisors and by enhancing financial literacy among customers," said Anisha Motwani, director and chief marketing officer of Max New York Life In surance.
Misselling takes place often when there is a misalignment in the objectives of the parties involved. For instance, the investor's objective may be to save on tax outgo, investment or life protection while the agent may be looking at fetching the maximum premium, as it will earn him higher commission and help him reach the target faster. The insurer's objective is to create maximum corpus from a pool of well-diversified clients, so that the risk of cash crunch is minimised.
In order to beat the competition and survive in a market with receding profit margins, insurance companies are increasingly realising the importance of the service aspect and some insurers have brought in innvovative practices in a bid to check misselling "Enhancing efficiencies and, thereby, productivity of delivery channels is the main challenge for insurers in the new regulatory environment," said G Murlidhar, chief operating officer of Kotak Mahindra Old Mutual Life Insurance.
Need-based selling -a process of analysing a customer's needs based on age, short-term as well as long-term financial needs, risk appetite and lifestyle -is the new trend in insurance marketing. Insurers use this process both as pre-sale as well as post-sale activity.
Max New York Life Insurance claims it suggests only those products to a customer, which will suit his/her income, life stage and occupation. As a postsale activity, insurers crosscheck a product that has been sold with the investor profile. In case of any mismatch between the investor profile and the plan chosen, steps are taken to cross-check if the investor is aware of the policy terms or s/he has been duped.
Canara HSBC Oriental Bank of Commerce Life Insurance is trying out a different model. The insurer sell products only through the branches of its promoter banks -Canara Bank, HSBC and OBC -and has avoided retail agents completely.
In this bancassurance model, distributors are also the shareholders of the insurance company. "This is a first in India, and the result is an efficient distribution model, with the correct product being offered to the customer. It has also ensured faster resolution of customer complaints/queries," said Chirag Jain, chief operating officer of Canara HSBC Oriental Bank of Commerce Life Insurance.
Most insurance companies have also started the process of making a `welcome calls', in which the customer is once again briefed on the various features of a product and charges applicable in order to reconfirm that the investor has take an informed decision while buying the policy.
This is in addition to the regular process of getting the benefit illustration signed by the customer and offering a free look period of 15 days during which the customer can cancel the policy.
Source :- mydigitalfc
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