Star Union Dai-ichi Life Insurance Company
Outshines the market
Already, one of the fastest growing and most trustable life insurers, Star Union Dai-ichi Life
Insurance Company, is set to further accelerate its growth trajectory in the coming years, as
its team is aiming to take it to the top five in terms of overall performance. While half a
dozen products now on offer are sold through as many as 7000 bank branches across the
country, it still has a vast room for growth through finding market within and outside the
staggering 60 million-client base of its Indian promoters, two large commercial banks. An
average Indian customer visiting any of the branches of Bank of India and Union Bank now
will not feel deprived of what he or she is keen to buy from a trustable life insurer.
Right from the beginning, Star Union Dai-ichi Life Insurance Company stood to
shine virtually as a star in the milky-ways of the fast growing, yet intensely
competitive, life insurance market. When ECONOSTAR met Mr Kamalji Sahay,
Managing Director and Chief Executive Officer of this private life insurer in
September 2009, he said: “In just seven weeks of operation in the first financial
year after we set out our business, we could sell a record breaking 13,425
policies, collecting a premium of over Rs 50 crore,”. No other insurer in the
country has ever reported such spectacular number in so short a period as less
than two months after starting operation, though many of the private insurers
boast themselves of being the best in terms of selling policies. The figure would
have been much higher had the climate in the financial market been favourable,
he pointed out. Incidentally, that was the first financial year after opening up of
the sector to private players the market saw a virtual de-growth mainly because
of the economic slowdown and plunge in investors’ confidence. Still, this
youngest life insurer in the country did not find any discomfort with the
environment - nor an excuse - thanks to its parental strength, its own preparation,
planning and delivery arrangements, much before its official launch.
Star Union Dai-ichi Life Insurance Company is a joint venture of two large
commercial banks - Bank of India and Union Bank of India along with The Dai-ichi
Life Insurance Company of Japan. While Bank of India holds 48 per cent stake in the
capital base of the company, Union Bank of India holds 26 per cent equally with Daiichi Life, the Japanese partner. The fundamental objective behind floating a private
life insurance company by the two large commercial banks was obviously to expand
their service offering with insurance products suitable for their customers through
their nation-wide branch network.
One reason, says Mr Kamalji Sahay, Managing Director and Chief Executive
Officer of the life insurer, for such good show owes mainly to the strategy of
rolling out its products simultaneously through the entire branches of the
promoter banks. In aggregate, the banks have more than 6600 branches and
around 70 million customers across the country, which are still growing. These
Indian promoters also enjoy immense public trust not only for their government
ownership, but also for their proven reliability and services to their customers –
both retail and business customers. More importantly, the banks have substantial
presence in semi-urban and rural areas, where scope for expanding insurance
coverage is still vast. Besides their branches, roughly 1300 branches of regional
rural banks (RRBs) in five States, sponsored by these two banks also sell the
products in many villages. The RRBs take the products deeper into remote
villages where insurance penetration is relatively lower and there is a huge
growth potential without much competition. These banks have the tradition of
supporting socio-economic growth in rural India and also in inculcating
investment culture among the people across all economic classes. Both the
banks have significant presence in almost all cities in the country, especially in
the economically flourishing western region. In fact, now more than 8500 bank
branches virtually ensure dominant presence for the company both in urban and
rural centres. Union Bank has significant number of branches in the densely
populated States like Uttar Pradesh, where insurance penetration in rural pockets
is still insignificant. The branch managers of the bank in close rapport with people
in rural and semi-urban regions successfully convince the customers about the
need of buying insurance products for their safety and investment returns. That
creates win-win situation for the bank and the insurer.
When the company was set up, the industry had begun to see competition with
the leader LIC of India, banking on its millions of agents, continued to make
everyone run for their money. The competition has been more intense in the
urban centres. Still it was considered an industry with huge growth potential, but
with huge challenges in terms of HR and product designing. “After establishing
relationship with the banks, our focus was on strong HR and competitive
products,” says Mr Sahay. The company was keen to ensure and maintain high
standard of customer service and tried to make sure that selling insurance
products by bank branches was not difficult. In normal situation, bank branches
could not easily sell insurance products, as third party products. They may or
may not give adequate attention on this as banking service is their core focus
always. Moreover, branches did not have enough manpower strength to take
care of insurance sales. “We also understood the need of creating awareness
among the bank employees, who are dealing with customers at the front end and
necessity of having a strong talent base,” he points out. The insurer also trained
them and set them not only with necessary skills for selling insurance products
but also with enough information on the benefit of selling insurance products.
This strategy paid well, he adds.
The company already has half a dozen products on offer, which include child
plan to retirement plan as well as ULIP, endowment plan and group insurance.
These products have great potential in urban, semi-urban and rural areas. That
could make the task of selling insurance products easier for branches in different
geographies. Today, Star Union Dai-ichi sells the largest number of policies
through the bancassurance channel with at least half of the total number of
branches that vend the products keep sending their numbers every month. “This
is a big success,” he says.
It is planning to roll-out more products in faster pace with an aim to cover as
many people as possible. An average customer, who walks in any of the
branches of its promoter banks, should not feel deprived of any products which
are available outside, the management believes. Of late, it also has added microinsurance plan to its list of offering, which will help it offer protection for members
of credit-linked self-help groups (SHGs). “So in terms of products on offer too, we
have an edge over many of the private players. We will continue to maintain this
advantage and uniqueness in our approach,” he points out. Side-by-side, it will
also continue the process of product innovation keeping in mind the taste and
changing requirements of the people.
Star Union Dai-ichi has the second largest bancassurance network, after SBI
Life. The promoters, while enjoying more than a century of public trust, have a
combined base of over 70 million customers with impressively lasting
relationships, across the country. These two flourishing public sector banks have
first-hand knowledge of their clients’ economic background, socio-economic
progress, their changing requirements and growing ambitions. None other than
these banks know the customers so closely and confidentially.
Manager in most of the branches are given preliminary training to handle its
products and, over a period, at least one in every branches will be trained with
full-fledged knowledge of every insurance product. Already, bank managers are
known for their relationship with customers, who can further take the products
forward once suitable training is provided. Initially, bank managers did not take it
as a part of their core services and they used it sell it reluctantly. At the grass
root level some of the bank managers even used to find insurance as an
encroachment to their deposit products. But slowly they understood the value of
insurance in protecting and generating wealth for their customers. Beyond credit
and remittance services, if the banks are capable of delivering tools of social
protection and investment solution or both of them combined, their customers
would be happier, the branch managers have soon begun to understand the fact,
proving that the company’s constant attempts have been a great success. Star
Union Dai-ichi, taking every opportunity to train and fine-tune them on how they
can sell the products in a better way, is convinced of the benefit it may reap on
the bancassurance channel and the banks’ relationship with its customers.
The company by virtue of its pedigree with the public sector banks could inherit
huge number of faithful bank customers as its promising future customers. The
process is still on. Once all the bank branches begin to vigorously sell insurance
products, which is inevitable, the speed of growth is expected to be more rapid.
The bank branches will be supported by its own offices. Currently it has 20
regional offices and is planning to expand its touch points by adding 48 offices to
be known as “Business Support Centres”
Though the bank know their customers closely and understand the necessities of
their customers; as an insurer, Star Union also understood the need of building in
itself a organization that can live up to the expectation of the branches and the
customers. That necessitated strong operation team at corporate and regional
offices levels. This strategy also has paid well, he recalls. “The impressive
performance of most of our schemes, outsmarting benchmark indices, reflects
the competence of our team,” he says praising the talents within the company
that currently has assets worth around Rs 3000 crore under management. The
Japanese partner of the company is keen to see it breaking even at the earliest.
Last year, the company would have achieved its breakeven point hadn’t IRDA
changed its rule that had led to narrow down its margins.
The company aims to emerge itself as the best in all operational metrics, the
most cost efficient insurer and be the fastest growing in the industry. It is already
the best among bank promoted insurance companies, outsmarting even the
leaders with long years of experience and existence. In terms of the overall size,
it left behind three other bank-promoted life insurers, including those who were
already in the market before it came up. In fact, within three years, Star Union
could emerge itself as one of the best managed private life insurers. The
business growth in terms of number of policies sold, which is one of the highest
among private insurers and in terms of premium collection, has been more
admirable in the last four months. In the financial year 2011-12, the company
expects its number of policies to grow by 50 per cent and the total business to
grow at least by one-thirds. In terms of rate of growth, it has been India’s number
one, Mr Sahay points out. “We could successfully manage the growth without an
additional infusion of capital over the initial capital base of Rs 250 crore,” he
says. In another six months, the company expects to storm itself into the “Top 10
Club” of life insurers, thanks to the determination of the management, their deep
understanding of the market and the basket of right products that can meet the
growing requirements of people in urban, semi-urban and rural centres.
Besides, the bancassurance network, currently the sole channel for selling the
products, it is planning to create agency model too. Once the company
establishes more offices on its own, it will start enrolling individual agents. Still,
Star Union Dai-ichi is going to depend largely on its potential bancassurance
model, wherein it already has an enviable strength and reach. The company also
has high expectation from this model, which has immense strength in bringing
business and enough capability in handling policies and overall transactions.
Internally, the insurer looked at polishing its skills with an in to build in itself a
dynamic modern institution that is invulnerable to competition and to remain as
the best role-model. It knew the management strength determines the
organizational strength in the competitive days. It created a team accordingly.
Now the committed workforce of 1700 employees, who work day and night to
achieve excellence in every parameter, including customer services, help it stand
out to be best and the most hopeful in the industry, he avers. It has also set up a
competent investment team. In fact, Star Union Dia-ichi has the best available
talents within it, with sound knowledge of the market and products, experience in
spearheading many challenging assignments in the sector and skill in managing
a modern institution. In the life insurance industry, even while keeping a low
profile, Mr Sahay is known for his skill in handling assignments successfully in
the most competitive atmosphere. One of most experienced executives in India’s
life insurance sector, prior to taking up the assignment in the new life insurance
company, he had spearheaded LIC of India’s marketing at the very time, when
the public sector life insurance behemoth was pitted to face challenge from
private players for the first time in its history. The rest was just reality - when LIC
of India’s indefatigability changed every premonition and proved itself to be
invulnerable to private competition, executives like Sahay could smile upon the
success – the very success of keeping LIC of India on the fastest growth track.
He had broken further ground while heading LIC (Nepal) Ltd, a foreign subsidiary
of LIC of India through steering it into breakeven point in two years of business,
too short a period for turning around that was considered not-so easy in the
industry.
Virtually, though the life insurer has with it a Japanese promoter, Dai-ichi Mutual
Life Ins. Co, a leading insurer in Japan also, it gathered all required strength from
the pool available within the country. The Japanese promoter, perhaps, would
encourage it become more perfect in line with the excellent book keeping and
corporate culture that Japanese conglomerates are known for and be worldly
efficient as this leading automobile and consumer electronic brand. “While we
have enough expertise in building an insurance company acquired through
Indian sources, we would be looking for being an efficient company matching
with the Japanese standard,” says Mr Sahay. This shows that Star Union Daiichi, vividly pines for being an outstanding life insurer combining Indian talents
with Japanese perfection, efficiency, public trust and reliability. In the financial
market these build brand value.
Now Mr Sahay wants Star Union Dai-ichi to be a life insurer with outstanding
position in the industry and be one of the fastest growing companies in the
country. It has all required strengths. Its robust IT architecture helps it build
considerable efficiency in terms of servicing the rising number of policies and
changing aspiration of people. “In the current financial year, we are keen to do so
much business that takes its position among the best five in the industry in terms
of performance,” he says. In the first year itself, it could jump its ranking at least
two notches above its natural position. No private life insurance company in India
might have done so much of business and sold so many varieties of products in
the first year itself as Star Union Dai-ichi did in the first full year of operation itself,
he asserts while dwelling on what he aims for the company this year too in terms
of premium income.
An institution’s public approach and sense of social commitment also have great
bearings on its success. First of all, one must be capable of convincing people
why the institution should be their first destination for buying an insurance-cuminvestment cover against future uncertainty. As Mr Sahay rightly points out, in the
insurance business relationship is always longer and trust is an important factor.
Throughout their life, an insurer must be capable of convincing the customers
that they are safe under the insurer and it does all right things for them. Star
Union Dai-ichi could convince its customers. It is aware of its social responsibility
and is capable of delivering what the society requires, as a true life insurer, Mr
Sahay points out.
Some Quotes
“While we have enough expertise in building an insurance company
acquired through Indian sources, we would be looking for being an
efficient company matching with the Japanese standard,”
MR KAMALJI SAHAY
Managing Director and Chief Executive
Now we are confident of very quick success. Though we cannot overlook
the commercial aspect of the business, we have to fulfill our social
commitment too. That way, we have to focus both on selling high premium
oriented products and more social oriented policies.
- Says MR SAHAY
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The company aims to emerge itself as the best in all operational metrics,
the most cost efficient insurer and be the fastest growing in the industry. It
is already the best among bank promoted insurance companies,
outsmarting even the leaders with long years of experience and existence.
In terms of the overall size, it left behind three other bank-promoted life
insurers, including those who were already in the market before it came up.
In fact, within three years, Star Union could emerge itself as one of the best
managed private life insurers.
*******
Training the bank managers for selling insurance products is a huge
challenge. Once the banks which sell insurance products put up matching
resources, insurers too will do the same, which will create a win-win
situation. As a result, the market also will expand.
*******
Bancassurance gives huge opportunity for banks to generate fee-based
income from their captive base itself. They don’t need to search for
customers elsewhere and they get their commission instantly.
*******
Box
The Star Union Dai-ichi Life Insurance secured licence on 26th December 2008 as the 22nd life
insurance company from IRDA and launched its business on 9th February, 2009. At the end of the
FY 2009-10, the company achieved 13th rank on the basis of first year premium, and as on
February 2012 the company improved its position to 12th leaving behind several companies who
had been in business for last 8 to 10 years. The company operates on all-India basis with around
7300 sales outlets. It has been able to emerge as one of the fastest growing companies in India
and is admired by the market as India’s most cost efficient life insurance company, its operations
cost being 11.30 per cent of premium as on 31st March, 2011.