Tata AIA Life bucks industry trend — in new premium collections, job and pay cuts

Tata AIA Life has scripted an impressive story in the insurance industry.

Even during COVID days, in the April-June 2020 period, when the industry as a whole saw an 18.6 percent decrease in new premium collections, Tata AIA Life posted a 23.8 percent growth in first year-premiums.

In fact, boosted by this success, the company bucked one more industry trend -- there will be no lay-offs or pay cuts owing to COVID-19. Several life insurers have already resorted to layoffs at the branch level as the number of branches is being cut down.

How did it pull it off?

“By focussing on protection (term plans), end-to-end digital capabilities, balanced multi-channel distribution, and nurturing our people,” Rishi Srivastava, MD CEO, Tata AIA Life, told Moneycontrol in an interview. He then gave a detailed explanation. For example, on the protection front, “India has a gap of 92 percent. This means that for every Rs 100 required to be spent on insurance, only Rs 8 is actually spent. This shows the demand potential and it has only intensified in these distressed times,” he said.

Now on, there will be an increased need for certainty and assurance – both financial and health, he said. Digital options like chatbots, WhatsApp, IVRS, calls, SMS and email ensured round-the-clock servicing. In fact, even call-centre employees are working from home, he said.

In FY20, Tata AIA Life saw a 30.9 percent Y-o-Y increase in new premiums at Rs 3,241.07 crore -- the highest in the sector. The company saw a growth in profit from Rs 32.7 crore in FY19 to Rs 44 crore in FY20.

Lesser travel days, lower operating costs, and greater leveraging of digital capabilities resulted in some organic savings, Srivastava said. A report by Kotak Institutional Equities showed that, as of June 2020, the average ticket size (average policy premium) for Tata AIA Life was Rs 64,933, showing a Y-o-Y growth of 6 percent and month-on-month growth of 22 percent.

Industry data have already shown that insurers focussed on unit-linked insurance plans have seen a 10-20 percent decrease in ticket size as customers are now keen on protection plans.

Focus on employees and agents

Srivastava believes it is not just the customers who are at the core, but employees and agents as well. The company was quick to enable work-from-home in March 2020 for all employees, and have introduced facilities like doctor-on-call and online counselling.

“This, along with existing medical insurance and emergency medical funds, ensures that our employees are safe. We are constantly engaging with teams, keeping their morale and spirits high,” he added. For the advisors (agents) too, Tata AIA Life has offered an end-to-end digital suite that enables remote services. Advisors can also access doctor-on-call and online counselling services.

Tata AIA’s growth on an individual-weighted new business premium in Q1FY21 was 17.2 percent when overall industry figures declined 18.2 percent. He said that the company’s retail protection business has grown by 75 percent year-to-date in June 2020.

The claims settlement ratio has been 99.06 percent for two years running.

Source: Money Control

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