Watson Wyatt Worldwide, a global consulting firm specialising in insurance and financial services, has been working with banks and insurance companies in India to help them make gains in the grossly under-penetrated Indian insurance market. In an interview with Sharang Limaye, R Krishnamurthy, the company’s managing director talks about
the role of public sector banks in selling
insurance products. Excerpts:

How do you assess the performance of public sector banks in selling non-banking products like insurance?

Unfortunately, the performance has not been along expected lines. It seems public sector banks haven’t clearly understood the importance of selling non-banking products. In the case of insurance products, except for State Bank of India (SBI), others have disappointed. Around 70 per cent of the insurance premium collected through banks is still coming from foreign banks operating in India and a few new-generation private banks.

Which has been the biggest problem area as far as selling insurance through PSU banks is concerned?

There has to be awareness of the fact that the customer’s interest is paramount. Also, there is the issue of after-sales service or lack of it. The banks don’t monitor if the customer is satisfied with the product or whether he is facing any problems regarding it. Along with a sales push, there has to be a service push.

Do you see the situation changing?

There have been some positive moves from PSU banks. They seem to have realised that cross-selling is important if you want to protect your client base. Now, the banks seem to be making an effort to understand the product that they are selling and how it meets the potential customer’s needs. There is a greater focus on training personnel to be good at selling such products.

What’s your take on the success of unit-linked insurance policies (Ulips)?

There is no doubt that Ulips have been a great success. Around 80 per cent of the premium generated in the market today is unit-linked. Before Ulips were introduced in 2004, banks were selling traditional insurance products. In the case of such products, banks took full responsibility of the investment of the premium money. Ulips changed that completely. When a customer invests in a Ulip, he shoulders the entire risk. Hence, the insurer has to allocate lesser capital to cover the risk. This is why all the insurance companies have been pushing Ulips instead of traditional insurance products.

Do you feel people nowadays look at insurance more from an investment viewpoint than for protection?

Its true, but it has more to do with how insurance products are being marketed these days. Still, everyone must have some basic insurance cover from a protection standpoint. The extent of the coverage would be determined by factors such as the person’s age, his responsibilities and his needs.