With less than ten days to go before the time runs out on life insurers to comply with the new Irda guidelines,FEs Anto Antony caught up with Max New York Life,managing director and CEO,Rajesh Sud. Excerpts:
In less than two weeks the deadline set by the Insurance Regulatory and Development Authority (Irda) to rework Ulips sets in. Have you finalised the products that you will have on shelf by then?
We are working on filing the new products before the deadline. But the fact remains that it is a tight time frame. We need certain clarifications on the guidelines that they came out with.
Even though we agree to the regulators guidelines as this will help the industry to set new standards but the pace at which these changes are being made have got most of us offguard. I do not know whether this is the most efficient way to do it.
What are these clarifications that you need from the regulators side?
When a person writes some thing he may have certain things in mind. But the reader may not necessarily understand the rational that has gone behind it. In the same way,the industry does not understand the reason for capping certain charges.
Regarding the guarantees also,more clarity is needed. The guideline talks about 4.5% guaranteed return on products. But it does not make clear whether this guarantee is at the time of maturity or for the first few years. Guaranteed return is inherently risky as the 2008 crisis showed. You may think that you have covered the risk but it may not be. We value trust and also policy holders money. We do not want to come out with a product that will promise attractive returns and will not stick to it. We also need clarifications on to what index these returns will be benchmarked.
Are you expecting a disruption in Ulips sale as it will take time before companies can file different products?
I wont call it a disruption. Let me put it this way. Regulator has put price control mechanisms in place. There are certain number of products that can be priced in that band. So there is room for lesser number of variations after September 1. So,fundamentally,not many different products will be there. We will have two or three products on shelf by September 1.
How will Max New York Life fare in the new environment as Ulips comprise a large part of your portfolio?
There will be an increasing shift towards traditional products. Selling a balanced product according to the needs of the customer will be the focus. You can see that the regulator wants the industry to focus more on traditional products.
We always maintained a healthy ratio of 75:25 between Ulips and traditional products. Now coming to our case,we have people,training and technical know-how to do well in the traditional product segment. So we are in better position than other players.
How will the Irdas move on stipulating minimum floor for number of policies that has to be sold by an agent or the premium that he has to collect affect the industry?
In the past years we saw a land grab mentality in insurance sector where there was a frenzy in setting up an office and hiring people in hordes. That model is not where future is. Investments have to be made in training before high productivity is expected from work force. Across the industry,though the rolls may show large number of employees,majority of them do not come to work. Success clearly depends on the productivity of agents and not by number of agents. We welcome this move by the regulator.