`Internet to Drive Insurance Sales of up to Rs 4 L-cr a Year’

Customers in non-metros will buy more policies online, shows a survey

The internet will help drive insurance sales of up to ` .4 lakh crore annually in about five years as customers in non-metro cities and youngsters buy more policies online than anticipated, a survey shows.

“Our studies indicate that the internet will influence ` . 3 lakh crore-4 lakh crore worth of insurance sales in India by 2020,“ said Vikas Agnihotri, industry director at Google India, which conducted a joint survey with private nonlife insurer ICICI Lombard. “The findings from this report clearly outline that consumers are shifting to the internet at a more rapid pace than perceived earlier.“ The survey did not indicate the proportion of sales from the internet. Life and general insurance companies did new business worth ` . 2 lakh crore in 2014-15, according to data collated by the industry . While life insurance earns income from the renewal of policies, general insurance is usually a one-year contract.Customers of non-life companies can move to other companies if they are unhappy with the present provider. Life insurance contracts are normally valid for a minimum of five years.

The survey found that non-metro ci ties are ahead of their metropolitan counterparts when it comes to buying or renewing health and motor policies online. Internet us ers in the age group of 25 to 35 were the most active in buy ing non-life insur ance products online. The offline survey covered more than 3,000 respondents who were active Internet users spread across 18 cities in India in the age group of 25 to 55.

“Our experience with our customers shows that those buying our products online are more evolved and long-term oriented,“ said Sanjay Datta, chief, underwriting & claims at ICICI Lombard General Insurance Company .

Among those who preferred the traditional route, the main reasons for not using the internet were personal contact with an agent and better post-sales service, according to the survey.

The poll showed that private insurance companies are using online chats to make up for the lack of a distribution network, what Life Insurance Corporation of India took decades to build. “Conversion ratio of customers who have approached the company using online chat is almost double for customers calling in,“ said Sanjeev S, head, marketing, e-business & bancassurance at ICICI Lombard.

The company has a 15-member team handling online chats, whereas 200 people at the call centre currently contribute less than 5% of retail sales. The share of online chat is less than half a percentage point. The chat facility on the website was introduced a year after it started the online business. Motor, health and travel insurance are the three segments sold through online chats

Source: Economic Times

Date: 13th May 2015

Aegon to Raise Stake in Indian JV, Partner Sells 44% to BCCL

Dutch insurer to take stake to 49%; with BCCL deal, Religare has exited venture

Aegon NV , the Dutch insurer, plans to raise its stake in its Indian life insurance joint venture to 49% even as its partner Religare Enterprises exited the venture by selling its 44% stake to Bennett, Coleman & Co (BCCL).

“Aegon would increase its stake in the JV company to 49% while BCCL would acquire the entire 44% from Religare,“ Religare said in a filing with the Bombay Stock Exchange. “This transaction is subject to necessary and appropriate regulatory approvals of CCI, FIPB and Irda.“

Aegon has joined foreign insurance companies such as France’s AXA and UK’s Bupa which have agreed to increase their stake in their local ventures after the government permitted foreigners to raise their holdings to 49%, from 26%. Others such as Prudential of the UK, Standard Life and Old Mutual may also raise their stake.

The agreement provides for BCCL to buy Religare’s entire 44% in Aegon Religare Life Insurance, and for Aegon to raise its ownership to 49% from 26%.BCCL, which publishes newspapers, including the Times of India and The Economic Times, now owns 30%. Financial details of the deal were not disclosed.

Aegon Religare reported a 41% increase in new business premium income to ` . 207.5 crore in 2014 . 147 crore in the previous 15, from ` year, according to data compiled by the Life Insurance Council, a representative body of life insurance companies. The life insurance industry as a whole saw a de cline of 5.84% in in come from selling new policies to . 1,13,140 crore.

` The company op erates through 67 branches in over 52 cities across India.

It has an employee strength of 1,670 and serves more than 3.5 lakh cus tomers.

The promoters have invested capital of ` . 1,310 crore as per latest available numbers. The company incurred a . 34.16 crore for the first loss of ` nine months ended December 31, 2014. Insurance companies generally take eight to ten years to report profit. The joint venture started operations in July 2008.

Source: Economic Times

Date: 13th May 2015


Dozens of top managers have moved from established companies into startups.
Shelley Singh takes a look at how are they faring

Ritu Khanna, 39 joined online insurance seller policybazaar.com in December 2014. Much to her surprise what she was doing on day one was different from what she was hired for. In the three months gap between quitting the country’s largest business services player Genpact and joining online insurance startup Policybazaar.com her role had changed. Recalling those days, she says, “that’s what startups are all about–they can grow 2x to 3x even before you know.“

From being hired to develop the sales organization she was doing customer experience & supplier operations integration on her first day.

Quite unlike the way it was at HCL, GE and Genpact where she put in a total of 14years before joining the startup. “You have to be flexible to change orientation and be prepared for the unknown. Else you are not startup material,“ says Khanna, an engineer and IIM Calcutta MBA. Khanna is among the growing tribe of professionals leaving their comfortable jobs to walk into startups. Last fortnight Vivek Patankar quit as head of financial planning & analytics at Unilever London to sign up with Snapdeal.com as vice president, finance, in Delhi. While last week Idi S Murthy joined Snapdeal as senior VP , marketing from GlaxoSmithKline where he was regional director, marketing based in Africa, spearheading GSK’s portfolio in 44 countries.In January Harshvardhan S Chauhan, quit his job at Godrej to join ShopClues.com as associate director, categories. At Godrej he handled business P&L and brand marketing strategy for Rs 3,600 crore portfolio.

This trickle of lateral hires is turning into a flood with many like Khanna, Chauhan and Patankar leaving their well paying jobs at global companies like Citibank and Unilever for startups like TinyOwl and UrbanLadder, transported into anuncertain future and stock options worth only on paper as companies are notlisted.

When Chauhan left Godrej to join ShopClues he got his parents to office on the first day. Says Radhika Aggarwal, cofounder, ShopClues, “that was important to ensure he was not working for a shack on the road.“

Startups launch their uncertain journey with just the founders and even friends filling in technology and product development roles. But as the startup grows there’s a need for an organization areas -HR finance, marketing technology , businessdevelopment and so on. “With no existing pool to tap in the e-commerce space, we have to scan the whole landscape for talent,“ says Aggarwal.

Adds Alok Bansal, co-founder & CFO, Policybazaar.com, “ As the startupstarts to scale, there’s a need for experienced people or lateral hires as they understand process and scale.“

Importing Talent

Besides the lack of talent available within ecommerce and the internet sector, fresh hires from campus are no good as companies need the experience and exposure of large companies combined with the fire-in-the-belly of a young recruit to take up positions.

Says Rishi Das, CEO, CareerNet, a Bangalore-based recruitment firm, “The startup story is all about imported talent. You don’t see startups on campuses as don’t see startups on campuses as they need experienced hands.“ According to CareerNet about 25,000 were hired by new internet companies in2014 (less than 5,000 were campus hires) and this will increase in 2015 as funding has grown two fold since last year.

Das believes if a startup is at Series A funding it won’t have a big brand name and if it needs an operations head they will go in for project managers in large companies and make them head of operations. A sales manager in a large multinational could be hired as business development head.

While fancier designation are a carrot to draw experienced talent to unknown startups, a feeling of hitting a dead end makes the decision easier. Says Khanna, “there’s lot of inertia in large companies. They are rule oriented and top driven. In startups it can be bottom up.“ Besides Khanna wanted to be part of a growth story and saw the startup as a place to unleash her entrepreneurial spirits as well. Says Khanna, “I wanted to put myskin in the game -be as responsible for growth as the founders.“ AddsPrithvi Raj Tejavath, 32, vice president, category management, UrbanLadder.com, “at large companies there’s little risk taking. I needed freedom and fast pace of work and that got me to Urban Ladder.“

Tejavath worked at Coca-Cola and Diageo before joining the furniture startup.

For Ranjan Aggarwal, head analytics, Lenskart the shift from American Express helped him get out of a single task into multiple areas at the eyewear startup. “Startups provide the opportunity to try out different hats and give room to take responsibility outside the job description,“ says Aggarwal. On the other hand Aakratee Vajpai, head HR at Lenskart where she moved from Airtel, the shift provides “an opportunity to create the founding blocks“ that will help the company scale. For Sharad Khise, head of production at the less than a year old personal care division of Soothe Healthcare the move from Kimberly Clark was prompted as the startup offered a `step up role with reasonable salary hike’. Says Khise, “it’s an opendoor policy . I can walk up to the managing director’s cabin or whatsapp him even in the night and I’ll get a response.“

The compensation is no less attractive. An executive from Unilever might have to take a 5% cut or at most get a 5% increment„ but will get stock options valued at say Rs 1 crore today . If the startup does well this could balloon to Rs 8 crore to 10 crore in just three to four years, making the risk worth taking. Says Das, “wealth creation opportunity without taking the risk of starting a company is also attracting laterals to startups.“

The Downside

While the upside is huge if the startup goes through multiple rounds of funding, getting a better valuation with each round, laterals may run into culture and adaptability issues. Says K Sudarshan, managing partner, EMA International,“If you carry a Citi or Unilever card it gives easy access to lot of places. Besides you are used to business class travel, five star hotel stays and support staff in office.Startup is unlikely to offer such perks.That needs huge mental adjustment.“

Besides, the wealth creation vehicle, stock options, are worthless unless funding keeps happening or the startup eventually lists. “The downside can be cruel,“ he adds.

For a mid career manager moving from ITC, Tata Motors, Amex the shift could mean moving from a cabin to an open area apart from putting in long and unsocialhours at the startup. “Still people do join startups as they might have reached a dead end or want to test their own skills,“ adds Sudarshan.

Tejavath agree there are risks, “but at the end of the journey there are gains as you hit milestones.“ Adds Khanna, “We are yet to see the landing but I believe it’s a risk worth taking.“

Apart from giving up cabin to sit in the open, risks include lack of clarity on roles, the problem of running into the `the founders club’ where the founder is always right and management style could be perception driven. Explains Das,“someone staying till midnight in office is perceived to be working more than another person working 9 to 6pm while the latter might be delivering more.“

A bigger problem at startups is that the lateral hire could be superseded. According to CareerNet half of the lateral hires are unable to scale up themselves and hence leave or are superseded. Startup organization structures also change as it grows say 4x to 8x and from 100 employees to 2,000 employees. Says a head hunter who wished not to be named, “we have seen that happen at Snapdeal, Myntra, Flipkart and others where employees either left as they were superseded or grudgingly accepted a new head, waiting for stock options to vest.“ Says Sudarshan, “to avoid being superseded you need to keep pace with the organisation’s goal. You need to believe in the startup story and be aware of the risks involved before joining it.“

At fashion e-tailer Myntra, Neeraj Seth who joined as CMO from Nestle quit in 15 months. “His case was different as he had a clause inbuilt in his appointment letter to vest his options in under two years. Every lateral hire may not get all terms in his or her favour but be careful of what you sign on and see the exit route upfront in case it doesn’t work out,“ says thehead hunter quoted earlier.

A Win-Win Case

Though not all lateral hire stories will end up as forgettable moves. Several 30-year old executives at traditional companies see merit in joining startups as this is where they will get the best digital experience.

Says Das, “A 30-year old in a traditional company will be irrelevant in less than a decade if he does not have digital experience.“ Today in the US Wal-Mart insists on digital retail experience for its new recruits.

In future 70% sales of brick and mortar companies could also come from online.“An employee with no startup experience will stare at a dead end if he sticks to his job at the traditional company. On the other hand switching to a startup today will make him more sought after even by a Unilever or Amex orWal-Mart if he wants to return,“ adds Das. Even if the stock options don’t pay off, the spell at a startup will still come.

Source: Economic Times

Date: 12/05/2015

India Inc outsources exit interviews

Employee exits can be painful, but exit interviews can be even more agonizing.Emotions run high and most of the times the company is left clueless about the reasons behind the talent departure.

In a novel practice, some companies have begun to outsource exit interviews to a third party . This not only retains the confidentiality factor, but also helps the company understand the lead theme around employee exits.

Some of the companies which outsource exit interviews or exit surveys include Marico and Mondelez India Foods. A large majority , however, continues to conduct exit interviews internally .

“We don’t believe exit interviews are a crib session. Attrition is a reality of life. We cannot wish it away ,“ said Ashutosh Telang, chief HR officer, Marico, which outsources exit interviews to a third party and the same is kept ultra confidential. At Marico, the management only gets to see the themes and not the reports. “This is because we are interested in the `what’ and not the `who’. We would rather go in for a qualitative exit interview and not the tick box kind of report,“ said Telang. Incidentally, ex-staffers form 10% of Marico’s working population, which means people come back to the company .

Losing out on top talent can be a setback for a company .That’s why companies prefer to keep their doors open just in case former employees want to come back and this can be facilitated if exit interviews are kept confidential by a third party .

According to Mahrukh Bandorawalla, organization development, HR consultant and coach: “There are no names involved in an exit interview that is outsourced to a third party, there is no malintent assumed and it’s free from prejudices.“

According to a former HR consultant who has experience in this area, when exit interviews are outsourced, there is objectivity in the process and a level of neutrality is maintained. Some organizations use such services to ensure that departing employees are able to share feedback openly , especially if they are leaving due to a bad experience. “This service offers anonymity and hence they can express themselves freely ,“ said Savitha Gaikwad, managing partner, Antal International Network.

An analysis of such exit trends can be of great value to the employer. “Most times when exit interviews happen internally , employees may just say they are leaving for growth or performance reasons -but their actual triggers may be entirely different,“ said Gaikwad.

So Mondelez India Foods uses exit surveys to learn from feedback and put it to good use. “A third party offers specialized expertise and a scientific methodology of both collecting the inputs and converting them into insights to be acted upon,“ said a Mondelez spokesperson.

Source : The Times of India

Date : 11-05-2015

Take cover against disasters

You can’t stop calamities but you can minimize their impact on your finances

It has taken a devastating earth quake to shake homeowners in In dia out of their slumber. Seeing the trauma and destruction in Nepal, everyone wants to know whether they can insure homes against earthquakes and how much would it cost.

Very few people take home insurance in India. “Even though it is very cheap, less than 1% of people who can afford home insurance actually buy this cover,“ says Tapan Singhel, Managing Director and CEO, Bajaj Allianz General Insurance Company .

This is surprising because India is disaster-prone. As much as 30% of the Indian landmass is prone to earthquakes of severe intensity. Another 27% is prone to moderate earthquakes.Nearly 12% of India is prone to floods and 76% of its coastline is prone to cyclones and tsunamis. “Even if someone buys home insurance, it is for a very short tenure. There is a greater need to buy a cover against disasters,“ says K.K. Mishra, Managing Director and CEO, Tata-AIG General Insurance.

How much it costs

A 1,500 sq ft house can be covered for `50 lakh against fire and other perils for less than `1,700 a year. If contents worth `10 lakh are included, the cost will go up by `400. You don’t need to take a cover for the market value of the property but only for reconstructing it.Construction costs vary from `1,000 per sq ft for a no-frills structure to almost `3,000 per sq ft for premium.

Some companies offer discounts if you buy a comprehensive policy with additional coverage. We like the Householder Policy from Oriental Insurance that offers an array of 10 covers and gives discounts to buyers who tick on more than four. The policy covers nearly all the risks that your house and valuables are exposed to. A basic cover of `50 lakh for the building and `10 lakh for the contents is as cheap as `2,100 a year (see table). It can be bought online, though you might have to spend 40-50 minutes on drawing up an inventory of the items you need to cover.

As the cost of reconstruction keeps rising, you might have to increase the insured amount every few years. Some insurers offer discounts if you take a multi-year policy . If the premium for a `50 lakh cover is `3,800 a year, it will be 18% lower at `15,590 if you buy a fiveyear policy . If the escalation of rebuilding costs is a worry , HDFC Ergo has a policy where the sum assured goes up every year. The basic insurance cover rises 10% every year. The premium of the escalation option is higher at `19,100 compared to `15,590 charged for a normal `50 lakh cover for five years.

What gets covered

While all home insurance policies offer cover against earthquakes, some insur ers have a compulsory 5% deductible in case of damage due to an “act of God“. An act of God is any event, especially a natural disaster, for which no individual can be held responsible. The deductible means that if your house is insured for `50 lakh, and it suffers a damage worth `20 lakh, the first 5% of the claimed amount (or `1 lakh) will be borne by you. Some insurers don’t even have such deductibles. “Policies covering individual residences or dwellings with individual owners do not have compulsory deductibles. However, policies covering housing societies are subject to deductibles depending on the sum insured,“ says Subrahmanyam B, Head, Health & Commercial Underwriting, Product Development and Reinsurance, Bharti AXA General Insurance.

In some policies, this deductible can be customised. Raise the deductible, and the premium goes down.

What is not covered

While you can cover the contents of the house against damage and theft, some valuables are not covered. Cash, documents, share certificates and debit or credit cards are not included. Jewellery and other valuables are covered, but subject to ceilings. Some policies specify that the cover for jewellery will not exceed 25% of the total contents insurance cover sum insured or `1 lakh, whichever is lower. The individual responsible for the theft is also critical to the claim getting passed. “If the contents have been stolen by a relative or a household help your claim will not be admitted,“ says financial planner Pankaj Mathpal. When covering appliances and gadgets, ascertain the cost of replacing the item. An item is insured for its market value after depreciation. The insurance company will pay the amount required to restore an item to the condition it was in before damage.Simply put, a refrigerator or an airconditioner might have cost you `40,000 about five years ago, but its depreciated value will now be Rs 20,000-22,000.

Source : The Times of India

Date : 11-05-2015

Consumer As Asking – Insurance company liable to pay punitive damages for pursuing meritless litigation

Officials of public sector undertak ings often harass citizens and handle litigation frivolously , considering themselves immune and unaccountable for their highhanded actions.

Case Study: The Haryana government had floated a scheme named `Ch. Devi Lal Jan Suraksha Bima Yojna’, popularly referred to as `Devi Rakshak’. Under this scheme, one bread earner per family would be covered for an accident resulting in death or permanent disability . The bread earner, in the age group of 18 to 80 years, would have to be a permanent resident of the state, with his name on the voter’s list or holding a ration card. According to the memorandum of understanding between the government of Haryana and New India Assurance on October 25, 2004, a yearly premium of Rs 6 crore was paid for cover age of Rs 1 lakh for one bread earner per family .

Charanjit Kaur’s husband was the sole bread earner of their family . He died an unnatural death due to an accident. His widow applied for compensation after a year. New India Assurance repudiated the claim as it had not been lodged within ayear of the accident. Kaur had a legal notice issued to the insurance company , but the claim was not settled.She then filed a consumer complaint. The Panchkula District Forum directed the company to pay the claim of Rs 1 lakh as per the coverage limit along with interest at 6% per annum from the date of rejection of the claim, and Rs 2,000 for costs.

The insurance company appealed to the Haryana State Commission, which set aside the forum’s order and dismis sed the complaint. Charanjit Kaur then filed a revision before the National Commission.

The insurance company argued that the complaint was not maintainable as the MOU was between the government and the insurance company , and there was no privity of contract with the claimants. Also, the claim was not payable since it had not been submitted within 12 calendar months of occurrence of the mishap.

In its judgment on May 7, 2015 delivered by Justice VB Gupta for the Bench along with Dr BC Gupta, the National Commission observed that the JantaGramin Personal Accident Insurance Policy was a totally different policy for individuals in the age group of 10 to 70 years. The MOU did not contain a stipulation that the claim had to be reported within a period of one year from the date of accident. The order the District Forum was restored.

The National Commission also held New India guilty of trying to mislead the consumer fora at all levels. The commission expressed deep anguish at the way in which a public sector undertaking was conducting a litigation, and raising frivolous objections in an attempt to defeat the genuine claims of those insured. For this conduct, the forum directed New India to pay punitive damages of Rs 10 lakh to the consumer aid account, and recover this entire amount from the salaries of the delinquent officials responsible for pursuing a meritless and frivolous litigation.These punitive damages would have to be paid along with 9% interest in delayed beyond the stipulated period of six weeks.

Impact: The attitude of arrogant officials will change only when it pinches their pocket.The judgment will force such officials to think twice before harassing consumers.

Source : The Times of India

Date : 11-05-2015

Gravy Train of Joining Bonuses Rolls Again

Desperate for talent, India Inc’s established names and startups alike dole out sign-on bonuses

Large established companies and new-generation startups are dangling substantial joining bonuses -sometimes up to six months of total annual cost to company -across senior and middle management levels in a bid to woo top talent in a com petitive job market.

Executive search firm EMA Partners International recently hired a CXO for a manufacturing company with a total . 4 crore worth of joining bonus of ` stocks payable over three annual instalments. This March, Indian Hotels shareholders approved a ` . 1.92 crore ($300,000) joining bonus for Rakesh Sarna, its new managing director.

Startups, loaded with cash recently raised from venture capital funds, are not far behind. Companies such as Flipkart, Jabong, Snapdeal, Urban Ladder, Zomato, among others, are doling out far greater number of joining bonuses to senior hires this year than a year or two ago.

“We are trying to improve our compensation structure to make it more efficient and in the process we are paying much greater number of joining bonuses this year,“ says Ashu Malhotra, head-HR at fashion and lifestyle ecommerce portal Jabong. “The number was much smaller last year,“ he adds.

Joining bonus, or sign-on bonus, has made a comeback in recent times with companies willing to shell out huge premiums to woo top talent. Earlier, joining bonus was an offer to compensate for monetary loss of quitting an organisation before the completion of an appraisal cycle on a case-tocase basis. The concept of joining bonus has turned upside down with companies now going all out to pay a risk premium to the prospective hire.

“Joining bonus is largely to take care of future losses, if any, for people who take risks by quitting their roles in large organisations or (for) people with specialised skills and not easily available in the job market,“ says R Suresh, managing director, RGF Executive Search.

“There is a tremendous increase in joining bonus. Not a single CEO appointment happens these days without joining bonus,“ he says.

It is a win-win for the company as well. These days joining bonuses often come with a `claw back’ clause. If one takes a joining bonus, one needs to work for a certain duration, usually two years. And, if one leaves before that period, one has to return the money for the proportion of time one did not work.

“This claw back is a fantastic tool,“ says Suresh.

Joining bonus is popular because companies are putting more golden handcuffs around their prized senior talent, says Sinosh Panicker, associate principal, Heidrick & Struggles.

Source:- The Economic Times ( Mumbai)

Date:-8th May,2015