Banks & Insurers may have to rethink tie-ups after IRDA cracks down on mis-selling

Bancassurance, the sale of insurance products through banks, which is the most preferred route for growth of the sector, may be at risk.

After the Insurance Regulatory & Development Authority of India (Irda) indicated that banks would have to take responsibility for policies sold through them, lenders may prefer not to become mere distributors of insurance products. Onerous rules and the threat of penalties could also make banks wary of such deals.

“The whole point of Irda is to bring better surveillance and discipline. For banks, this will require sufficient trust and seriousness in relationships with their insurance partners — if the responsibility of customer complaints is going to be on banks,” said Girish Kulkarni, MD and CEO of Star Union Daiichi Life Insurance.

This may discourage banks from entering into plain distribution partnerships with insurance companies. Banks may prefer to be equity partners so that they have a better control over the eco-system.” However, banks may seek high valuations for equity partnerships, driving insurers away.

This may discourage banks from entering into plain distribution partnerships with insurance companies. Banks may prefer to be equity partners so that they have a better control over the eco-system.” However, banks may seek high valuations for equity partnerships, driving insurers away.

Insurance companies tie up with banks to sell products because it is a low-cost distribution channel and gives them access to a large customer base. The most recent partnership was between Punjab National Bank and MetLife. IndusInd BankBSE 1.51 % has a corporate agency tie-up with Aviva, which is coming up for renewal.

Many banks including Indian Overseas Bank, Syndicate Bank, Central Bank, Allahabad Bank and UCO Bank are without any equity partnerships.

Irda chairman TS Vijayan recently said banks would be made accountable for insurance products sold through them by misleading customers. At present, insurance companies are responsible for any mis-selling of products through the banking channel.

“Blatant mis-selling will go away,” said RM Vishakha, MD and CEO of IndiaFirst Life Insurance. “The regulator is making the responsibility more explicit, which was always implied.”

During a sting operation by a news portal a couple of years ago, employees of both public and private sector banks were caught mis-selling insurance products, partly due to stiff targets set by banks. The share of banks in total individual new insurance business went down to 15.62 per cent in 2013-14 from 16.18 per cent in 2012-13, according to Irda’s latest annual report.

Source: Economic Times

Date : 12th October,2015

Is Motivation or Qualifications Most Important in a Candidate?

One-third of nearly 500 executives surveyed in August 2015 said a candidate’s motivations and drivers are the most important factor when sourcing for open positions.

Respondents chose a candidate’s skill set as the next most important factor (27 percent), followed by past experiences (24 percent), and then traits such as assertiveness and confidence (16 percent).

None of the respondents believed the college the candidate attended or the degree he or she attained was most important, according to the survey released by Futurestep, a Korn Ferry company specializing in recruitment process outsourcing and professional search.

Futurestep Managing Director of Global Operations Vic Khan explained that a candidate’s motivations and drivers are clues to whether they will be a good fit. “For example, one very potent driver is power—the motivation to attain work-related status, visibility, responsibility and influence,” Khan said. “Those who work in a competitive environment and have this driver would likely be highly engaged and successful. Conversely, those same people working in a more collaborative culture may struggle.”

Steven Raz, co-founder and managing partner of Cornerstone Search Group, a life sciences executive search firm, agreed that fit is important, but not at the expense of being qualified.

“When we are sourcing for candidates, there are two important factors: Can they do the job and do they want to do the job? The first level is a technical assessment, meaning, do they meet the qualifications? Once you have determined that they have met the requirements, then during the interview you can assess if there is a cultural fit,” Raz explained.

He added, “Clearly from a long-term standpoint, the candidate’s expectations and motivations should be logical and match up to the company’s vision and plan for this person. Both the company and the candidate should be as aligned as possible about the expectations for the position from day one, as well as what the future looks like.”

Candidate Sources

The survey also found that:

  • More than two-thirds (68 percent) of respondents said their best candidates typically are active job seekers.
  • About half (52 percent) use their own professional network first when sourcing candidates.
  • Only 6 percent said they rely on internal referrals.

“Having a solid professional network has been and will always be critical for those sourcing candidates,” said Khan. “However, we also recommend that organizations create an internal mobility program to tap into the gold mine of key talent that already exists within the company.”

Source: SHRM

Date: 22-09-2015

Expert Take – IRDA’s Latest Rules an Attempt to Clean Up Bancassurance

Will the insurance regulator’s tightening of rules under which banks sell insurance change anything much?
Insurance regulator IRDA says that banks are going to be liable for the insurance policies that they sell. Just as importantly, IRDA wants recording of, and access to, the actual bank employee responsible for each insurance policy sale.

Of course, it will come as a surprise to ordinary people who have been at the receiving end of banks’ hardsell that this isn’t the case so far. However, this is basically a dance around the meaning of the word `liable’ that is typical of the complex regulations around insurance.

In the official terminology, insurance can be sold either by agents of insurance companies or by independent insurance brokers. Agents represent one particular insurance company while brokers can sell policies of many.In the sense above agents are not `liable’ for what they do, but the insurance company that they represent is. Up till now, banks have acted as corporate agents of a single insurance company. An actual policy sale could be done by any one or many bank employees but the identity and conduct of that person was an internal matter of the bank.

Now, IRDA wants to regulate this whole process. This accompanies new regulations that will allow each bank to tie up with up to three life, non-life and health insurance companies. According to what the IRDA chief has said that the regulator would want it to be recorded of who was the actual person who conducted the policy sale and would want access to all this data.

The idea seems to be that this would make mis-selling less likely because the salespeople would be trackable and the bank liable.Do you find this convincing? I don’t, and I doubt anyone who is familiar with banks’ insurance sales business would do so.

This idea is based on the belief that the bank employees who sell insurance are the culprits behind all the hard sell and the misselling while the banks themselves (at an institutional level) have their policies and priorities right. In reality, nothing could be further from the truth. The employees’ hardsell and misselling is exactly as the banks themselves are driving it.

For better or for worse, customers trust banks. This trust is bestowed upon them by the simple fact that they are permitted to call themselves banks. They then turn around and abuse this trust and have specially done so on a vast scale in the matter of selling insurance. It very much remains to be seen whether IRDA’s focus on the actual employee, or its shifting of liability to banks will actually have any effect. Unless IRDA makes a serious effort at proactively detecting misselling and then handing out exemplary punishment that seriously squeezes the bank where it hurts, nothing much will change.

Actually, the heart of the problem lies even deeper. To a customer who doesn’t have adequate life cover, selling any kind of insurance scheme except plain term insurance should be recognised as mis-selling. As a general rule of thumb, one should have at least ten years’ income as life cov er. But if you try to do that as part of ULIPs or traditional insurance plans, you will find that even paying your entire income as premium will not suffice.

The result is that after close to two decades since insurance privatisation started, no one is willing to talk about whether it has improved the quantum and rate of actual life cover that Indians have.

If anyone is really serious about forcing the insurance industry to do its primary job -give life cover to people -here’s a simple idea. Make it illegal to sell any non-term policy to anyone who does not already have at least ten years’ income’s worth of term insurance. The ten year’s income must be based on income tax returns (say, the last two or three years’ average) rather than a self-declaration. This way, insurance companies and their agents will still sell unsuitable policies, but at least it will limit the damage that they do to their customer’s finances.

Source: Economic Times

Date: 05-10-2015

Rural youth can bank on fin sector for jobs

Pvt Banks Hire Up To 80% From Small Towns

The banking and finance sector holds a beacon of hope for rural youth as employment from the interiors now forms a bulk of the total hiring for some banks. For most private banks which started expanding their network in rural areas a few years ago, hiring from tier-3 to tier-6 regions now forms 50-80% of the total recruitment.

HDFC Bank officials said plans are afoot to hire around 12,000 people in the current year. Given the bank’s growing presence in semi-urban and rural locations, a majority of the hiring is taking place in tier-4 to -5 cities. “These cities account for half of the total number. Most of the hires in the tier-4 and -5 locations are done locally . For example, in our auto loans business, for the rural vertical, we are hiring rural sales officers who are recruited from the same area, given their familiarity with the geography and demography ,“ the officials said.

Over the last three-five years, Axis Bank too has been growing steadily and expanding its network and reach, especially in tier-2 and -3 cities. Hiring data over the last three years reveals a trend of close to 80% hiring from these cities by the bank. “With bran ches opening in tier-2 and -3 cities, the bank’s strategy has been to focus on hiring local talent. This -whilst generating employment opportunity for the indigenous community -brings in local flavour, which is critical for customer service,“ said Rudrapriyo Ray , HR head, Axis Bank.

DCB Bank, which hires around 60% from tier-3 to tier-6 locations, sees a lot of business potential in these loca tions. Just a few years ago, the entire hiring at DCB Bank was carried out in tier-1 locations. The bank has also tied up with several campuses from tier-3 to tier-6 cities to facilitate hiring beyond the metros. Hamsaz Vasunia, HR head, DCB Bank, said hiring in these locations will continue to see an upward trend, especially in the banking sector.

Census data shows that over 22 million youth look to move from rural belts to urban areas over a ten-year horizon. “Our six cities are incapable of fulfilling their aspirations any longer. Till such time manufacturing contributes to enable the la bour market transition from farm to non-farm -labourintensive, service sectors like BFSI are a ray of hope,“ said Rituparna Chakraborty , senior VP and co-founder, TeamLease Services. However, contrary to what is popularly assumed, talent gets hired at a premium in these cities. “There is a dearth of good middle-level managers in these cities since most have migrated to bigger towns. Most organiza tions want leaders in those locations to have very strong local market knowledge and network. Thus, they pay higher to find the right fit,“ said DCB Bank’s Vasunia.

Source : Times of India

Date: 05-10-2015

‘Banking, financial services need 1.6 million skilled workers by 2022’

Banking, financial services and insurance (BFSI) sector in India will need an additional 1.6 million skilled workforce by 2022, the National Skill Development Corporation (NSDC) has estimated.

“The BFSI sector is expected to create additional employment of over 1.6 million during 2013-2022,” NSDC said in its report

The report pointed out that considering the low levels of banking penetration, expansion through branches and business correspondents (BCs) is likely to generate significant employment opportunities in the sector.

So far, public sector banks (PSBs) have been the leading employer in the country’s banking sector, accounting for more than 73 per cent of the hirings.

As the focus shift towards customer-facing and sales profiles, the industry has witnessed a surge in entry-level hiring, which is expected to sustain the sector’s growth.

The report further states that the country saw a mix of public, private and foreign banks impart stability and growth in the banking ecosystem while the network of non-banking financial companies (NBFCs) complemented banks in a huge way.

The sector saw increasing use of alternative channels, such as ATMs, mobile and internet banking, which have added to the incremental human resource requirement in the sector.

With high disposable income, the banking sector recorded double digit growth in excess of 15 per cent in each of the last five years, according to the report.

At present, back office and transaction processing profiles constitute a majority of the existing roles in the banking sector.

“Industry needs to provide additional training to its employees so as to enable them to scale up to the changing trends,” NSDC MD & CEO Dilip Chenoy said.

The report states that corporate banking, retail banking, treasury, finance, technology and human resource will increasingly require staff with relevant aptitude.

Banks also need to hire specialists to increasingly match the evolving business context

Date:-30th Sept,2015

Source:- Asia Insurance Post

Liberty Videocon General Insurance launches a Tab-based Claims Surveyor App – LiVClaims’

“It offers innovative solutions to improve claims service while reducing time and costs.”

Liberty Videocon General Insurance has launched tab-based claims surveyor App – ” LiVClaims” a technology-aided claims processing services.

After a thorough and a successful pilot-testing for over six months, the company has finally across all its branches in India.

Roopam Asthana, CEO and Whole Time Director, Liberty Videocon General Insurance, “Claims processing is a crucial activity for any insurance company. However, the complexity of managing claims environment with multiple systems and manual hand-offs can sometime create errors and delays that can cause irreparable harm to customer relationships. Our Tab-based Claims Surveyor App is here to simplify the claims processes, as it offers innovative solutions to improve claims service while reducing time and costs.”

Initially introduced for motor claims processing, this Tab-based App is an omni-channel approach, which would enable any motor claim surveyor of the company to perform key functions, such as loss assessment, estimation and communication from various remote locations in a cost effective manner. It will ensure quicker approvals to garages resulting into a better productivity and quality customer services.

Date:-30th Sept,2015

Source:- AIP News Bureau