Chennai, Sep 2 (IANS) IndiaFirst Life Insurance, a three-way joint venture of Andhra Bank, Bank of Baroda and British financial institution Legal and General, will open 12 new branches to sell its insurance plans.
‘We have been selling policies only through the branches of our promoter banks – Bank of Baroda and Andhra Bank. We will be opening 12 branches by the end of this month,’ P. Nandagopal, managing director of the Mumbai-based company, told IANS.
IndiaFirst Life is mainly focused on leveraging the 4,500 branches of its two promoter banks for business. However, not wanting to avoid the individual agents, the company is now adding other life insurance distribution format- the branch network with individual agents.
‘Currently our policies are retailed at around 2,000 branches of Bank of Baroda and 1,000 branches of Andhra Bank. We are in the process of activating more number of their branches to sell our policies,’ Nandagopal said.
The company started operations last year. Nandagopal is confident of breaking even in five years time.
IndiaFirst Life has two new unit-linked insurance plans(ULIP) as it had to scrap its three old ULIPs as they did not conform to the new norms laid down by Insurance Regulatory and Development Authority (IRDA).
Around 260 old ULIPs had to be scrapped by the life insurers and in that place IRDA has approved around 50 new ULIPs.
Asked about the impact on the industry as there are only about 50 products in the place of nearly 260, Nandagopal said: ‘There may not be any major impact for the life insurers. At any given point of time only two or three products will be fast moving for a life insurer. Now most of the insurers have two products.’
However, he agreed that the game has changed now for life insurers with the ground becoming level for all.
‘The only challenge is whether the distributors are willing to sell ULIPs at a lower first year commission – maximum that could be paid by a life insurer is eight percent- or they would move out,’ Nandagopal said.
According to him, the main problem with older ULIPs was the high distribution cost and the IRDA has addressed that issue through product redesign.
‘The one worry is whether this would lead to product arbitrage – life insurers to pay higher commissions to distributors on traditional insurance policies. IRDA should also try to address this issue,’ he said.
Despite the new ULIP norms capping the charges, the Indian market is attractive for new players.
‘There may be mergers and acquisitions happening which is part and parcel of open market economy,’ he added.
