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Nageswara Rao

MD and CEO | 17 Nov 2010

“Life Insurance is a long term business and thus long term sustainable profitability is the key. The industry is already very competitive with 23 players and in the new challenging scenario; I would expect consolidation and productivity being far more important than break-neck growth. In the coming years, companies that can strike the balance between creating value for the customers and the shareholder capital will sustain and achieve the break even mark.”

Nagesh has more than 22 years of experience in various sectors of financial services including retail banking, corporate banking and capital markets. Prior to this assignment, Nagesh was the MD and CEO of IDBI Bank Ltd, a new generation technology savvy bank established in 1994 and one of the fastest growing banks of its generation. Following its merger with IDBI Ltd., he was the CEO of the commercial banking SBU of IDBI Ltd. Nagesh was the first MD and CEO of IDBI Capital Market Services Ltd which was the largest primary dealer by turnover, net profit and return on net worth, for three years in a row when Nagesh left the Company. In his early career at IDBI, Nagesh held key positions in corporate finance, business development, investment banking, resources and infrastructure finance. He led the team that launched IDBI’s highly successful and innovative bond offering ‘Flexibonds’. He was part of a core team that worked on setting up SEBI, the country’s securities regulator. Nagesh is a Chartered Accountant, Cost Accountant and PGDM from the Indian Institute of Management, Ahmedabad.

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas Insurance International, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48 per cent equity while Federal Bank and Ageas own 26 per cent equity each. Having started in March 2008, in just five months of inception we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on June 30th 2010, the company has issued over 2 lakh policies with a sum assured of over Rs 9,160 Cr.

Q. Since you took over the reigns as MD and CEO, how has the journey been so far and what have been the biggest lessons in this sector?

Being the 18th player in the life insurance industry, we decided to do things differently from competition. To quote Al Ries, “When you are not a leader in a category, can you create a category that you can lead in?”

We have attempted to do that. We started with our innovative flagship product Wealthsurance™ that is an ‘insured wealth plan’. This unique plan helps our customers build a wealth plan and secure it against life’s uncertainties, so that the wealth plan can continue to grow without any interruptions.

Since Wealthsurance we have created a slew of innovative products like Homesurance, Termsurance, Bondsurance, Incomesurance, Microsurance etc. that create value for our customers as well as the business. This product driven strategy makes us focus the creation of a differentiated value with each product that can be sustained in the marketplace. This fundamental guiding principle makes us think differently and approach every change as a challenge to innovate and create value.

The key learning is to offer customers products that are relevant to their needs and thus build enough flexibility to suit diverse needs with changing conditions.

Q. Who are your direct competitors and what is your USP and positioning compared to them?

When we started our operations in March 2008, we were the 18th life insurance player in the industry. Having launched innovative combinations of Life Insurance and Investment products, we look at the category as a share of long term savings. As a saving nation, there is still a significant share of household savings that are kept in FDs and bank deposits and other traditional instruments. Life Insurance not only holds the unique capability of long term contractual savings, but also allows for investment combinations that span the risk return continuum, with the added protection of insurance against any unfortunate eventuality.

We truly believe in Unique Selling Propositions and the same is evident with our wide range of innovative products that are unique in the category they operate and focus on creating value for the customers.

IDBI Federal Wealthsurance™ Milestone Plan our flagship product is a unique combination that aims to help people reach their important goals in life with full confidence. The Wealthsurance™ Milestone Plan offers a wide range of investment options, insurance options and unmatched flexibility that allows customers to customize a plan suited to their needs. Customers can plan for their milestones like education for a child, a marriage, acquisition of a new house and so on. This plan comes with a wide range of 13 investment options and seven insurance benefits - all packaged with a low charge structure and unmatched flexibility.

IDBI Federal has recently launched Loansurance® Group Life Plan, a cost-effective way to ensure that the outstanding debt of many types of loans is settled in the unfortunate event of death of the insured member. Healthsurance® Hospitalisation and Surgical Plan, a power packed plan with a host of benefits that help you manage the extra financial burden that comes with hospitalisation. IncomesuranceTM Endowment and Money Back Plan which is a first of its kind combination product of endowment and money back that gives the customers unmatched transparency and competitive interest rates in relation to the changing market conditions, Homesurance® a protective cover for home loans, BondsuranceTM, for guaranteed returns with life insurance cover and TermsuranceTM Protection Plan, for customers looking for a flexible protection plan and large insurance cover at an affordable cost. IDBI Federal Life Insurance also offers MicrosuranceTM for affordable life insurance cover to less privileged groups and TermsuranceTM Grameen Suraksha, a low cost life insurance plan for rural markets.

Q. Tell us about a few marketing initiatives that you have undertaken?

We were the first life insurance company in India to be a title sponsors for a cricket tournament in their name. We held Wealthsurance Cup’09, India vs. Sri Lanka ODI and T20 series held in Sri Lanka in 2009.

With an understanding of the complexity of the category of personal finance and life insurance in particular, we have launched a few viral videos that aim to communicate the benefits of life insurance in a light hearted and funny manner, making the content easy to understand and absorb. You can view these on www.bosskaboss.com, www.quantumofshoelace.com and www.happylucky.in

Q. What is your target audience and what is your preferred medium to reach out to them?

Typically the decision for buying Life insurance plans is taken by the earning member in the family and by and large they are male members. Hence our primary target is predominantly males, aged between 25 to 45 yrs SEC A and B.

We have used different media to reach our customers across the country, in 2009, we used TV and outdoor, earlier this year we looked at print and outdoor, this coupled with different activities online throughout the year.

Q. What were the sales and revenue targets for 2010 and how has the performance been compared to the projected figures?

Ever since we started, we were one of the fastest growing life insurers in the country and reached our first hundred crores of New Business Premium in just 5 months of inception. We have been growing at a consistent rate ever since, completing over 318 Cr as on 31st March 2009, over 400 Cr last fiscal and as on Sep’10, the company has done Rs. 197.34 crores in first six months with the growth rate of 38 per cent over last year. Since inception the company has issued 2.35 lacs policies with over Rs. 11,577 Cr in Sum Assured. We aim to continue to grow with the same momentum in the future.

Q. With so many insurance players already in the market and new ones pouring in, how do you perceive the market to be in the next five years?

Life Insurance is a long term business and thus long term sustainable profitability is the key. The industry is already very competitive with 23 players and in the new challenging scenario; I would expect consolidation and productivity being far more important than break-neck growth. In the coming years, companies that can strike the balance between creating value for the customers and the shareholder capital will sustain and achieve the break even mark. We are very proud to say that we have maintained one of the lowest cost to premium ratios in the industry.

Q. Please tell us about the consumer trends in this industry?

Being a complex category, there is a strong need for education both for the customers and the distributors. The full value and potential of the instrument is still not utilized. With increasing amounts of media money spent in creating categories like retirement and child plans, customers are starting to demand these type of plans today. With all players expanding their marketing effort, we should aim at a more educated market that will appreciate innovative products.

Q. Have you carried out any marketing innovations for the brand?

Finance is not an easy topic to understand for a layman, going by the multitude of complicated terminologies used in financial planning and investment which hit them every day. We attempted to make this subject more simple and interesting by introducing a series of viral campaigns. We launched several online campaigns in past two years.

The attempt is to say something complicated wrapped in a light-hearted story, so that people are more amenable to listen to us. Our first such initiative was www.BosskaBoss, that communicated the benefits of having a protected wealth plan and was viewed by over 500,000 potential customers.

With a slew of other initiatives like bulletproofboss.com, quantumofshoelace.com, shineshah.com and our latest; www.happylucky.in, we have managed to get the attention of viewers who would have otherwise found financial communication to be boring or complex. This helps us simply explain financial solutions in a market inundated with complexities.

Q. Who are your creative and media agencies?

Ogilvy & Mather is our creative agency and Equinox (TLG Group) is our media partner.

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