The transformation of the Indian insurance industry has been striking. A sturdy framework, pragmatic regulations and aggressive competition that blends global and Indian elements have resulted in customers being offered services and products like never before. You don’t have to be a nuclear physicist to understand that privatisation has been the catalyst for this change.

Challenging the might of the state-owned monoliths is a clutch of private companies, among the most prominent of which is Tata AIG, a joint venture between the Tata Group and American International Group. Tata AIG has, in its first year of operations, become the biggest private life insurer in India.

In this interview with Shobha Ramswamy, the newly appointed managing director of Tata AIG Life, Ian J. Watts, talks about the scorching pace the company has set, and about its plans to stay ahead of the pack.

What are the numbers involved in Tata AIG becoming the largest private Indian life insurer in its first year of operations?
Tata AIG’s life and general insurance operations have touched the lives of over half a million Indians in their first year of existence. On the life side we have covered over four lakh people through group and credit insurance and individual policies. Today we are the largest private Indian life insurance player in terms of lives covered. Comparatively, LIC did 23 million policies last year. The market potential is huge and we are young. We believe it is still early days; we have a long way to go.

How would you describe the Indian insurance market?
Insurance is a sunshine industry in India and it’s very exciting. The projections for the industry are that it will touch $ 50 billion in 20 years, with individual life insurance accounting for almost $ 40 billion of this huge pie. Over 300 million individuals in this country do not have insurance. Even given that many of them cannot afford insurance, the potential is tremendous.

The Tata Group and AIG worked together for over four years to establish this joint venture. Neither the industry nor the market is new to either partner. The Tatas pioneered private insurance in India, with Sir Dorab Tata setting up New India Assurance in 1919. AIG entered India in 1945 and had offices in several Indian cities before nationalisation happened.

What are the challenges Tata AIG Life faces?
Thanks to LIC, the awareness regarding insurance is strong among people, but there are problems. The peculiarity of this market is that people tend to buy policies to save tax, which is why the three months prior to the end of financial year are when most of our business is conducted; this is followed by ‘nothing’ periods. But insurance also offers protection against death and disability, besides being a savings instrument.

The challenge for us is to change the mindsets of people through education about the need-based sale of life insurance. We have to convince people to park their hard-earned money in long-term insurance and savings. This will take us time. We are using our trained agents and advisors to bring about this change in perception.

Also, consumers were accustomed to having a single, dominant player for too long. With privatisation, plenty of companies have entered the fray — and they are offering too much choice. This has resulted in the consumer getting confused and either making wrong decisions or making none at all. Hence our focus on insurance education.

How is Tata AIG training its agents?
Regulations dictate that you need a licence to sell insurance. We have our internal regulatory training, which is for about 100 hours. For higher education, the agents do another 50 hours of training. This covers the rudiments of insurance, claims, policy protection, basically a lot of the background about the insurance industry. Later the agents are trained on products, need analyses and how to deliver the message to the market.

We have full-time, ongoing training across the country. We are committed to supporting our agents and distributors, with the emphasis being on delivering quality training. Our agents come from all walks of life; there are retired bankers, housewives and graduates among them. This way we can meet the needs of any consumer.

What differentiates Tata AIG from its competition?
What sets us apart is our experience and our innovative services and products, and the fact that we deliver what we promise. The Tata name has always stood for trust, stability and fair play, and AIG is, in market value, the world's largest insurance group.

Our focus is on customer service and experiences. A lot of time and effort is invested in educating our agents, so that our customers get the right advice and guidance. Besides, the company offers the full range of insurance products: group, corporate, gratuity and superannuation. In fact, we are the first joint venture to offer gratuity and superannuation.

We are strong in terms of product innovation. Take, for instance, the ‘MahaLife Plan’: the first policy of its kind in India, it offers a whole life insurance cover that doubles up as an annuity plan. And it generates guaranteed, tax-free income, besides paying cash dividends from the sixth year onwards. Our aim is to deliver good value to our customers — always.

What about your efforts in rural India?
Tata AIG’s rural programme has accounted for around 11 per cent of all the life policies it sold in the year ended March 2002, as against the stipulated minimum of 5 per cent. Our aim was to create an asset for the rural poor in the form of hedging their economic loss in the event of an earning member of the family expiring.

The rural market is huge and it is growing aggressively. We have tailored products with smaller premiums to suit the needs of this market. We have a strong strategic alliance with the Bridge Foundation — a micro-finance company dealing with non-governmental organisations in southern India — to use its network to distribute our products. The company has undertaken a pilot programme in Tamil Nadu, and this has been extended to rural markets in Kerala and Karnataka.

There are more than two lakh Tata employees spread across the country. What are your plans to tap this huge base?
Tata companies and employees are one of our major focus areas. We are working with various Tata companies to understand and fulfil their life, general and pension needs; this will be an ongoing process. For the staff of Tata Group companies, we have crafted special products with reduced premium rates.

We have piloted ‘workside marketing’, wherein a team of agents goes to the workplace and explains our products and advises people about them. This has been introduced in Tata Tea, Titan and Tata Engineering. About 25 to 30 per cent of our total business in 2002 came from Tata Group companies.

What are your future plans?
We want to maximise our penetration and expand our staff. Currently we are in nine cities: Mumbai, Delhi, Chandigarh, Kolkata, Chennai, Bangalore, Hyderabad, Kochi and Guwahati. We will, in the near future, be opening offices in Jaipur, Jamshedpur, Ahmedabad, Lucknow and Coimbatore. We will continue to focus on growing our reach, with strategic expansion across geographies and channels.

We expect two or three insurance companies to lead the market in terms of growth, aggression, size and perception; others might concentrate on niche areas. We want to be the fastest-growing private insurance company in India, offering the best service and being the most profitable.