Trevor Bull, managing director, Tata AIG Life Insurance Company talks about the life insurance industry and his company's plans for the future

In his 28 years as a life insurance professional, Trevor Bull has often been called to pry open new markets. In February 2006, 47-year-old Mr. Bull was appointed as the managing director of Tata AIG Life Insurance Company, the joint venture between the Tata Group and AIG.

This is after holding senior positions in the UK, Japan and Korea. Mr. Bull was with Lutine Assurance Service Limited in the UK when he was hand-picked by American International Group, Inc. (AIG). The international insurance and financial services organisation, with operations in more than 130 countries, assigned to him their flagship Japan operations.

Mr. Bull, who is equally comfortable in conventional life insurance products as well as unit-linked ones (which invest in the stock markets), worked in Japan for six years at American Life Insurance Company. The next four were spent at another AIG affiliate, American International Assurance Korea.

He couldn't have entered the Indian market at a more opportune time.

Tata AIG Life has been on a winning streak. Over the last year, total premium has grown cent per cent. The company has over 35,000 agents as well as numerous other partners and distribution arrangements to handle its policies and this figure is expected to grow by 42 per cent this year. Bull, fond of flower and vegetable gardening as a hobby, is confident of nurturing Tata AIG Life on a new growth path during his tenure.

Mr. Bull works out of a beautifully done-up office in central Mumbai. Most of the décor is in blue and white, the Tata AIG colours. He is relaxed, leans back and often laughs when talking with his visitors.

"The partners make up a winning combination," the amiable Britisher tells Raju Bist in the following interview. He also talks about how his company is gearing up to grab new opportunities that are emerging and the pitfalls that Indian life insurers have to be vary of.

What is your impression about the Indian life insurance industry?
The industry was privatised in 2000. Since then, 13 new companies, including ours, have entered the market and started competing with LIC (Life Insurance Corporation). In the period April to December 2005, new business of the private life insurers grew by 91 per cent. LIC grew at 40 per cent. But I feel there is still a lot of potential for the private players.

How is it different from the Japanese and Korean markets where you worked earlier?
Compared to India, Japan and Korea are very mature markets. Japan is the most heavily insured market in the world. In India, there is no language problem since English is widely spoken but that was not the case in Japan or Korea.

The regulations are different in the three countries, the distribution models are different and so are the insurance products. For example, unit-linked policies are fashionable in India but not in Japan or Korea.

Unit-linked plans seem to be the flavour of the season. What has been your experience in this area?
InvestAssure is a very successful unit-linked product. Tata AIG Life has been cautious and prudent in advising customers on unit-linked products. We have been the only life insurance company in India which insists that only select, specially trained people sell unit-linked products. These people have to pass an internal exam which assesses how well they are able to communicate to customers the benefits and the potential downsides of unit-linked products.

Which are your most popular products?
In 2004, the first year of its launch, InvestAssure accounted for 38 per cent of the total premiums issued. MahaLife made up 30 per cent of the total number of policies sold so far this year.

HealthFirst and Health Protector were unique since these were the first health-related products introduced by a private life insurance company in India. These two (products) take care of the entire gamut from hospitalisation to surgery.

Nirvana Plus is a pension planning solution and MahaLife Gold has also been received very well.

What are the new segments that you would like to enter?
As a company, we always anticipate the changing needs of consumers and accordingly deliver innovative insurance policies. We have a very wide distribution network here but are also looking at setting up more offices and hiring more people. This will help us expand, particularly in rural areas. Here, we are looking for simple, good quality products.

In this connection, I am happy to inform you that we have won a substantial grant from the UK for a rural project. The three-year project was started in September 2003. Tata AIG Life has received a grant of £89,500 against a commitment of its own spend of £104,500. The money is being used for implementing a micro insurance project to cover landless daily-wage workers in Andhra Pradesh. Tata AIG Life has always exceeded its rural commitment

What are your persistency and renewal ratios? How do you plan to increase the same?
Persistency and renewals are the true test of the relationship between our company and customers. We continually train our agents on building a long-term, customer-benefiting relationship. The strength of this relationship, combined with the strength of the Tata AIG Life brand, ensures very healthy persistency and renewal ratios.

Since inception our persistency for single life policies is at 82.4 per cent and is increasing each year. The renewal ratio for some of our major schemes even touches 90 per cent. We can keep this ratio high by going in for more face-to-face interaction with customers. Nothing happens by good luck.

What kind of policies do you sell online?
We don't sell online but we do have a website (http://www.tata-aig-life.com) where potential customers can learn about our various schemes. It is not an end-to-end solution because we would like to be cautious. When a customer shows an interest in a scheme, our agent gets in touch with him. We want to make sure that the customer understands the product fully and buys the product which meets his ultimate needs.

What is the company's performance on the bulk business side? Do you derive business regularly from the Tata Group?
We have a strong focus on corporate coverage and are amongst the market leaders. We have over 400 corporate relationships with the top corporates in India. We work closely with 18 Tata Group companies on corporate businesses and with 55 Tata companies on individual life policies. We will cover more Indian companies, Indian multinational corporations (MNCs), foreign MNCs, and small and medium enterprises (SMEs).

Industry experts say that insurance companies are experiencing huge cost overruns. How is Tata AIG Life placed in this aspect?
The insurance industry, especially life insurance, has high costs in the initial days to support acquiring the business. It requires large capital infusion as it grows at a rapid pace. The gestation for investments is very long. But Tata AIG Life's path to profitability is in line with pre-determined plans.

Let us not forget that the private sector is a comparative newcomer in the insurance business in India. The company is receiving full support from both the partners and we are on track with our targets. That is mainly because both Tata and AIG have practiced fiscal prudence and good corporate governance. We maintain a perfect balance between entrepreneurship, leadership and creativity.

What exactly do the two partners bring to the table?
The partners make up a winning combination. The AIG side brings in specialised knowledge of insurance (product and distribution) that have been successfully launched all over the world while the Tata's contribute through their knowledge of the Indian market place and the tremendous trust customers repose in the Tata name.

What is the media strategy that you adopt and how much is your annual spend?
Tata AIG Life commenced a brand communication programme in June 2004. We first launched innovative products such as MahaLife, Nirvana and HealthFirst. Then we made a brand statement of our company's ability to anticipate and innovate.

We adopt a strategy of being actively visible in the media during the key quarters of October to December and January to March. We use television to increase awareness and reinforce the trust and reliability. The press is used as a follow-up to supplement our television activity. Outdoor publicity, hoardings, internet and radio are also used at different points in time, depending on the requirement.

One of the Indian private life insurers acquired a credit rating from Fitch. Do you have any similar plans?
Rating is useful provided the customer understands what it represents. Our name and standing gives us good rating with our customers.

How do you see the future of the industry in India?
The Indian life insurance industry will continue to focus on growth by tapping new geographical areas. Insurers will also introduce innovative products to reach wider segments. They will have to ensure that customers get the right kind of information and the solution offered meets the real needs.

At Tata AIG Life, we always tell our agents that insurance is not something that can be bought today and returned back tomorrow. It is a 20-year plus relationship we are building with a client, his family, his business and his employees. Hence what he gets should be appropriate in every possible way.

Do you expect consolidation happening in the sector?
The life insurance industry is in its infancy here and it will take some time before any consolidation becomes a consideration. The focus of all players is geared towards growth in an under-insured market. But ultimately, as in other types of businesses, the survivors will be the ones who will be able to build a sustainable business.

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Uploaded on April 13, 2006