Tarun Chugh is the Managing Director and Chief Executive Officer of private general insurance company Bajaj Allianz.
He has spent over 14 years in leadership roles within the Indian life insurance sector and joined Bajaj Allianz, which is a joint venture between Bajaj Finserv Limited owned by the Bajaj Group of India and Allianz SE, a German financial services company, in 2017.
An alumnus of the Indian Institute of Technology and of the Indian Institute of Management, Chugh is known for his strategic orientation and believes in investing toward building long-term relationships across stakeholder groups.
He is a member of the governing council of Insurance Information Bureau of India and an elected member of the executive committee of Life Council of India.
In his free time, he enjoys taking adventure and nature holidays and is an avid reader.
In a conversation with Forbes Advisor India, Chugh spoke about how the coronavirus has helped the life insurance industry reach a milestone with respect to all stakeholders accepting digital and what the road ahead should look like.
Why does India not take life insurance seriously? What kind of reforms can change this?
Lots has changed. I think in the last two decades, the size of the industry has grown phenomenally. The number of participants and the money that has been invested in the space is significant.
Life insurance products are multiples of decades long. The shortest plan would be a five-year plan. I expect the entire paradigm of checking the business we do on a per capita GDP basis to change. I think instead of that, it should be sum assured we write, which is a significant change by itself.
Ultimately, we are intending to increase the sum assured per life. All said and done, insurance has become a lot cheaper in the last twenty years.
The other thing is it’s not an easy product, not like someone would get up in the morning and want to buy. My vision of life insurance is for it to be a part of every financial portfolio of every single person in the country. That’s easier said than done.
For example, financial literacy is a significant part. Life insurance is critical in your portfolio—it’s to me a given—but there are some segments of customers who are either already super rich and they don’t require the means to cover their life, and there is the extreme that is making ends meet. If you leave aside these two ends, and consider the middle class, by which I mean a broad terminology to mean lower middle, middle, higher middle, affluent as well as high-net worth individuals who earn up to INR 1 crore a year, for this space to have life insurance, financial literacy is very important.
We have to figure out how we can get closer to being like fixed deposits in terms of simplifying life insurance. The simpler a product is, the more people buy.
The entire value chain—simple to communicate, to buy, to fathom and finally to get fruits of—has to get a lot simpler. There is a lot of legal jargon. So you have to simplify that, and it is a challenge for the industry, the regulator and to the reach of the players. I think 10 years would just fly by in trying to get there.
Has the coronavirus pandemic changed India’s approach toward life insurance? How will a transformational change come about?
An event like coronavirus does impact: In the first quarter of 2020, we saw a lot of term life insurance being bought. But all said and done, all these impacts in the journey of a lifetime do leave a dent, and I do think the trajectory of awareness has gotten steeper and people have started evaluating life insurance as a must-have.
The other bit that has happened is that people’s attitude to digital has changed. This, by itself, is a huge bit on the reach front. I think the biggest issue in India is to be reaching out with the right verbiage, to the right person at the right time and that leap digital has taken for us. That fruit is yet to be eaten, and it will come through for sure.
I see a lot of segments of customers getting into insurance. I can see younger salaried class getting interested and pensioners looking at insurance and pensions seriously.
Now it is the responsibility of the regulators, insurance companies and other stakeholders to take this COVID-19 moment to steer life insurance in India.
It starts with the product design, it moves to simplicity of communication—am I able to reach out to the customer and talk simply—second how do I reach? I feel vernacular and videos and more voice are going to make a significant difference in the way we communicate on life insurance. We have to look at what the new generation is looking to accept. Are we belonging to their world, for which we have to understand what is relevant to them.
We have to increase the “need buckets” we meet. Longevity, long-term wealth, mortality and morbidity. There is a lot to be done in terms of product design to meet all of these.
There is a lot to be done in terms of frictionless onboarding of customers, increasing trust in customers, and sometimes technology can provide it. The biggest distrust people have is they don’t know what is being filled in a life insurance form and for that, for example, we have come up with a simple innovation based on technology in the form of a digital assistant called Smart Assist, which is a virtual assistant that allows customers to engage in a personalized conversation with the company’s representative anytime, from anywhere.
The real-time screen sharing service and chat option within Smart Assist replaces face to face interactions considering customers preference due to COVID -19 restrictions.
Trust, transparency and simplicity are among the foundations the industry needs to be built on.
Have we arrived at the breakthrough moment where every household may feel the need for at least one life insurance policy among members?
The answer to this is: We are not there. There is a lot of work to be done to be part of assisting customers to accomplish their life goals through life insurance. We eventually need to be tip of tongue whenever a customer thinks of life goals. At least to start with, we should look at getting life insurance in the “thali” (platter) of life goals of people who wish to get into life insurance.
The government has been working a lot in the lower side of the pyramid, and there is a lot that’s been offered there. But there is too much hand-to-mouth there.
There need not be term plans. India is a young country, the average age is 27-28. So such a country would want to save but want a part of savings for their lives later.
What are the key challenges facing the life insurance industry?
The challenge lies in simplification. The simpler we will be, the more we will be a part of every household’s “thali.” Simplicity is equal to propensity to buy, engage and that is what we lack.
With Pradhan Mantri Jeevan Jyoti Bima Yojana, we have crossed the barriers of awareness. Many life insurance companies in India are now listed as well. So they are part of investment portfolios as well.
What is your motivation to be in the Indian financial services industry space?
It is the ability to think that you are in a position to make a positive impact in the lives of individuals around you. Lifetimes pass by and people are just OK making impacts for themselves.
I find myself lucky to be in a leadership position to make that impact. Everyday might sometimes feel like a grind, but if you approach life in a way that “hey, I was able to convince two people on this,” and if those two people are able to talk to 20, it keeps you going.
What would your advice to the government be for the life insurance space?
For life insurance, it is directly proportional to the amount of tax benefits that exist. If the government is focusing on financial inclusion, it should be able to provide the right kind of tax breaks for products like life insurance.
Government-aided schemes are something we always needed.
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