In Rural Areas, Most Of Our Customers Are Buying Their First Life Insurance Policy, Says Shriram Life Insurance MD And CEO

The new regulations represent a significant shift for the industry, particularly in how it manages product margins and costs. We would now have to reassess the product offerings to ensure compliance, which means refilling or modifying several products.

The challenge lies in balancing the cost of doing business and maintaining customer-centric products. We are focusing on refining our product portfolio, adjusting distribution strategies and enhancing operational efficiency to adapt. Sure, these adjustments entail challenges, but they also offer an opportunity to innovate and realign our offerings with customer needs. 

Not directly. ALM involves aligning the durations of assets and liabilities, which is a separate ongoing process, managed by our actuarial and investment teams. However, changes in surrender payouts may call for small adjustments. For instance, if higher payouts require additional reserves, it could slightly alter the duration of some liabilities. 

The primary impact is on the costs side of doing business, such as how we structure commissions and manage distribution. While ALM processes remain stable, we are committed to maintaining financial balance and ensuring compliance across all areas.

Though awareness of life insurance has improved, especially after COVID-19, challenges persist. In rural areas, the concept of insurance is often met with emotional and cultural resistance. People need to understand that they are paying for a benefit that might not directly impact them unless a claim arises.

To build this understanding, we have invested heavily in awareness campaigns. As the lead insurer in Telangana, we are driving initiatives to educate communities about the importance of life insurance. Our approach focuses on creating tangible experiences, ensuring that customers see claims being honoured. This builds trust and reinforces the value of insurance. 

For many of our rural customers, their first policy comes through us. This requires us to create a market from the ground up rather than tapping into an existing one. Our efforts go beyond selling products. We aim to foster financial literacy and trust within our target communities.

The proposed changes are promising for the sector. With insurance penetration quiet low in a rapidly growing economy, there is a massive room for expansion. Raising the FDI limit and introducing a unified licence would attract more foreign players, bringing in capital, expertise and innovation.

Increased foreign investment would enhance competition and drive improvements in products and services. However, it is crucial to manage this influx carefully to avoid market consolidation that may hurt smaller domestic players. Overall, these reforms could significantly boost growth and help the industry achieve deeper penetration especially in underserved markets.

The Insurance sector is at a pivotal moment. While regulatory changes pose challenges, they also offer opportunities to innovate and grow. At Shriram Life we remain committed to adapting insurance, compliance and delivering value to our customers, particularly in rural areas where financial protection is most needed.