Now buy your Insurance for Rs 49 at Insurance Mall - Future Generali

Insurance I Opener : Expanding middle class plus increasing disposable incomes has lead to a booming retail market in India. According to NCAER’s or National Council of Applied Economic Research, Great Indian Market Survey, organised retail, which was worth 5,200 crore in 2007, is set to grow to 37,400 crore in 2012.

India’s Future Group and Italy based Generali Insurance who have come together to form India’s newest insurance distribution model – Mallassurance. This will now be one stop shop for all your shopping as well as insurance needs.

Rs 49-99-149, no these are not price tags in a dollar store, but they are the premium costs of insurance policies that can now be purchased from shopping malls. Future Generali has approached the Indian insurance market in a unique way through insurance kiosk in your neighbourhood mall. So, you can insure your home, car, or self from accidents while buying vegetables and that could be for as less as Rs 49.

Excerpts from CNBC-TV18’s exclusive interview with Kishore Biyani and Sergio Balbinot:

Q: You are one of the late entrants as far as the Indian insurance
market is concerned. We all know that its one of the fastest growing markets, there was a little slowdown last year as compared to the aggressive about 100% growth. Are you still bullish on the Indian insurance industry because our penetration levels are extreme low at this point of time?

Balbinot: India is not just a big country, a big population as well.
There are tremendous opportunities for an insurance company. 50% of the population is below 25 years old. We have a middle class, which is coming up. These are potential buyers for an insurance company. If we see the penetration ratio, it is very low in life. In non-life, it is half compared of what we see in other countries. The saving ratio is very high; it is typical of Asian countries. We need to have a big business. In a country like India one can never say, “You are too late.”

Q: Is it one of the reasons why penetration is so low here because we
by definition are very fatalistic people. We do not believe we would ever die, so we don’t need insurance. Whether it is our plasma television which we may buy for lakhs of rupees but do not want to pay Rs 99/- for covering that or it is our own life, we believe that nothing is going to happen to us, is that what is the reason?

Biyani: We have made this product a little complicated and non-glamorous. There is no approach, so how do you sell these products. Acquiring a young customer and making him aware of insurance as a product is our first job. We believe we can do it in a mall space because today malls are a public space where people spend a lot of time. They are coming there to do almost every activity. We believe that if we explain a product and not try to sell them big things on day one it would help.

Q: How do you plan to do that?

Biyani: We want to expose the product to them and make it as simple as possible. We are building a kiosk wherein you can put in money and buy a policy on the spot.

Q: Would that be an Accident Policy?

Biyani: We can do a home insurance policy in that manner. But then once a relationship with a customer is built, it is for us to make him aware of more products. We have to start a relationship with a product; it cannot be started at a bigger level.

Q: Do you agree that one of the reasons in our country why insurance
probably hasn’t penetrated is because it has been very largely agent-distributor driven and is driven largely by commissions. So, it is always been about how many agents you have. We have a system here that every insurance company can have only one tied agent. So, do you feel that distribution or the manner in which insurance is been sold in this country is one of the reasons for low penetration?

Balbinot: It’s part of the issue. Agent distribution is a typical format that you have in many countries. You still have agents in Europe and in United States. But, what’s important is the evolution of distribution. The idea of Mallassurance is very interesting for our customers.

Q: How has it worked overseas in other markets?

Balbinot: It’s always difficult to make comparison country by country because it depends on the Mall, its location, attitude of the customers and their awareness for Insurance. For example in UK, a co-operation between Tesco and Royal Bank of Scotland is something which is very attractive at the moment. They have 2 million customers and 800 million premium income originating from Mallassurance distribution. We have something similar in France with Carrefour. We at Generali are still working with Migros in Switzerland and Italy. So, the Mallassurance is coming as another distribution part of Generali because we still will have agents.

Its not that in India we say, “We don’t need agent.” We will need the Agent / Broker but Mallassurance will be something that we are on. Especially, Future Group which has come to India as an innovator.

Q: If I am coming to your mall and buying the insurance product after
going through whatever I see there, as you said it will be simple products and easier to understand, why then do I need to go to an agent? Do I as a consumer then stand to benefit?

Biyani: We have an array and bouquet of products. So, an agent is required to explain a product. But our future money outlets, which we are building in every mall to sell insurance, will have promoters and advisers who will advice people on what polices to buy.

Q: Is advice not selling necessarily?

Biyani: Advisory leads to selling. But the approach is basically every human being has a different need.

Q: You feel that almost a percent of the people who are walking into your malls could actually be converted into buying insurance, is that right?

Biyani: It is more than that, around 3-4%.

Q: When you talk of global experiences is there a 3-4% conversion rate
or is it much more?

Balbinot: It is difficult to make a comparison. Even in a mall, we have a completely different approach in Europe than in Asia. In Europe, you see a mall, go buy, and then exit. Here it is different. You enter, buy, have lunch or dinner, and have entertainment. So, it is a place where you spend time with your family. It is a very important point, because you come with your family here. Insurance is mostly an issue that you have to discuss with your family, it is not an individual decision of one member of the family. So, there are some elements that will make Mallassurance in India much more attractive that we have seen in other countries.

Q: The numbers say that almost about 17% of your business as a group comes out of Mallassurance. Do you see that number being much higher in India as far as your joint venture is concerned?

Biyani: We are looking at much higher number, at least 17%. But it is too early to talk about numbers. Our initial test launch has been quite successful. We just had a test launch in the last two days in 20 stores. We have done more than 10,000 policies in the last few days, i.e. in three days since our launch. From tomorrow onwards, we will be moving into 40 stores. We have more than 500 outlets where we can move in as far as possible. Once we have our distribution points, then in the next 40-45 days the first target for us is 1,00,000 customers.

Q: Is the whole idea of getting into insurance in sync with your retail business or is this something that you are going to look at completely in isolation? Of course, Mallassurance fits in beautifully with that.

Biyani: The way we have designed our Future Group is to capture the spend of Indian consumers. Our aim is to spend, insure, and protect them. A financial services product is also an important product in the life of our customer’s balance sheet and we want to be a part of this. So, it is a part of our financial services strategy wherein insurance fits very well with us.

Q: In insurance, we tend to talk a lot more about life insurance but tend to ignore the general insurance side of it. Do you see Mallassurance being a bigger driver there rather than on the life insurance side?

Balbinot: The first issue would be awareness. Life is the issue because there is no pension element in India. We also have a big need for non-life insurance here.

Q: You have always brought in price points which have defied the
market, do you intend doing the same here. From your test market points what is the feedback one can take away from consumers?

Biyani: We have launched a product at Rs 99 and at Rs 199. We are looking at one at Rs 49. These are interesting price points to acquire a customer.

Q: Similar product to product, how do they compare with others at the current levels?

Biyani: We normally like to prototype and test out what suits the Indian customer. The response has been good and that’s how we decide on what price point works best.

Q: So for Rs 49/- I can buy an insurance cover?

Biyani: That’s the whole idea. How to acquire a customer at an interesting price point, build up a base, and make the customer aware of various products, which you have?

Q: If you compare point to point, how do you find our insurance market compared to the global market? It’s a fairly mature market now with private life insurance being around for about 8-9 years in India. Do you believe that it’s still a little overpriced as far as charges are concerned?

Balbinot: In a market, there is a cycle of insurance. You are in a free situation and competition. The market is growing on a sustainable rate for the next 10-20 years. This market can grow roughly 20% per year.