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POSP + Digital to Boost Insurance Sales

Lucknow-based regional rural bank Aryavart Bank has adopted frictionless customer experience to onboard customers for insurance policies. Shiv Bajrang Singh, Chairman of the bank explains the salient aspects of this strategy:

Mehul Dani: What is the total income from third-party insurance product sale in 2019-20? What is the number of life, general and health insurance policies sold by the bank?

Shiv Bajrang Singh, Chairman, Aryavart Bank

Shiv Bajrang Singh: Third-party insurance sector has always been a lucrative segment for banks. It not only ensures appropriate hedging of risks by insuring the assets, but also contributes to the income through commission. The products are modelled based on the needs of the customers as well as the banks. The premium income of our bank has decreased to Rs274.14 million in 2019-20, from Rs359.34 million in the previous year. Also our income through commission too came down to Rs44.24 million in the last FY from Rs53.84 million in the previous year.

The infograph shows that premium as well commission during 2019-20 has plunged 23.71% and 17.82% respectively compared to the previous year. Insurance business is more pronounced normally during the months of February and March, but this year, this has been adversely impacted by unseasonal rains and hailstorms in February and covid outbreak in March 2020, leading to negative growth in life and health insurance business.

How is the bank pushing insurance sales?

Growth in sales in insurance products is always linked to awareness of the products available, to bank employees and also to the targeted customer segments. One needs to have a thorough understanding of all the available options so as to pick the one that best suits the customer. For this, we have posted one marketing officer at each regional office and a specified person on cluster basis. Specified persons, who are well trained and well versed to address the issues promptly in the branches, are delivering product knowledge to the customers and their family members. The sales results can be largely attributed to top-down guidance and control mechanism that is exercised by the department at the head office. A thorough monitoring of insurance sales figures and giving necessary guidance like changes in regulatory guidelines, training on new products and special focus on untapped areas, have helped us. Also, in this technology-driven era it is essential to provide details of the products and address grievances of the customers promptly.

How are you leveraging technology for customer service?

Typically, our customer base is mostly low-income rural households. Hence, we are more inclined towards the micro-insurance segment. In order to effectively and timely aggregate the policies, we are in the process of adopting point of salesperson – life insurance (POSP-LI) policy, adhering to IRDAI guidelines. With this concept, we would be providing tab-based support to the POSPs for capturing the KYC and selling micro-insurance policies on end-to-end automation basis. The policies would be registered through tab on a real-time basis and the customer will receive the corresponding information on his/her mobile.
For grievance redressal, customers have a plethora of options. They can connect with the insurance providers directly, either through their website or through the toll-free number provided on their policy certificates. Customers can also connect with the specified person, branch managers or conce4rned staff at the regional offices. They may also raise their grievance or request through the complaints portal of the bank on our website.

What were the digital initiatives for insurance sales in 2019-20 and the current year?

All our branches and regional offices are on CBS platform. RTGS/NEFT facility is enabled in all the branches. We have been working in close collaboration with our insurance partners to implement digital facilities in order to help customers with the onboarding process. Few initiatives like onboarding through tab-based application, OTP-based authentication by both specified person and customer to speed up solicitation process, generation of e-receipt as a proof of acknowledgement of policies and delivery of information about customers along with details of premium paid to the insurance companies through auto mailer have been implemented. With the help of these initiatives, the policy documents can be delivered to the company faster and policies can be generated electronically.

Which insurance companies have you tied up with? And the new tie-ups in the last financial year?

We have tie-up with Bajaj Allianz and Star Union Dai-chi for life insurance, with United India, Future Generali India and Universal Sompo for general insurance and with Religare for health insurance. Except for Universal Sompo General Insurance, the tie-ups existed from the days of the erstwhile Gramin Bank of Aryavart. After the amalgamation (Gramin Bank of Aryavart and Allahabad-UP Gramin Bank), we tied up with Universal Sompo and discontinued Life Insurance Corporation of India last year.

Can you list the customer segments that have shown the highest interest in insurance products?

At Aryavart Bank, we cater to a highly diverse clientele, ranging from farmers in rural areas to professionals in urban areas, from illiterate workers to educated service class. Our varied customer segments have different needs for finance as well as insurance and we solicit the best matching products from the customer after an in-depth need-based analysis and personal interview of the customer. For any asset created out of the bank’s finance, there is always a risk associated with it. These risks can be due to any loss caused to the asset or any loss to the owner himself. In either of the cases, the bank’s finance is always subject to uncertainties of return. Here comes the role of insurance companies, which are helpful in myriad ways to hedge all such types of risks. Normally, low-ticket endowment policies are preferred by rural population in life segment, whereas term insurance is preferred by semi-urban and urban population. In health insurance, family floaters without exclusion are the preferred policies in the range of coverage from Rs50,000 to Rs100,000.

We have financial literacy centers (FLCs) in 10 districts and have created a novel scheme for sustainability of BC model named as ‘BC as BF’ (Banking Facilitator). The FLCs are functioning well and are bringing awareness among the masses and developing resource persons by organizing training of trainers (ToTs) apart from addressing queries of people / customers. This scheme aims at utilizing the bank mitras /bank sakhis for various activities as extended hands of the bank in a cost-effective manner incentivizing them to earn sustainable income. The bank has been allotted 2429 sub-service areas (SSAs) in rural areas and 491 wards in urban areas, out of which 2038 SSAs and nil wards are unbanked. We have engaged 4 service providers to provide services through its field staff and bank mitras / bank sakhis.

How do you see the corona virus crisis impacting the demand for health insurance?

We have been selling health insurance policies for the last 4 years. Since our collaboration with Religare, we had organized several campaigns and literacy programs throughout the villages to spread awareness about the need for health insurance. This has helped us in managing good business in the health insurance segment. Although the customers right now are thronging our branches for cash withdrawals, we believe the demand for health insurance is bound to go up in the light of the awareness we have been able to create and realization of the importance of personal security among the people. The covid epidemic has certainly raised the demand for term insurance and health insurance. We are expecting 25% growth in insurance business during FY 2020-21.

In what ways the crisis has impacted loans to farmers and crop loans?

The covid crisis has had a very serious impact on every financial institution worldwide. We were compelled to shift our priority from providing loans to farmers to restricted banking operations. Our business, particularly loans to farmers and rural population, has been adversely impacted by the epidemic during March and April 2020. We have already sent instructions to our branches to saturate the beneficiaries of PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) with Kisan Credit Cards. We have started a specialized credit scheme in the form of personal loans to provide aid/finance for rural godowns, SHG credit, etc. We have also lowered the interest rates on advances.

We are continuing our Aryavart Star Mission this year to boost the credit flow and improve the financial stability. Through this campaign we would be providing fresh lending to 125 newly identified families per branch, through multi credit linkage activity. Free accidental death cum disability insurance scheme, with provision of Rs200,000 insurance cover to all the existing borrowers of the bank, has also been continued for 2020-21.

We have taken up an initiative on mission mode to upload the data of the farmers on the MSP portal so that the proceeds of their agricultural produce can be remitted directly to their respective loan accounts. This would not only reduce activities of the middlemen, but also help our bank in upgradation of some out of order accounts.

We think these initiatives will help the farmers/customers in our command areas to minimize the impact of the pandemic. I hope the year ahead will offer tremendous potential for all-round growth of
the economy.

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