Interview with an expert of the insurance market: the current position and prospects for the development of the life insurance market
Our expert – General Director of the IC Ingosstrakh-Life LLC Chernikov Vladimir – more than 27 years worked at the Russian insurance market on TOP positions of largest insurance companies (Renessans insurance, Ingsstrakh IPJSC, Holland Company Achmea e.t.c.), held an internship in the foreign insurance companies (Axa, If, Pohjola, Tapiola)
Vladimir, good day! We want to thank you for your cooperation with our information and analytical portal Calmins.com – a deliberate insurance. As well we would like to ask you the first question:
– 2020 comes to an end, how do we remember the life insurance market this year?
– I would like to start with what products are presented in the life insurance market: ISG – Investment Life Insurance, NSG – Universal Life Insurance and Credit Insurance. Let’s start in order and briefly consider each of them.
This year, we obviously observed a decline in the share of the investment ISG Life-assurance. This kind will grow up its natural level in the near future. Maybe ISG will even survive a couple of short-term takeoffs at the expense of new concepts and investment ideas. In the middle and even more long term, the fair share of sales is unlikely to grow actively, since currently, stability is more important for customers, and not risky investment solutions. Most likely, this product is intended for financially advanced Affluent and Private Customers.
Universal life insurance. Everyone says that cumulative products are the future. This year we observed how the growth rates of NSG fees are pleased with the insurers, and the increasing commission on these products is encouraging banks. It is important to consider the following: First, the NSG is not yet able to completely replace the volumes out of the insight; Secondly, the usual NSG is usually standard – this is not a massive easily sold and, moreover, is not an ultra-massed self-sellable product. Therefore, NSG will certainly play a significant role in the future development of the life insurance market, but it has a number of rather deep transformations.
Credit insurance is also experiencing a decline. In the case of loan insurance of life, customers are mostly interested in maximum savings. Consequently, the conditional proposal “with financial protection” should be a borrower more profitable to the conditional supply of a net loan, but at high bank commissions the value of such products for the client is minimized. I am confident that credit insurance will certainly play and continue to a significant role in the bank-care segment, but probably also evolutionally spares the natural share in the overall sales structure, which may well be less than the current one.
– What trends, in your opinion, will be the most significant in the life insurance market in the near future?
– The main trend in the near future will be an output to more mass client segments. Now we work well in private and in the segment of secured customers, i.e. In Affluent. Private is a narrow client segment. Affluent has become very competitive over the last few years, and life insurance has to compete not only with itself, but also with other financial instruments. There is also some “fatigue” in affluent customers from the proposal of various solutions from a narrow circle of suppliers within the “portfolio approach” from a particular personal account with a bank.
Despite not the easiest economic situation, the upper mass segment will become more consistent i.e. “Mass-affluent.” I believe that this segment is definitely worthy of more attention, because it can become a stable demand generator.
The expansion of focus on more mass segments implies the adjustment of the basic principles of the product supply. More mass client segments are interested on the one hand, in more economical solutions and on the other hand, in decisions with a much simpler and obvious customer value. Such products seem logical to lift the basic and extremely important needs.
That is why we started with products focused on solving the basic problems faced by the mass segment – especially regional customers when caring their health. Product concepts for more mass segments must have a simpler and understandable customer value.
– How to create customer value that can be used right now?
– Optimization of expenses for attracting a business to maximize the product value for the client and, of course, services. Those services that are needed by the Client on an ongoing basis or allow them to obtain a maximum of the benefits of the product itself. Telemedicine, service for the receipt of social tax deduction is already unambiguous Must-Have Insurance Products. Other services, such as general-consulting or concierge, and the medical “Check-up” or thematic support services will certainly receive further development and will be added to products depending on the positioning of the product itself and requests
– As I understand it, you are talking about the mass segment now. Are there any interesting new products for more wealthy customers?
– We have already developed and led such a product in Russia. This is a pretty new solution in the domestic life insurance market. We are talking about NSG with high fixed guaranteed income. The design of the product ensures the profitability of the above rates on annual deposits. Our experience with the “Avantage Invest” product and its sales confirms the consistency of the approach – especially in the emergence of the tax on deposits.
– You are constantly talking about the ISG and NSG, but for a simple client, it is often quite difficult to understand the difference between these two products. Which one of the products, based on your opinion, is the “engine” of the Insurance market in Russia?
– The main driver of the industry currently is the ultimate life insurance (NSG). Largely, this is due to the demands of the current time – any crisis causes customers to be careful with their risk-appetites and consider accumulation options with guaranteed income. Also, do not forget about the variations of service components within NSG products – medical, legal, financial.
The ISG is primarily a product for more ambitious and risk target audience, for customers with a fairly high-risk appetite and a high level of financial literacy. As well as for those who have the ability to diversify financial instruments.
Nevertheless, since its development drivers have their own development drivers – the upcoming introduction of the deposit tax and a decrease in the profitability of most financial instruments. Under these conditions, the ISG programs appear on the market, which gives more opportunities to obtain increased income, but carrying more risks, in particular, programs that guarantee not 100% return of invested funds. These are considered variations of programs with the possibility of replenishment – the product in which the client can annually contribute to insurance premiums. At the same time, a tendency to change the basic assets of many strategies appears. This is primarily due to the interest of investors in industries growing against the background of corona crises, such as information technology, pharmaceuticals, online entertainment and delivery services.
– As far as I know, two-thirds of sales in life are carried out through credit organizations …
– The banking channel has been and remains the main sale of life insurance products. But it is not surprising that in a situation where banking commissions seriously limit the client returns, Insurers started to test online-sales. Obviously, this area has a future, but both to any new channel, to the online still to “find keys”. Regulatory restrictions are essential, in particular, customer identification requirements that are saved by life insurers. The remote channel will develop, gain competencies and in the future may compete with traditional sales channels, miting the risks of missell.
– Let’s go from the products that are offered by insurance companies to the needs of the client himself. How, in your opinion, has the behavior of the consumer changed now in the market, what are the preferences of the client himself?
– The segment of the ultimate life insurance (NSG) not only has not declined, but also demonstrated the growth of the awards in the first half of the year compared with last year. In many ways, the growth of NSG products is associated with the concerns of people with their health and health of their loved ones. More and more customers of insurance companies began to choose products with guaranteed income and service constituents that meet the time and needs of customers. During the period of the Coronavirus pandemic, people are focussed attentively on such indisputable values, as the life and health of the individual and their family, which affects their interest in certain insurance products.
– And what is the attractiveness of this offer? And why the clients buy investment products or ultimate life insurance?
– These proposals are attractive not only in terms of life insurance and in terms of customer health, but also for legal protection of capital. After all, from the moment of payment of the insurance premium before receiving the insurance payment or return of the award, with the termination of the contract, the cash to the insurer is not the property of the debtor, which is from third parties. The funds cannot be confiscated, they cannot be imposed arrest, they cannot be charged on the court, are not subject to section between spouses when divorced and do not need declaration.
– What do you think, what should be the life insurance products in the market so that they are not sold, namely bought by customers?
– In our opinion, products must have high customer value and meet the current situation in the market and, ultimately, the needs of the client. Increased product value for customers is more possible in remote sales channels when the client buys the product from the food factory, i.e. At the insurer. In terms of life insurance “Ingosstrakh-Life”, for more than 17 years, is working professionally with the most deep fears and client fears, anticipating them and providing solutions that protect against these fears. We have a wide range of product solutions for various consumer segments, while, for any client, we are also ready to select a solution option: to level the risks of fears for the life and health of your relatives and loved ones, for your savings, take care of a fear We make the main emphasis on the products-designers – for example, a group of NSZ products Avantage are products that allow customers to choose a risk set and service options that are necessary.
– Recently, quite a large resonance in the press was associated with the problem of imposing insurance for life. Is it gone now, and if so, how was it solved, and how can trouble be avoided in the future?
– Since the largest amount of premiums of all insurers for insurance products “Generate” a banking channel of sales, then banking staff are important to understand the detailed characteristics of products to prevent mis-sells (insertion of the client’s delusion during sale) This is especially important today when the decline in deposit rates has led to the development of combined deposit products, when the client proposes a contribution with simultaneous investment in mutual bonds or NSS, which increases the final yield. In the case of NCS, it is possible that the NCS is a product that requires replenishment by payments on an annual basis: all these moments should be transparently explained in the process of structuring and signing a transaction with the client.
Cumulative life insurance products with annual contributions make the client think if they need a product or not and weigh the feasibility of acquiring the insurance program. Especially if these are products with a guaranteed opportunity to consolidate income for a long time. For the right sales of insurance products, insurers, together with the partner, should conduct permanent training of selling employees, updating the training programs on a regular basis. Particular attention should be paid to the disclosure of information in marketing materials provided to customers (booklets, reminders about products and so on).
Also, the text of the insurance contract should be made of particular importance, which the client is in the end receives on hand. The more the subtleties of the purchased insurance program is spelled out in the contract, the better. In addition to the development of training materials for partners, insurers should wider use their own opportunities for quality control of affiliate sales. The most obvious way to conduct control purchases by the “Secret Customer” method. Also, under the legislation, when purchasing a customer’s insurance product, there is a time for additional thinking in a relaxed atmosphere and a possible refusal of the “imposed” service – the cooling off period. No less effective mechanism is the use of this period in order to contact the new client to re-clarify the essence of the product – the so-called Welcome-Call.
In conjunction with regulatory changes – the appearance of the so-called key information document – these measures should contribute to an increase in awareness of life insurance programs and the conscious acquisition of these products.
– And in conclusion of our interesting conversation, I want to ask: what direction the insurance market is moving in Russia?
– First of all, this is maximizing the product value for customers, which is more accessible in promotion through remote channels; Further development of ecosystems, customization of insurance programs for different customer segments, further synergy products with the services of Wellness market services: In general, the orientation for the need for the client and providing him with prepared solutions.
And in conclusion, we want to wish you and the insurance company Ingosstrakh-life of the successful completion of 2020 and achieve new heights in the coming 2021, and your customers are new available, profitable and innovative products! Calmins.com Study with us!
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You can also have a look at the interview with the expert of the insurance market Lebedev Denis by clicking on the link.