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ING Vysya Life Insurance begins operations

Fakir Chand in Bangalore

ING Vysya Life Insurance Ltd, the first and only joint venture to enter the life insurance business from south India after it has been opened up to the private sector, has commenced its nationwide operations in Bangalore on Tuesday with three niche products to the Indian public.

Undeterred by the shadow of gloom engulfing the financial markets and the Indian economy on the whole as a direct fall-out of the terrorist attacks in the US, the newly formed company is going ahead with the following offerings:

1. Reassuring Life Endowment Plan.
2. Maximizing Life Money Back Plan
3. Innovative Fulfilling Life Anticipated Whole Life Plan with special services and add-on benefits.

The tripartite joint venture, which is the latest to foray into the Indian life insurance sector, has been formed by the Netherlands-based $55-billion ING Group NV, the Bangalore-based Vysya Bank Ltd, and GMR Technologies and Industries Ltd, with an initial paid-up capital of Rs 1.10 billion and an authorized capital of Rs 2 billion.

ING Insurance is the second largest insurance player in the world offering life, group, and general insurance policies, besides pensions to customers through a range of distribution channels in around 28 countries worldwide.

With 49 per cent equity, Vysya Bank is the largest stakeholder, while ING Insurance and GMR, which has come in place of the earlier investor, the Damanias of Bombay, hold 26 per cent and 25 per cent of the stake respectively.

According to company's chairman K R V Subramanian, customers can choose any of the three products as all of them provide life-long protection, savings, and liquidity. "Along with Bangalore, we have commenced our operations in Bombay and Delhi right away, and will extend our presence in other cities and towns by this year-end," he added.

As a premium private sector bank, Vysya Bank is the largest of its kind with about 480 branches spread across the country, especially in south India, where it has a strong presence in the semi-urban and rural areas.

"Besides leveraging on the bank's wide network, the joint venture will be expanding its presence in other parts of the country to serve its customers with hundreds of advisors and actuaries, trained specially by the ING team of experts, drawn from its global operations," Subramanian stated.

Tailored to meet specific needs of each and every customer, including education, marriage, housing, and post-retirement expenses, the three life products have been fine-tuned to match the best of competitive products being offered by other players in the sector such as the Life Insurance Corporation of India, the government-owned behemoth.

"For instance, the Endowment Plan and Money Back Plan offer a yearly cash bonus to provide liquidity at periodic intervals during the lifetime of the policy, whereas the Anticipated Whole Life Plan guarantees lifetime security," claimed CEO and managing director Ton van der Star.

Star, however, clarified that cash bonus, which will be offered from the second year of the policy would depend on the kind of returns the company will get from its long, medium, and short-term investments.

"We have already started making investments from our initial capital to the tune of Rs 500 million in government securities, infrastructure bonds, and commercial papers of corporate houses, rated by credit rating agencies. All these investments are being made in conformity with the guidelines prescribed by the Insurance Regulatory and Development Authority of India," Star told rediff.com.

The company has also introduced a slew of add-on benefits, which are termed as riders to increase protection for an additional premium. The benefits include the option of tripling the sum assured in case of the customer's untimely death.

Stating that the company was looking for a break-even in its sixth or seventh fiscal year of its operations, joint venture president and deputy managing director Yvo Metzelaar said they were targeting around 2 million policy holders for the next couple of years.

"World over, Life insurance business is a long-term investment proposition with gestation periods for returns being not less than 10 years. Our research findings have shown that the potential in India is immense as the industry has been growing at 50 per cent annually during the recent years.

In a country of 1-billion population, a single and monopolistic player like the LIC has been able to enlist about 40 million policy-holders till date, whereas the potential customer base is about 300 million in the next 2-3 years," Metzelaar affirmed.

The company plans to pursue Bancassurance as an important distribution channel in cooperation with its lead partner (Vysya Bank), which boasts of a strong network and brand equity in the south with around 1.5 million customers on its rolls, and about 6,000 employees.

"The advisors, who will be given about 40 per cent commission as per the IRDA stipulation, will also be trained in the respective Indian languages for communicating effectively with native customers in semi-urban and rural areas, where we will be targeting the untapped farming community," Metzelaar disclosed.

The annual premium for the three products range from Rs 4,000 to Rs 8,000 with policies lasting from 16 years to 30 years.

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