Insured growth

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The entry of private life insurance companies has boosted the growth in this sector. Haroon Mirani reports.

The entry of private insurance companies in the state in 2003 kick started the growth.

The entry of private insurance companies in the state in 2003 kick-started the growth.

The life insurance sector in Kashmir has been growing at a breakneck speed surprising many. Besides absorbing billions of rupees, the sector has been providing jobs to thousands.

The sector has not been affected by economic recession as almost all companies have been hiring in the last two years in the state.

The entry of private insurance companies in the state in 2003 kick-started the growth with MetLife starting its operations in Kashmir in collaboration with J&K Bank. The business got a good response and slowly the growth shifted to top gear. Earlier the government-owned Life Insurance Corporation, was the sole life insurance provider in the state.

“The growth of insurance sector is amazing in the state,” says Rouf Ahmad Sheikh regional Manager of MetLife Insurance Company limited.

Seeing the business opportunity, almost all major insurance players from mainland India opened their shops in the state and all of them are doing excellent business.

Insurance executives say the sector started its phenomenal growth after the companies succeeded in presenting insurance as an investment and not necessarily a hedge against death, mostly of the breadwinner. “Earlier Insurance used to deal with death, but now it is an investment avenue,” said Rouf.

Insurance is classified into two categories, general insurance and life insurance. General insurance deals with insurance of health, vehicles and property.

Life insurance companies provide cover under traditional and market linked plans called Unit Linked Insurance Plans (ULIPS). While traditional plans provide for an assured sum at maturity or death, and very little growth, ULIPS are direct investments into the market where market behaviour dictates the growth. Under the traditional plans, the investments are tied for long periods, in some cases more than 20 years, while ULIPS are more liquid and can be encashed anytime after three years.

In Kashmir, ULIPs are very popular with the people because of higher returns as these are directly linked to the market.

“People are asking for benefits in their lifetimes and that too quickly,” said Yawar Latief, regional manager Life and General (L&G) insurance brokerage house. “To cater to people’s varied needs these companies have been coming up with dozens of products (investment plans) that suits the needs of almost every individual.”

L&G is the only brokerage house that has tie-ups with 42 insurance companies authorised to sell their various products.

The insurance companies either have opened their offices in Kashmir or are selling their products through such brokerage houses. The life insurance sector has huge potential in Kashmir, as according to experts it has just touched the surface.

“There is enormous potential in this sector as Kashmir is still a virgin market,” says M I Parvez, divisional manager Bajaj Allianz. “We have barely penetrated 15 to 20 per cent.”

Bajaj Allianz is the second largest private company in Kashmir in this sector. “As of now we have eight offices and nine unit branches in every old district and some newer ones,” said Parvez. Seeing the response the company is planning to increase its branches and even open a branch each at Leh and Kargil.

“The rural market is entirely untouched and our focus will be that area in the coming times,” says Parvez.

Metlife is the major player in this sector with a turnover of around Rs 105 crore in 2008-2009. Metlife has 15 branches in the state and more are in the offing.

Rouf says that high returns are bringing people towards insurance. “In banks, the same money gets around 6 percent growth whereas in the Insurance sector, depending on markets, it gets 15 percent growth,” says Rouf.

The money has been pouring into the market, despite Kashmir being non-HNI (High Net-worth Individual) client region. According to Rouf, “Kashmir market can be regarded as a retailer market, where people are investing in case sizes of Rs 12000 to 18000.”

Max NewYork which launched its Kashmir operations in May 2008 has been getting results better than its expectations. “The company targets are exceeding by 150 percents,” said an insider who is not authorised to talk. “We are getting one of the best case sizes here from the Kashmir market and everybody is excited about the potential.”

Employment opportunity

Besides providing investment opportunities the sector has also become an employment provider. There are around 13 insurance companies that have set up their offices in Kashmir and more are likely to arrive in coming days. They have been hiring in large numbers.

Those operating in Kashmir include Metlife, Bajaj Allianz, ICICI, HDFC, Reliance, ING Vaishya, Sun Birla, Max New York, Kotak, and others.

“We have 400 full-time employees,” said Rouf. “In addition to it we have 1700 agents (working on a commission basis).”

“The insurance sector provides lot of growth and lot of money,” says Rouf, who himself is regarded as exceptional success story in this sector.

Starting as Unit Manager, Rouf has clocked six promotions in three and a half years to reach the level of Regional Manager.

Majority of people associated with insurance sector are Kashmiris with the exception of few top notch officials. In some companies like Bajaj Allianz, there are strict rules that promotion will be given to insiders only and nobody from outside, thus guaranteeing the growth.

A number of youth are switching careers and joining the insurance sector. Asif Aziz is a branch manager with Bajaj Allianz who joined the sector after leaving his job in the telecom sector.

“I found this sector very good,” says Aziz who joined Bajaj Allianz in 2007. Aziz garnered three promotions and was made Branch Manager in April 2008. “Although (selling) insurance is a challenging job but when you put in your sweat the growth comes calling.”

Most of the hardworking employees get frequent offers from rival companies. “I too got a number of offers, but I have sticked to Bajaj Allianz as I am progressing well,” said Aziz.

Bajaj Allianz has at present 100 people on roll and 1500 others work on commission basis.

According to estimates 15,000 to 20,000 people are employed in the insurance sector in Kashmir.

“This is a challenging job, but once you are into the rhythm you will attain greater heights,” said Aziz.

The sector also finds a place for freelancers, who double their income by working as part-time insurance agents. The high commission rate is the major attraction for them. Depending on the type of scheme the commission can be as high as 42 percent. Besides, there is also an option of recurring income as agents do keep getting checks for the business they have generated long time ago.

“As a person invests more in a scheme which I had introduced to him, I get my commission properly,” says Yawar. “Sometimes I get commission cheques for the business which I had generated around three years ago.”

The salary starts from Rs 8000 for agents who are on company rolls. The next rank Team Leader gets in excess of Rs 15000 and the salary increases as the hierarchy goes up.

At present Max New York is regarded to be highest paying employee in the state. “Other companies pay sales managers Rs 17000-18000, while as in Max the same manager gets around Rs 23000,” said an employee of a prominent insurance company.

Max has also been accused of poaching on other companies to get the best candidates for them, but the company maintains that its high standards attract the candidates.

With insurance sector zooming to new heights, more people will be employed in this sector.

The general insurance has also shown robust growth in the state during the last decade with National Insurance Company raking in Rs 17.5 crore last year followed by New India Assurance with Rs 8.5 crore and United India Insurance at Rs 8 crore.

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