Before the insurance sector was opened to private players, Life Insurance Corp (LIC) was the only insurer in the country, which defined the category too. After the opening up of the sector an array of private players entered the market, which have come up with innovative and flexible policies, forcing the dominant LIC to tighten its belt and deliver better services. One of the leading private players is Bajaj Allianz Life, which has made an impact on consumers by building strong franchises across the country, and is now a very creditable brand. A joint venture between two-wheeler major Bajaj Auto and the one trillion euros German financial services giant Allianz AG, Bajaj Allianz Life was incorporated in March 2001 and is today the second largest life insurer in the private sector with over Rs 5,300 crore in assets under management as on March 2007. Bajaj Allianz marketing head Sanjay Jain gives an insight on the brand as he narrates its success journey to Correspondent Purna Panchal.
You have built a strong brand awareness amongst consumers. How has the journey been so far, considering the strong category association that LIC has built over the years in this space?
We saw a huge opportunity in this market considering the fact that only 20 percent of the insurable population is insured in the country and the penetration rate is very slow at two percent. The sector was opening up and we entered into a joint venture with Allianz Life and the new entity, Bajaj Allianz Life, was formed in 2001. The contribution of insurance and banking services to the GDP is seven percent out of which the gross premium collection forms a significant part. The funds available with LIC for investments are eight percent of GDP.
Since then we have been doing well, be it terms of increasing market share or ramping up our brand awareness. Recently we won the CNBC Awaaz-instituted the Voice of Consumer Award in both life and non-life segments. We became the most preferred private insurer in both life and non-life categories in ‘the most trusted brands of 2007’ survey released by the channel in May 2007. Though we are one of the lowest spenders in that list we have beaten many telecom, airlines to be in the list. And to me this success comes from our targeted marketing efforts coupled with our precise working on the key the consumer insights for maximum impact, affinity and relevance. Thanks to all this, we have a very strong presence and consumer trust. Our association with the cricket property and other popular properties gave us a strong trust and recognition factor.
What were the challenges you faced and how did you overcome them?
India is a huge and heterogeneous market, which demands a huge distribution network. Creating diverse communication for this market was one of the biggest challenges we faced. However, our communication efforts have paid off well. The second challenge is that this is a highly underinsured market as only 20 percent of the insurable population is covered today because there is a strong reluctance towards insurance. We are yet to find out the obstacles they are facing and we need to find the correct solutions for them. This reluctance to insurance is found more amongst the youth population and to bring them to buy the product we need to verbalise thoughts from their minds and speak to them in the language they can relate to and then offer them tailor-made products that appeal to them.
What do you think are the growth prospects of this sector? What is the size of the domestic insurance market?
The life insurance sector contributes only three-four percent of the GDP today, which is very low according to global standards. We have a long way to go. The size of the market is around Rs 1 lakh crore, of which LIC nets Rs 60,000 crore with the remaining going to private players as annual premium collections. So, there is a huge untapped opportunity in the market. But to tap this diverse market, we have to come up with various flexible products that cater to their needs. Penetration will increase only when the customer gets the right product. This is a challenge we are working towards now. We have many tailor-made products to suit the diverse needs of our customers. Our endeavor has always been to give customers what they need and not just stick to our basic products.
With so many players already in the market, and many more are waiting, how do you look at competition?
It is a strong market and everyone is trying out different ways and options. The market is at its nascent stage yet and we all are just trying to find out what customers like and want. We are trying to find different ways and means to capture the market. It has just grown in the last five years since the entry of private players. In fact the private players have added to the growth of the industry and competition is healthy. It is growing at an healthy 30-40 percent. The future is very bright and more people will come to the sector. It has also created a lot of jobs and a good career option.
What are your future plans?
The brand Bajaj Allianz is now valued at $7.5-billion in a short span of five years. Last year the valuation was around $2.5 billion. This major boost in valuation is due to strong consumer confidence for the brand and a powerful business boost. We intend to take it further from here and maintain our position in the market.
What has been you communication strategy?
Our communication speaks more from the consumer insights than from the product side. We never over promise anything. Simple insights like people need much more than just insurance or investments while planning for their children’s future plans form the basis of our communication and so our campaigns ask consumers if they are ready for such sudden requirements while they plan for their kids future. Our campaigns speak very realistic things without glamorising them. We use words like ‘income after retirement’ rather than pension. Our ads are mass based. As our country does not have social security we did a research to find out why are the youth not investing in pension plans or insurance. Our youths have incomes but are not bothered about savings in spite of low job security and lack of government aid. One of the things we have discovered is that the word pension does not mean anything to them but curtailing their current lifestyle. So we came up with a very different product packaging which said ‘Income after retirement’. Since the ad spoke their language and addressed their needs, which helped us better connect with them and thus made them our future customers.
Similarly, our current ad talks about how tax alarms and bothers consumers and we have a policy that can help this botheration. Our creative agency TBWA has been very instrumental in our successful campaigns for the last three years. One of the key research findings is that our advertisements are one of the most effective ads in the sector as there is a high element of sincerity in them.
What is the key differentiating factor in your campaigns? How does Bajaj Allianz stand out in the clutter as there are 16 players in the industry?
One of the key differentiating factors is the launch of the ‘super agent campaign. The agent is the key thing in the insurance business. When people need to buy insurance they are looking for an agent and the super agent that we created is a very real life character. We haven’t chosen a celebrity as a super agent instead someone who looks like a next-door boy. People could relate to him and he is very approachable.
We have over 2.5 lakh agents and they are our real heroes so we thought why not celebrate them. In the ad, after the real life situation is narrated the super agent comes and offers a solution to the problem. All our ads have the contact numbers of our super agents. Thus, we have a few things very different in the industry, which I would like to call it very destructive in its nature. Out of the 16 private insurers only we talk about the agents. Another differentiator is that the super agent character is an animated one. That apart, we communicate real life situations. Simple things that connect with the masses is another key differentiator of our communication plans.
We built the brand systematically. First thing, we wanted people to know about the joint venture and built trust for Allianz as a brand in this market. Then slowly we developed our distribution network. Now we are present in over 1,000 towns and cities, making this the highest amongst private insurers. While we have own offices in over 850 towns, our partners are present in at least 1,500 towns and cities. Our marketing efforts are not jut aimed at customers but we also undertake special drives to motivate the market with our 2.5-lakh agents.