In conjunction with the "Far from home" feature appearing in the January 2013 print issue on life insurance sales in emerging market countries, NUL Senior Editor Warren S. Hersch questioned insurance professionals from several of these nations about their practices. The following are written responses from Ravikumar Kodumudi, a director and independent financial and insurance advisor at Ganadeesha Financial Services, based in Mumbai, India.
Hersch: How would you describe your life insurance/financial service practice? What are your areas of expertise? Whom do you serve?
Kodumudi: We have been in the business of life insurance and financial services for more than 20 years. We have an expertise in risk management and financial planning for families, and small and medium business owners.
Hersch: How would you assess the current market for life insurance and annuities in India? Is the market growing or contracting?
Kodumudi: There is an immense opportunity in the life insurance and annuities business in India. India is moving toward a nucleus family from a joint family system. People are either living longer or dying young. At present the life insurance market is contracting.
Products are giving early exit options in insurance plans, promising higher returns and competition among the insurance companies to be on the top slot. However, there are very few annuity products available for the buyer.
Hersch: Which life insurance and annuities products are selling well in your practice? Why?
Kodumudi: Guaranteed immediate annuity products are selling well and being bought by retirees and self-employed clients with surplus cash to hedge against a possible rate cut.
Hersch: Which life insurance-funded techniques (to be used, for example, in estate planning, business succession planning, executive compensation planning or retirement planning) are especially popular among your clients?
Kodumudi: Clients prefer retirement planning with insurance as a base in tandem with other asset classes, as accumulation through insurance is not surrendered or redeemed in the short term. This is because the cost of exiting early is high.
Hersch: What regulatory, legislative and business challenges do you face in India? How do these challenges affect your practice?
Kodumudi: Regulators are capping insurance commission payouts to advisors for variable insurance policies to give the benefit of charges to customers. There are also more regulations. These changes have actually helped us in our growth as we have been giving unbiased advice to clients irrespective of the payouts.
Hersch: How are you adapting your practice to meet these challenges and grow your business?
Kodumudi: We are working toward upgrading our own skills by installing an operational customer relations management solution to be compliant with the regulator. We are also keeping our clients informed of the changes that are happening in their interest.
Hersch: What financial goals and objectives have you established for your practice in 2013? How confident are you that you can reach these goals and objectives?
Kodumudi: I have connected with an online platform provider for trading mutual funds, not only in the Indian market but also overseas. I plan to increase my income level by at least 40 percent in the next calendar year.
Due to regulatory changes, there are fewer advisors and more orphan clients. This leaves immense potential and therefore the goal can be easily achieved.
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