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Grantee
Max New York Life Insurance Company Ltd. (MNYL) is a joint venture between New York Life International and Max India Limited. Max New York Life started commercial operations in India in 2001. The company used a multi-channel distribution strategy. Agency distribution is the primary channel in India. The other additional distribution channels include the rural business, employed sales force involving alliance marketing, bancassurance and partnership distribution.
MNYL has developed "Max Vijay", a business model designed to serve 100 million low-income Indian households by improving access to benefits of life insurance and minimizing transaction costs. Max Vijay was awarded the "Golden Peacock Innovation Award 2008" for its unique product, distribution and service strategy.
Project Summary
- Project name: Reducing costs by leveraging technology and educating the customers, to bring life insurance benefits to the low-income people
- Project start date: January 2009
- Duration: 3 years
- Country: India
Beneficiaries
Max Vijay targets approximately 100 million urban and rural low-income households, with an average total income between Rs 4000/- ($88.89) and Rs 8000/-($177.78) per month. Despite irregular incomes, Max Vijay's target market has the potential to save part of their earnings, but do not have access to a convenient and easy method of saving small amounts.
Project Description
The model is based on extensive and widespread distribution of a simple, tangible savings and insurance product through established channels (e.g., non-conventional insurance channels like retail channel, NGOs, MFIs etc.) and leveraging IT, including handheld terminals, mobile phone and internet portals, to manage payments that are likely to be low and irregular. Another important variable to the success of the concept is the consumer literacy and financial awareness amongst the customers.
The product has been designed such that it will not lapse during the tenure of 10 years, even if the customer does not pay in any subsequent premium after purchasing the policy (i.e., it will always have a positive account value based on the premium allocated to account and interest credited, net of charges). It was piloted and launched in the retail channel in July 2008.
The Facility grant will support purchase of low cost, wireless, printer integrated hand-held terminals (HHT) that can be used to collect small amounts at the customer's doorstep. The grant will also be used to develop and install the new technology modes using mobile phones and Internet portals at the points of sale.
In addition, the grant will be used to communicate benefits of life insurance and long-term savings to small savers.
An underlying assumption of the project is that the more ubiquitous these terminals are, the easier the access, leading to a higher motivation and willingness to leverage 'small change' to build capital for long-term saving.
Key Challenges
- Using a "PULL Approach" (i.e. initiated by the customer) to sell insurance "over the counter".
- Inhibition of the customer in responding to insurance solutions vis-à-vis savings and returns.
- The speed of scale-up to large retail franchise.
- Communication barriers (issue of local language and literacy) in reaching the multicultural and widely dispersed, low-income people in India.
Learning Agenda
- Can technology (such as hand-held terminals, mobile phones and Internet portals) significantly improve affordability, responsiveness and transparency for the low-income policyholders?
- How can the insurer set up an effective delivery of customer service by intermediaries by using HHT, Internet portals and mobile phones?
- Regarding consumer education:
- Does increasing financial literacy result in increasing take-up rates?
- Which scripts work better to make the customers financially literate?
- What are the most efficient delivery modes for financial literacy amongst the target group?
- Impact on renewal behaviour of customers, basis different levels of financial literacy efforts and renewal outlet availability in close vicinity.
- Whether the initial premium is realistic and in line with the real paying capacity of the target group?
Quotes
"Have not found any other way to get life cover and savings opportunity at such a low cost. Max Vijay gives me freedom from the fear of my policy lapsing even if I do not deposit the premium for some time. I have reduced the tobacco that I chew and add the saved money to my Max Vijay policy regularly."
Rajpal Jaiswal, policyholder
"Max Vijay has given me a great way to save all the small amounts of money which earlier would get unnecessarily wasted. I find it very convenient to recharge the Top-Ups at the neighbourhood stores."
Neeta Sharma, policyholder
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More information on the project
Website of the grantee:
References:
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