The insurer has been making quiet inroads in the life insurance sector with innovative products, a low-cost operation, focused management and strong support of the bancassurance channel. It also has an insurance veteran at the helm

Kamalji Sahay is not your usual flashy insurance honcho. The CEO of Star Union Dai-ichi has spent long years learning the ropes of the business in Life Insurance Corporation, going on to set up LIC's operation in Nepal.

His mantra for Star Union Dai-ichi has been efficiency in managing costs through which he is targeting an ambitious break-even level within five years. The corporate office is located in Vashi, Navi Mumbai, to keep costs under control. According to some insiders, even costs incurred by the foreign partner Dai-ichi were either trimmed or passed to the parent company's books. This is in sharp contrast to the huge overheads that other insurance companies have with their foreign partners.

According to industry sources, apart from the nuts and bolts of the business, Mr Sahay knows customer needs very well too. Years ago, when he was posted in Haora, West Bengal, a person who had worked with LIC came to meet him. "He wanted to buy insurance at 65 because he wanted to ensure that his cremation expenses were paid by the insurance company," recounted Mr Sahay. "He did not want to be a burden on any family member. Dying is the ultimate truth and one needs to exit with dignity and not leaving liabilities to family members."

Such insights shape Mr Sahay's approach to insurance and the kind of products Star Dai-ichi should be launching. According to him, "A person should be able to pass by Star Union Dai-ichi's office and believe that this insurance company will properly pay the insurance amount to his family in case anything untoward happens to him."

Star Union Dai-ichi has been making quiet inroads in the life insurance sector with innovative products, a low-cost operation, focused management and strong support of the bancassurance channel, since its launch a couple of years ago. According to Mr Sahay, "The cost of operations for the half-year has been just 64% of the premium collection, whereas this is much higher in the case of insurance companies which depend on their own channels. (Our) partnership with Union Bank and Bank of India has helped in this regard."

Bancassurance also gives access to the customer database of various banks, which is a major impetus.
 
Among its innovative products are its Reverse Mortgage Loan Annuity Plan, Defined Benefit Endowment Plan, a unique micro-term insurance plan (which provides insurance cover to weaker and backward sections of society at a low cost), group gratuity schemes, group leave encashment schemes and group life insurance term plans which cater to the needs of education loan borrowers.

The company also has a pan-India footprint. Mr Sahay says he can do "very good business" in some of the backward areas in north India and in cities and towns like Gorakhpur, Varanasi, Dhanbad, Bokaro and Ranchi. "We have been able to make determined forays into rural areas because of the bancassurance model benefiting from bank branches in these areas," he told Moneylife.

Star Union is the only provider today of the Reverse Mortgage Loan-Annuity Plan, which aims to provide financial security to senior citizens aged 60 years and above. According to Mr Sahay, "Reverse mortgage is an innovative product specially suited to Indian cultural values and ethos. The Sud Life Reverse Mortgage Loan-Annuity Plan aims to provide financial security to senior citizens who have assets but not enough liquidity to lead a life with dignity."

Senior citizens can approach Central Bank of India, which is the partner bank of Star Union Dai-ichi Life Insurance Co Ltd, to avail a reverse mortgage loan against their existing property. The bank will act as a master policyholder for the property and buy the citizens a group annuity from Star Union Dai-ichi Life Insurance. Senior citizens do not have to repay this loan and in case the legal heirs wish to retain the property they need to repay the loan amount to the bank with the accrued interest on it. This plan is also helpful for retired professionals, as they can lead their lives respectfully even after retirement.

There are two options to receive the annuity. Through the first option, senior citizens can receive the stated annuity throughout their lifetime and the amount will cease thereafter. Through the second option, senior citizens will receive comparatively lower annuity, which will be adequately compensated for by the return of the original purchase price to their legal heirs thereafter.
Bank of India and Union Bank of India, two leading public sector banks in India and the Dai-ichi Mutual Life Insurance Company, a leading Japanese company in the life insurance market, have floated the Star Union Dai-ichi Life Insurance Co Ltd for life insurance business in India.