On September 26, Guardian Life Insurance became the first insurance company in the country to bring digital Online Term Life Insurance—‘Easylife.’ In Bangladesh’s context, the company thus can be called a market mover.
At the helm of the company, sits its Managing Director M M Monirul Alam who has already retained the reputation of being a visionary leader in the country’s insurance industry. The Fintech team recently went to his office and talked about his life’s work and the overall condition about the insurance sector of the country. Here is an excerpt of that interview for our Fintech readers.
FINTECH: How did you begin your career in the insurance sector?
I became an insurance man not by choice rather by chance. Back in 1990, when Ershad’s regime had ended, I was a university student and my Masters result was not published yet. I saw an advertisement in the then Bangladesh Observer where a financial institution was looking for fresh graduates without any experience. Since the financial institution needed fresh graduates for the post of management trainee, my friend and I dropped our applications. When I was called for interview after some time, I realized it was an insurance company.
The interview session was not very enlightening for me and I didn’t find by job responsibility interesting enough but since it was my first interview and I was still a student then, I took their offer. It was Delta Life Insurance Company and I joined there in 1991.
The managing director of Delta Life Insurance was Shafat Ahmed Chowdhury, a very learned person who is considered a stalwart in the country’s insurance sector. I have learned a lot from him. He used to say that the insurance industry had a bad reputation and the people working here were responsible for this bad rep. Till today I keep in mind various advices of him.
FINTECH: When did you join Guardian Life Insurance Company?
I actually joined the IT and the actuarial department at Delta Life Insurance Company. Officially, my career started off from the actuarial department as a trainee and I worked in the IT department as well. After six months, somehow they offered me to join corporate business probably because of the way I presented myself among other reasons. I was taken almost forcefully by my boss and he said it was of no use pressing buttons so come with me and I will teach you real insurance.
I moved to group insurance department after six months. Actually you can say my career began from group insurance and corporate business. I became the head of department in 1998 at Delta Life. So from 1991 to 2000, I was at Delta Life and then moved to Pragati Life Insurance Company. I worked for almost 15 years at Pragati Life Insurance till the end of 2014. On the first of January, 2015 I came to Guardian Life Insurance Company. At that time Guardian Life had just completed a year. When I joined there was only 14-15 staff at Guardian Life. Now we have 125 people working on three floors.
FINTECH: What areas should be looked into to make an insurance company a profitable entity? What will be the income?
Actually this is a technical subject, so let me explain it clearly. How does an insurance company make money? Insurance is the business of risk taking. The assumptions we make on the amount of claim, for example two persons may die in a year, so if the death ratio falls, I can make money. If the claims are greater than the assumptions, we will make a loss.
What happens, there are mortality factor, investment factor and operational expenses/commission expenses. In terms of mortality factor, if the claims are less than our expectation, we make money. If we can bring in more investment return than initially expected, still we are making money.
Another thing is the profit margin we keep. There are the mortality factor, investment factor and profit margin in pricing. If we can operate at a lower rate than the factors we fixed, we receive the surplus from these three areas.
FINTECH: What are the main sectors where Guardian Life Insurance Company operates?
Guardian Life is a new and fourth generation life insurance company. We focus on corporate business besides individual life insurance. At the same time we try to develop alternative business channels. A large portion of our population is involved with NGOs and their micro credit activities.
In Bangladesh, almost three crore families are directly or indirectly involved with micro credit and other financial activities. We had the advantage of having Brac as our sponsor. After I joined Guardian Life, we started working with this sector where Brac has 4.5 million customers of their loan portion and there are around 15,000 claims in a year.
They have to write off a huge amount, and as you know that NGOs have this bad reputation of recovering the loan by selling the cow, calf, tin for the roof or even land when the borrower dies. We told Brac that we will create a product with minimum premium for their huge program and if Brac introduces it, it will not have to worry about recovering the loan. Guardian Life can pay off the loan and Brac will be free from any liability.
We gave them the solution that when they disburse the loan, they collect certain information in KIC but if they add three more categories of information like whether the person healthy, willing to take an insurance policy and amount of premium he/she is paying, that form can work as an insurance application form.
So we started on a trial basis by stamping seals on the form, and when they went for merger from piloting, they changed their contact and prepared a printed version. We began piloting from 20 branches, from 50 we went to 90 branches. From 2017, we introduced this service in 2,234 branches and covered 3.9 million families. It is actually a double coverage because both husband and wife are involved. Most of the borrowers of Brac are women but the husband is the main earner of the family. We understand that if either of the wife or husband dies, the family experiences a financial shock. We pay off the total debt if either of them passes away. At the same time we give a cash dividend. For Brac what we did is if someone dies, Tk 10,000 is paid by the local branch within three days to the family. So the micro credit is a major venture of ours and side by side we are working on other projects.
FINTECH: Guardian Life has completed five years. Have you taken any innovative plans to increase market penetration?
You may have seen that we launched a new product last week called ‘EasyLife’. We have always worked on innovation at the service level. We have launched this innovative product for online term life insurance called ‘EasyLife’ because availing it is really easy. You can try it by yourself. If you go to the playstore and type ‘EasyLife’, you find it with the Guardian Life logo. You can download and see how easy it is to buy a policy.
At present, those who are selling insurances, are all agent based. An agent goes to a customer, briefs the product, fills up the form, collects the money and deposits the commission. In today’s modern life, it is very difficult to reach people. It takes a lot of time to get an appointment and talk to someone. People to people interaction is decreasing and becoming more challenging.
Our insurance products are push products, we always pushing someone to buy a product, almost like begging. But we realized that pull products have emerged in countries around the world. We will make such a plan that people will feel the need to buy. So we designed a pull product, not a push product. So how does it pull? Like I said you can take Tk 10 lakh coverage at the cost of a cup of tea daily. One can purchase a policy with the coverage of 10 lakh spending as low as Tk1834 realistically which is much lower price than a cup of tea daily.
Our minimum premium comes to around Tk366 only for the coverage of Tk1 Lakh. This is innovation and the product is unique. The finance minister and the regulator came at the launching ceremony and appreciated it. In the meantime we haven’t told anyone or marketed it in that way but still 3-4 policies are being sold every day.
When we look at the dashboard we can see who is buying and other details appear after the money is deposited. We are giving them the experience that the policy will reach their home within five days after they purchase it. But at the same time when someone buys a policy, a dummy copy in the form of a pdf file is generated by the system and sent to the email address automatically. So immediately they are covered. In order to be compliant with the laws and regulation, you need a physical signature. For the KYC the customer has to give a wet signature. So for that we have employed a courier service and they collect the signature when the documents are handed over to them. That’s all.
So we have made this innovative product and our commitment is that no medical will be required. By spending just 15 minutes, one can purchase this product from anywhere and the premium is nominal. The KYC product of Bangladesh Bank requires the NID, e-TIN, photograph besides the name and address.
Guardian Life is extremely considerate about compliance issues. We do not want to do anything that may violate the law. We would also like to thank Insurance Development and Regulatory Authority (IDRA). When we took the product to IDRA, they were reluctant at first. They said people buy clothes and other stuff but how can you buy insurance online? You have to do so many things, fill up so many forms to buy any insurance. We told them that we have completed our research, analysis and assured them that it will be fully compliant so we asked for its approval.
The Bangladesh government wants us to move towards the digital age. So we should incorporate the insurance companies with this philosophy of the government. We hope this product will create a huge splash in the market.
FINTECH: There is a common complaint among the market players that they don’t have enough data to take intelligent and smart decision on their customers. What is your take on this matter?
On the contrary; we actually have enough data but we do not preserve data properly. Insurance is a long-term plan. It is not a year-to-year business where you declare your profit or loss after a few days. The policy you purchase today, you will claim it after 10, 15 or 25 years. Since it is for long-term, data security is important. So, I wouldn’t say there is any lack of data, but in terms of pricing, there is some deficiency. We don’t have our own data for mortality, the basis of calculating the premium. The death rate of the people in our country of different ages, which is called the mortality table, we don’t have that in Bangladesh.
We rely on international mortality table created by those who conduct research in UK, some work is being done in India but still we don’t have any data of our own, the pricing data to be precise. So we are depending on internationally accepted mortality tables.
FINTECH: Another major problem faced in Bangladesh relates to claim and settlement. What is the performance of Guardian Life Insurance in this regard?
Part of the customer service is also claim payment. You may be aware that we launched an app called ‘My Guardian’ last April. When we launched the app, many people criticized that since those who work in insurance companies have this fear of being assaulted on the streets due to the bad reputation of the industry, how could we launch an app where people can react instantly? But those who are in our board of directors like Apex and Brac, they are in the market for a long time. They always inspire us to be transparent and committed.
The advantage of our ‘My Guardian’ is that policy holders can pay their premium from home by using any debit card, credit card, bKash or Rocket. They can check the amount of premium by simply using the ‘My Guardian’ app. If there is any claim, they can submit it through this app. We have made it that transparent. As I have mentioned earlier, we have 2,234 branches of Brac where we have provided a web portal. Those offices of Brac in remote areas have internet access. So they can submit their claim from that location. They take photographs of the claim and send them to us. When we receive the photographs, we respond within 24 hours.
So this is the benefit of technology. There are around 64 lakh insurance policies in the 2,234 branches of Brac. We are settling approximately 200 claims daily. How is this possible? We would have needed thousands of employees but you’ll see there aren’t many employees in our office, only 120 to 123 people. This has been possible because of technology. With technology we can ensure the claims are settled on time and our KPI is set to settle claims within five days. However, we are settling most of the claims within three days.
FINTECH: Is the regulatory body taking any steps to curb the malpractices in the insurance sector?
In the context of our country, the insurance industry is not new, for example there were 37 life insurance companies during the Pakistan period. Then all the companies except Alico were amalgamated to create Jiban Bima Corporation. When Jiban Bima Corporation came into being, Alico had an agency office in Bangladesh, not a fully fledged office. They were allowed to sell some products but needed permission for each and every activity from the head office.
After independence, they could not bring in new staff or technology. When private enterprise was permitted in 1985, the private companies began their journey. As a result new kinds of challenges emerged as well as a new system was developed. Since our manpower was not built up properly, we were lagging behind.
You will notice that those who joined the insurance industry in the late 80s and early 90s, they are now the CEOs of different companies. The new generation is taking up the mantle only recently. People from Jiban Bima Corporation used to work in these companies for a long period of time. I wouldn’t want to blame government employees although they have this mindset where they know they will get paid if they work or not.
In the private sector, we know that the only way we can get higher remuneration if we improve our work, and work more. The main challenge in the private sector is that you can lose your job anytime. But on the flip side, your income is unlimited if you can perform outstandingly in the private sector. Those who have the faith in their performance, they need not fear losing their job. If you perform well, some other company may employ you. If you don’t have this self-belief, then you shouldn’t work.
FINTECH: How is your company adapting with the new technologies in our country?
The future is with technology, there is no other way to it. We recently concluded an IT audit to check the technological health of our company. We have identified certain areas where we have to minimize the threats. I found the business contingency plan (BCP) when I came here. We strengthened the BCP even further so if there is any disaster like fire or earthquake that destroys this building, we have the facilities to start working from the next day in another office location.
The facility we have is just like plug-and-play, we have a secondary office for any contingency. Another aspect is the data center. We do not have the data center of our own so we hired it from outside but we have the backup data center in our office.
We have branched into disaster recovery system or DRS. Whenever you make any entry; the data is being recorded in three places, in the office, in the data center and in the DRS. If any data is lost, we still have the access to information as we have the direct connectivity with DRS. Although we have to spend some money every month to maintain this system, something I didn’t find in other companies, I would say we are secured. Even business entities like Square, Apex and Brac know that the disruption will happen once and you are done for. We want to see if we are ready or not when the disruption happens.
We don’t use any pirated software, all are licensed, in every desktop or laptop you will find in this office. We have to pay a huge sum for this but we can safely say that we are compliant. I have seen many companies that are not compliant in this matter. Even the Outlook email we use is licensed whereas the other companies use the free version. So in terms of security and data protection, you can see how compliant we are.
FINTECH: People have this negative connotation about insurance companies and trust banks more. Why is that?
You should not mix banks with insurance companies. I always say that banks only give you prosperity. If you deposit money in banks, it will increase. But insurance companies give you prosperity and protection. In terms of prosperity, your money will increase with insurance companies but not at the rate of banks. Under normal circumstances, people don’t see the protection element; they can only see it when there is a claim. If you can make people happy by giving them the service on time, there is no greater job that you can do. That is why I built my career in the insurance industry.
Perceptions may differ, but my perception is that insurance offers you a wonderful career although people wrongly mix it with other services. If people wish, they can adjust with the environment and lead a good life. We have this perception that insurance companies do not fulfill their commitments; this is one reason why parents don’t allow their children to work in insurance companies. Thankfully, we have overcome this mindset. Now we know that if you don’t pay good salary, you will not get good people, like the saying; if you give peanuts, you will get monkeys.
In Guardian Life, even a CR has a huge role to play. When I worked in the lower ranks, I could not implement many of my plans because the MD didn’t agree. I couldn’t bring any change. In terms of salary, I can say that Guardian Life pays more than the 30 private companies, only Metlife’s pay scale is higher than us. We work fairly and transparently. At Guardian Life, we don’t have people of insurance background at the top level. Instead, we brought the talented individuals who were working in multinationals, banks and other top organizations and placed them in the top positions. They are extremely intelligent and learn everything within six months. And they are giving better service. If you bring in new people, talented people, you can create something new. If I bring in people from other insurance companies, they can only give me that much they know, nothing new. We sought out talent from the open market and made good use of it.
FINTECH: Thank you very much for talking with us.
Thank you too.