C a s e 3 Max New York Life The 3P Strategy

In 1999, when the insurance sector was opened to private players in India, Max India Limited tied up with New York Life to form Max New York Life (MNYL) to provide individual and group life insurance solutions. In a short span of around 5 years, it established a wide distribution network with 28 offices and representatives across 21 cities in India. MNYL offered 13 products and 9 riders1 customized to over 400 combinations that provided a number of options to the customer. MNYL mission, vision and values were all directed towards becoming the most admired and preferred Life insurance Company in India. They also aimed to be the first choice for employees as well as agents. In 2000, MNYL realized that to compete against LIC, the only large player in the life insurance segment, it had to build a huge network and implement a product differentiation strategy to gain customers. However, the tie up with New York life ensured that different options were given to the customer as against LIC products which were not differentiated. There was also an opportunity in the Indian markets as penetration rates were only 1.3% and insurance policies were mainly considered as a tax-saving investment, rather than risk coverage. The leading player (LIC) concentrated only on selling and very little qualitative advice was offered to the customer buying its insurance policies. This service gap enabled a customer-oriented player like MNYL to impress the potential customers. MNYL laid stress on training of agents, as personal relationships were the key to success in selling insurance. For this purpose, it took special measures to train agent advisors who were the primary source of distribution. In 2002, it had around 1900 agent advisors who underwent 152 hours of training before selling as against 100 hours stipulated by IRDA.2 These training programs were spread over 2 years for 500 hours and ensured upgradation of skills and knowledge. The training program covered consumer psychology, the financial markets, and development of selling skills, discipline and the right attitude in the agents. These agents were groomed to become financial advisors to customers. Commenting on internal brand building, Debashis Sarkaf (Sarkar), senior vice-president, marketing, MNYL said: "We will also be focusing on internal brand-building, since brand-building has a larger context in the service sector. Internal employees are all opinion shapers and indirect brand-builders and brand promise

needs to be replicated down the chain at every customer touchpoint."3 To strengthen its distribution system further, in 2003, MNYL adopted alternative distribution channels viz. franchisee model, rural business, telemarketing, bank assurance and corporate alliances. It appointed 'gram sahayaks' in some rural locales who were trained to identify and sell specialized insurance products. "We're tapping opinion leaders in the village like schoolteachers, social workers and chemists, and creating products which suit rural needs," commented Sarkar. The company tied up with Shoppers' Stop and reached out to customers who held the chain's "First Citizen" discount card and bought children's clothes more than once a month. Such customers were tapped for child saving schemes as well. MNYL created product differentiation by giving "Whole Life "policies that offered customers the correct balance between protection and savings. They offered for the first time in India a freelook period i.e., a customer had 15 days period to weigh the various options offered by MNYL which helped him to take an informed decision. This standard was adopted by IRDA as the best practice to be emulated by all players in the Indian insurance market. They were also the first company to sell a policy with riders. For example, 5-Year Term Renewable and Convertible Policy had two riders attached to it viz. Personal accident benefit and Dread disease benefit, which could be attached at the time of purchase of policy or later, subject to certain conditions. MNYL also offered a specialized rural policy provided term insurance for Rs 10,000 for a sum of Rs 100, which was affordable to that particular segment of society. MNYL offered cash bonus in May 2003 to its Whole Life policyholders, who joined before February 6, 2002. As a value added service, this bonus could be used in five different ways: accumulated with the company and earn interest, buy paid up additions to raise the death benefit of the base policy, offset against future payable premiums, taken in cash or buy an additional term cover for one year. In 2003, MNYL realized that it needed a new workflow system, as the existing one was unable to meet the customer requirements efficiently. Therefore, it tied up with Newgen to supply business process management tools. These technological improvements helped to reduce the turnaround time for customer request by 45%, aided in immediate retrieval of information, and generated savings on paperwork and telephone costs. MNYL also fixed benchmarks on claim processing time, processing of complaints and customer satisfaction and monitored these regularly. All these measures served to enhance customer service levels in the company. Questions for Discussion: 1. With the advent of private insurance players in India, how did Max New York Life decide upon its plan to gain market share in the country? 2. What was the marketing plan and strategy used by MNYL to increase its business in Life

Insurance. Discuss with reference to product differentiation and process improvements made by MNYL.