METLIFE INDIA INSURANCE

Background
The Metropolitan Life Insurance Company (MetLife ), established in 1868, is one of the largest insurers in the US, with over US$ 2.4 trillion of life insurance. MetLife serves approximately 10 million individual households in the US as well as 88 of the Fortune 100 companies. MetLifes institutional clients have approximately 33 million employees and members. MetLife India Life Insurance Company Private Limited was incorporated in India on April 11th, 2001 as a joint venture between MetLife International Holdings Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Pvt. Ltd. and other private investors. MetLife India has developed and distributes a range of life insurance products in India. MetLife in India is headquartered in Bangalore and has 15 offices in 9 cities and an additional 1000-out reach points through its channel partners. The company has 600 employees, 3,000 commission agents and 300-400 other distributors. MetLife India has a capital base of US$ 35 million. Working towards a goal of 5 million customers by 2010, MetLife India currently has more than 100,000 customers.

Factors for success

Strong parental support
MetLife India benefits from its parent companys global presence in the field of insurance, track record of establishing successful insurance operations in emerging markets and the unique strengths of its other Indian promoters. Strong parental support has enabled MetLife to quickly launch innovative products customised specifically for Indian markets. For example, MetLife India has launched Met Ultimate, a universal life insurance policy that combines elements of protection and accumulation simultaneously and provides ready access to the accumulated cash value.

every 15 agents, MetLife has an agency manager. This has helped MetLife in keeping its fixed costs low. MetLife India also launched a major advertising campaign in 2004 and hopes to reap benefits of higher market penetration in the future.

It also plans to expand by setting up bases in not only metropolitan cities, but also Class B and Class C cities and parts of rural India. MetLife International plans to increase its stake in the Indian subsidiary MetLife India, by infusing capital to the tune of US$ 100 million over the next 5 years, as it sees huge potential for growth in India. It also plans to capture a market share of 5 per cent in the Indian insurance sector.

Leveraging the India Advantage

Market potential
Despite its one billion population, India still has a low insurance penetration of 1.95 per cent and ranks 51st in the world. India has a saving rate of around 25 per cent, but still, less than 5 per cent of it is spent on insurance. MetLife has effectively leveraged the huge market potential of India. In order to tap into the Indian rural market, MetLife India has entered into bancassurance tie-ups with specific region-focused banks like Dhanalakshmi Bank, Jammu and Kashmir Bank, Karnataka Bank and other large broking houses like Karvy, Geojit and Way2Wealth securities.

MetLife India Ltd: AT A GLANCE

Metropolitan Life Insurance Company: Almost 140 years of experience. One of the largest life insurers over US$ 2.4 trillion. 10 million households Metlife India Life Insurance Company Pvt Ltd: 15 offices. 9 cities. 1,000 points through its channel partners. 600 employees. 3,000 agents. 300-400 distributors. Capital base US$ 35 million. Over 100,000 customers Factors for success: Strong parental support. Using technology as a business enabler. Using full-time agents on a commission basis For Metlife, India is: A market with vast potential. An application sourcing base Future plans, India: Aggressive growth plans of 100 per cent year on year 5 million customers by 2010. Expand agency and office networks. Foray into Class B and C cities, and rural areas. Metlife International plans to increase stake in the Indian subsidiary

Using technology as business enabler

MetLife India has translated all its underwriting rules into a software module, Aura, to automatically process an insurance proposal and issue the policy, both in medical and non-medical cases. The module ensures quick turnaround time, in addition to consistency and accuracy of decisions. Focus on technology and significant investments in training its sales-force have also helped MetLife in maintaining high standards of customer service. This in turn has led to MetLife having one of the highest persistency ratios in the Indian industry.

Application outsourcing
In order to cut costs without losing the service quality edge, MetLife has outsourced some of its legacy work to a prominent outsourcing firm with offshore development centres in India. The main driver behind this move was a desire to free up its IT personnel to work on more exciting, newer technologies.

Growing player in the private sector life insurance sector

For MetLife India, the first year premium and single premiums collected in 2003-04 stood at US$ 5.1 million. This represented a three-fold increase over US$ 1.6 million collected in 2002-03. During the same period, MetLifes market share among private sector life insurers increased from 0.12 per cent to 1 per cent and the number of policies issued increased from 11,200 to 25,100.

Using full-time agents on a commission basis to reduce fixed costs

MetLife India is focusing on building a strong network of professional agency representatives who will sell its policies. Unlike other insurers, all MetLife agents are full-timers working on a commission basis. MetLife has thus resisted the temptation of hiring agents on a large scale. Rather, it has maintained a smaller span of control when compared with competition. For

Future plans
MetLife India has a goal of 5 million customers by 2010, and has aggressive growth plans of 100 per cent year-on-year growth for the next 2-3 years. The company plans to expand its agency and office networks to enable the growth in India.

US COMPANIES IN INDIA