Berkshire to enter life insurance biz in India
Seven months after debuting in India, Warren Buffett’s Berkshire Insurance is now spreading its wings in the country. The company plans to enter the life insurance space in India, by launching an online term cover.
Berkshire India, a joint venture between Nebraska-based Berkshire Hathaway and Allianz, would start life insurance operations as a corporate agent of Bajaj Allianz Life Insurance Co.
â€œWe have a corporate agency licence with Bajaj Allianz Life, and in the coming six months, we would launch an online term insurance product,â€ Berkshire India chief executive officer, Arun Balakrishnan, told Business Standard.
Though the product would be launched under the Bajaj Allianz brand name, its underwriting would have some imprint on the insurance behemoth.
â€œWe would give some inputs to the underwriting team, and these might be incorporated. Whether it would sill be an exclusive product to be sold by Berkshire remains to be seen,â€ Balakrishnan said.
Berkshire India started its operations in India in March, as a corporate agent of Bajaj Allianz General Insurance. The company’s entry into the general insurance space coincided with Buffettâ€™s maiden visit to India.
The company is expected to increase its product suit in the general insurance space by launching a health insurance product. It already enjoys presence in the motor and travel insurance space.
The sale of online term plans is fast gathering pace in India, since an online product does not involve agents. Hence, companies are able to save on various costs to customers.
Various private life insurance companies have already launched online term plans, and these policies are more than 30 per cent cheaper than offline products (products not available online). The country’s largest life insurer, Life Insurance Corporation (LIC) of India, also has plans to launch such products.
In the first month of its operations, Berkshire, through a carefully-planned marketing strategy, managed to sell 300 motor insurance policies online, in return for the chance to spend an evening with Warren Buffett, also known as the Sage of Omaha. Customers who bought motor insurance policies for $48 could secure an invite to meet him in New Delhi.
â€œInvites, which aren’t transferable, are restricted to one per policyholder, and available on a first-come, first-served basis,â€ Berkshire Hathaway Inc had said in an emailed statement on the eve of its India launch. The other novelty, as the company website put it, was the fact that Berkshire had â€œopened an office in India by not opening an officeâ€.
However, as the initial euphoria died down, sales dived to less than 30 a monthâ€”a tenth of the initial figure. In August, Berkshire came up with a revamped version of its website. The company claims this has improved results.
â€œThe real launch happened only from August. Marketing activity started from August, only after we launched the revamped website. Since then, monthly sales numbers have crossed the peak of 300 policies,â€ Balakrishnan said.
â€œCustomer feedback on the new version has been very good. The enquiries are increasing and sales numbers, on a monthly basis, are also rising. Internet selling requires a continuous approach. We keep on upgrading the model, based on customer feedback. Based on the data, we are trying to develop different segments in the market, and would launch products accordingly,â€ he said.
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