‘India one of few mkts Aegon is focusing on’

Alexander R Wynaendts, CEO and chairman of the executive and management boards of Dutch life-insurer Aegon N V, has made over 20 visits to India since 1997. This is because India is one of the few international markets that Aegon has decided to focus on, and has decided to go fully digital from back to front. In an interview with TOI, Wynaendts speaks of how the company plans to leverage skills developed here in other markets.Excerpts:
What targets have you set for India?
We made a clear strategic choice: We want to be the leader in the protection market, and also in connecting, engaging and selling our products through digital channels. It is also a clear choice of what we will not be doing. We will not be going through traditional channels nor selling traditional products. We want to leverage all the skills and techniques that we develop here in other markets. The good thing is the market is large enough for us to make this choice, and still grow and become an important player. We have established ourselves in this space, and now we are looking to grow exponentially. How do we get 10 million customers? You need big numbers for digital business and that is why India is such a good market.
Most life insurers say it is difficult to make money selling only protection...
I think you can create a compelling proposition for both policyholders and shareholders by providing protection. Protection is not only term insurance. It could be income protection, disability protection, unemployment protection, etc. Term insurance is only one segment of protection. Pension plan is also part of protection.
When do you expect to break even?
While we have been patient, we need to see returns at some point. Since we have chosen to go for one segment of the market and to invest digitally, we have accepted a little longer lead time.
There have been reports about Aegon cutting costs in the US. Is there some kind of a pull back?
What we are doing there is reducing expenses to be more efficient and grow better. The cost of the policy has to come down. We have to digitise and invest in technology. So we are doing a lot of things. This includes our recent partnership with TCS where we outsource certain administrative services that they can do more efficiently than us. In the UK as well, we are reducing expenses and growing business simultaneously. We have acquired Cofunds there, and we acquired the pension unit of Mercer’s US-defined contribution record-keeping business.
Will you partner e-commerce companies?
E-commerce companies will become very important, and over time they would not only want to be selling bicycles and other things, they would also want to sell insurance. Once a customer has got used to the e-commerce experience, it will be easier for him to accept buying protection from e-commerce sites. Why would you buy stuff for your young children if you have not put in place protection for them?
Insurers that have banks as promoters have done well. Do you plan to get into partnership with retail banks that are not aligned with any life company?
We would be happy to engage in discussions with banks that are looking for partners. It is important that we have a real partnership with banks that is about servicing their customers and we can do that together. In Spain, we are the exclusive bancassurance partner for Banco Santander — the largest bank in Spain. We know the business well, we like the business. But it is also important that we do the right thing for customers.
There has been a bit of debate in India over the government’s decision to push a universal ID for citizens. What is your view?
I think it is important to allow people get access to financial services and financial protection. If basic requirements have to be fulfilled, they have to be supported with financial protection. We are used to a universal ID system. The debate should not be whether we should be having it. It should be about how we ensure privacy rules and protection against cyber-attacks. The debate should be how do we do this and not if we should have this system. It is a good idea to have a debate over privacy because for the financial sector the rules are well set. In Europe, under the GDPR the data belongs to the individual.
As a conventional insurance company, how are you using technology to become more efficient?
We have created a fund — the Aegon Transamerica Venture Fund — where we look at investments across the world including India. These are investments that we make for financial purposes and simultaneously we look for businesses that we can link to our companies.
One of the companies we have invested in provides cyber-security for cloud. If you are looking at controlling expenses than you need to look at cloud. Another investment is in a US firm that provides individualised advice. It is an artificial intelligence company that personalises advice for you. In the US, we are market leaders with five and a half million pension plans with us. They will retire at one point and will look at help and guidance. I cannot justify reaching out to 5.5 million participants if we do not use digital.
Another investment that we made is in peer-to-peer lending. We do believe that banks will get disintermediated for certain parts of the business. These peer-to-peer lending platforms are quite popular among our customers in Holland, who do not want to keep money in bank accounts because rates there are 0%. We keep the companies a bit apart. At this stage of development they need to be able to stay as startups. And who knows, one day if they become big and successful, they might become a part of Aegon.
(BCCL, the publisher of Times of India, has a 47% stake in Aegon Life India)