Ten months after Insurance Regulatory and Development Authority (Irda) came up with game-changing regulations for unit-linked insurance plans (Ulips), the life insurance industry is still struggling to keep pace. Rajesh Sud, chief executive officer, Max New York Life Insurance, spoke with Shruti Verma Khare and Sagar Sen on the industry and the company . Excerpts:

After the regulatory changes in Ulip norms, how has the market behaved?

Insurance, especially life insurance, should be seen as a long-term financial tool. The new Ulip norms have made that clear. The stakeholders, insurers, distributors and customers are now focusing more on protection-based products rather than on investment products. It is good for the industry. We as a company have done well, better than the industry, because our product mix was not heavily tilted towards Ulips.

What is the product mix right now?

After the regulatory changes, old Ulips became redundant. We have recently launched new Ulips. We would like to have a more balanced portfolio of 65 per cent new sales coming from traditional plans and rest from Ulips.

How has your profitability been impacted due to these changes in norms?

At a time when the industry is struggling with regulatory changes, we have done very well. But, certainly, there will be an impact on margins. Even though we have done better than the industry, we expect margins to fall from 19 per cent last year to 13 per cent this year.

A committee by the Irda on bancassurance has recommended that banks be allowed to sell more than one insurance company's products. What are your views on the issue?

Over the past few years, banks have emerged as a dominant distribution channel, mainly because of the vast client database and branch network. However, in order to sell insurance products, a certain level of product understanding is necessary, which needs insurers taking initiative to provide training to bank employees who will sell insurance products. With Irda allowing banks to sell more than one insurance company's product, there might be some problem in product understanding and unbiased selling practices.

What are your views on the present caps on commissions and expenses? Should Irda cap charges on traditional plans too?

After the regulatory changes last year, Irda had implemented certain caps on charges and commission, which made the products less costly and easier to understand. However, just putting caps is not sufficient for customer interest, efforts must be made to train distribution channels and remuneration should be in line with the efforts of selling insurance products.

In comparison with developed countries, India is still lagging behind in insurance penetration. What are your views on this?

There are three methods of capturing insurance penetration in a country. The one, which we follow in India, is insurance premium as a proportion of GDP. Second, is simply knowing the number of lives covered. However, the data that actually gives a true picture of insurance penetration is the sum insured as a proportion of GDP. India is still far behind the developed countries and in order to grow, insurers need to expand in smaller towns and cities, understand the problem of customers being underinsured and increase awareness of products.