Products redesigned for the customer who keeps paying

Taking a long-pay savings plan off the counter for older bank customers

In early 2022 our largest product was a non-participating savings plan that paid a fixed annual income after a premium-paying term of up to twelve years. It brought ₹1,180 crore of our ₹3,240 crore APE in 2021–22, and ₹720 crore of that came through Varunashree Bank's branches. When I split the bank-sourced book by age, 31 per cent of policies had gone to customers over sixty. Their thirteenth-month persistency was 66 per cent against 83 per cent for the product overall, and their mis-selling complaints ran at more than three times our average. Many had been shown the plan as an alternative to renewing a fixed deposit, then asked to fund ten or twelve premiums from savings that would not last.

I proposed that bank customers over sixty could buy the plan only with a premium-paying term of five years or less and a premium within 20 per cent of declared income, unless an affordability review approved more. Each sale would carry a recorded verification call in the customer's language before issue, and branches would offer an immediate annuity to anyone who wanted income now. The bank's head of retail branch banking objected, and so did our head of bancassurance: the rule landed before the festive quarter, cut the bank's fee income and invited competitors with no such limit. The bank's nominee director asked whether we were punishing one channel for an industry habit. The chair of our policyholder protection committee backed the change, and the board accepted it.

The rule took effect in July 2022. APE from older bank customers fell ₹290 crore in 2022–23, the bank's commission income about ₹64 crore, and our value of new business roughly ₹95 crore against plan.

By 2024–25 that cohort's thirteenth-month persistency had reached 84 per cent and its mis-selling complaints had fallen 71 per cent. Single-premium annuity sales to bank customers over sixty reached ₹410 crore in 2025–26. Eligibility limits now sit inside every product's sales journey rather than in compliance circulars.

What I would do differently is change the branch incentive before the product rule. For two quarters the bank still paid on volume, and some branches moved older customers into a single-premium unit-linked plan instead. We extended the rule to that plan in January 2023; it belonged in the first decision.

Underwriting term cover at issue instead of investigating after a death

By 2022 Varunashree Bank's mobile app and branches offered our term plan to selected bank customers as a pre-approved product: cover of up to ₹1 crore with no medical evidence, priced on the bank's knowledge of the customer. It sold well. The trouble appeared in early claims, deaths within the first three policy years, when an insurer may still examine what was disclosed. In 2021–22 we repudiated 19 per cent of early death claims on bank-sourced term policies for non-disclosure of conditions such as diabetes or heart disease, against 7 per cent on agency business. The families were the bank's own customers. Branch managers were sitting with widows whose claims we had refused, and complaints to the Insurance Ombudsman about term claims had reached 52 a year.

I recommended ending pre-approved offers above ₹25 lakh, requiring a nurse-led tele-medical interview for every bank-sourced term proposal above that amount and medical tests above ₹75 lakh. The bank's head of digital banking opposed it; the pre-approved journey was a showcase for the app. Our head of bancassurance warned that issuance would slow and volumes fall. Our chief underwriter and lead reinsurer supported the change. We introduced it in October 2022.

Bank-sourced term policy numbers fell 24 per cent over the next two quarters. Average time to issue rose from a day and a half to five days, and acquisition cost rose by about ₹1,450 a policy. In the first months we declined 9 per cent of tele-interviewed proposals outright, which the bank found hard to explain to customers.

By 2025–26 the early-claim repudiation rate on bank-sourced term had fallen to 6 per cent, and Ombudsman complaints about term claims to 14 a year. Our lead reinsurer reduced its rates by 6 per cent at the 2024 treaty renewal, and bank-sourced protection APE passed its 2021–22 level during 2024–25. Underwriting evidence is now specified in each protection product's design, not added afterwards.

I would change how we handled the declines. From 2023 we offered reduced cover or a premium loading where full cover was not possible, and about half of those customers accepted. A decline should have been the last option from the start, explained by a person on the telephone rather than a letter.

Sharing the cost of fairer surrender values with distributors

In 2024 the regulator's revised framework for life insurance products required higher surrender values in the early years of non-linked savings policies. Our non-participating savings plans had brought ₹1,350 crore of APE in 2023–24 at a 34 per cent margin. Paying departing customers more meant smaller benefits for those who stayed, a lower margin, or less commission paid up front.

Our actuarial team's first proposal reduced the maturity return on our main plans by about 0.6 percentage points, which held the margin and needed no one else's agreement. I argued for a different mix: move about 30 per cent of first-year commission into trail commission over years two to five, payable only while the policy stayed in force, cut customer returns by 0.15 percentage points and accept a margin of about 31 per cent. Front-loaded commission is one of the main causes of early lapse, so the change attacked the behaviour the new rules were meant to correct.

Opposition was broad. Varunashree Bank's head of wealth and insurance said the bank's fee income would fall in the year of change. Our agency leaders warned about agents' earnings. Our CFO worried about the margin we had signalled to investors, and the Appointed Actuary preferred his simpler route. Because the commission agreement with our promoter is a related-party transaction, the paper went to the Audit Committee with an independent review of comparable bank distribution terms; the committee and then the board approved it.

The trade-off arrived quickly. Kanakavalli Bank, one of our two other partner banks, gave its shelf to another insurer for nine months, and we lost about ₹180 crore of APE. It returned in mid-2025 on the new terms.

In 2025–26 non-participating savings APE reached ₹1,410 crore at a 31 per cent margin. Thirteenth-month persistency on those plans rose from 83 to 87 per cent, and surrenders in the first three policy years fell by about a third. Commission timing is now a standard design question for every savings launch.

I would do two things differently. I would have spoken to each partner bank's leadership myself before rumours reached their sales teams, and I would have put the new surrender table on the first page of the illustration at launch, not six months later.

Designing term cover for traders who cannot show a salary slip

In 2023, 82 per cent of the term policies we issued went to salaried customers. Self-employed applicants were declined or offered much less cover about three times as often, rarely because of their health and usually because they could not produce the income evidence our rules demanded. Small traders were among the least protected people we met.

My team designed a term plan for GST-registered traders. Underwriting would read 24 months of GST returns and bank statements, shared with the customer's consent through the account aggregator framework, convert turnover into an assessed income using margins that vary by trade, and allow cover of up to ten times that income, capped at ₹1 crore. The Appointed Actuary, with no mortality experience for this group, wanted a 15 per cent premium loading over salaried rates and a two-state pilot. Our head of agency wanted a national launch at salaried prices. I proposed three states, Gujarat, Tamil Nadu and Maharashtra, a 9 per cent loading, a 60 per cent quota-share treaty with our lead reinsurer and a formal review after twelve months. We accepted a value of new business margin about 22 per cent below that of our salaried term plan, and gave most of the remaining profit to the reinsurer in exchange for its capacity.

We launched in February 2024 through agents and through Varunashree Bank's current-account customers. By March 2026 we had issued 1.12 lakh policies with an average sum assured of ₹42 lakh. Claims are running at about 96 per cent of the priced basis, a figure I describe to the board as preliminary because the numbers are still small. After the twelve-month review we extended the plan to five more states. Thirteenth-month persistency began at 74 per cent and rose to 82 per cent once customers could choose premium dates that matched their trading year.

The change for the company was in our underwriting rules: income evidence is now a design choice for each customer group, not a fixed list. I would have offered flexible premium dates from the first day, since the GST data showed the seasonality before launch. I would also have designed for family businesses: only 11 per cent of policyholders are women, though many shops are run jointly, and a joint-life version is now in preparation.