Reliance Nippon Life Insurance: Challenges of Raising Market Share

Reliance Nippon Life Insurance: Challenges of raising market share

On April 20, 2017, Mr Shyam Sundar, the newly appointed Chief Sales Officer of Reliance Nippon Life Insurance had a meeting with Mr Anil Ambani, chairman of Reliance group last Friday. Mr Ambani was worried about the low market share of his insurance company and had appointed Mr Shyam who was earlier the Sales head of another insurance firm which was doing very well in the market. Shyam had been given the task of reviewing the company’s performance and finding a way forward to increase the market share of the company.

Company Background

Reliance Group is one of India's top 5 business houses and has the world's largest Shareholder/Investor base of over 13 million shareholders and investors. Reliance Group has assets more than Rs. 2,60,000 Crore (US $ 43 billion); annual revenues of around Rs. 56,000 Crore (US $ 9 billion). Net Worth of over Rs. 98,000 Crore (US $ 16 billion); and over 1,00,000 employees.

Reliance Capital, Reliance Infrastructure, Reliance Power, Reliance Communications are the different companies of the Reliance conglomerate.

Reliance Nippon Life Insurance

Reliance Nippon Life Insurance is a subsidiary of Reliance group which came into existence in June 2005 following a demerger from Reliance Industries Limited.

The company’s vision is “To be a company people are proud of, trust in and grow with; providing financial independence to every life we touch.” With this in mind, Reliance Nippon Life caters to five distinct segments, namely Protection, Child, Retirement, Saving & Investment, and Health; for individuals as well as Groups/Corporate entities.

In the year 2005 reliance acquired 100 % shareholding in AMP Sanmar Life Insurance Company Limited and changed the name to Reliance Life Insurance Co. Ltd. In the year 2007, the company received ISO 9001:2000 certification and in 2008 became the 4th largest private insurer. Nippon Life signed a definitive agreement to acquire 26% of the company in 2011.

In 2016, post the enabling regulations, Nippon Life increased its stake in Reliance Life from 26% to 49%, after the receipt of all regulatory approval. The Company, with over 29 million policies in Japan, offers a broad range of products, including individual and group life and annuity policies through various distribution channels and mainly uses face-to-face sales channel for its traditional insurance products. The company primarily operates in Japan, North America, Europe and Asia and is headquartered in Osaka, Japan. It is ranked 114th in Global Fortune 500 firms in 2016.

 Competitors

The other players in the market are Life Insurance Corporation of India, which is a state-owned insurance group and investment company headquartered in Mumbai. It is the largest insurance company in India with an estimated asset value of ₹1,560,482 crores.

ICICI Prudential Life Insurance Company is the largest private player with assets of over 100,000 crores.  HDFC is the other main competitor with assets of around 74,200 crores.

[ see exhibit for market share]

About Shyam Sundar

Shyam Sundar, a 45-year-old, is a renowned sale and marketing professional in the insurance industry. He did his post-graduation from a well-reputed Business school in west India. He has been in the insurance industry for the last 15 years. Before joining Reliance, he was the sales head of ICICI Prudential Life Insurance.

The road map: which way to go

After the meeting, Mr Shyam was envisaging about what could be done. He sought advice from two veterans of the company, Mr Ram Prakash who is the chief operating officer and Mr Joseph D’Souza, chief analyst. These two appraised the current scenario and gave inputs to Shyam.

1. Ram Prakash is of the opinion that company should go for B2B and make Memorandum of Understanding(MoU) with other business entities for group insurance of its employees
2. Joseph D’Souza highlighted the fact that other main private players in the market have their own banks from where the companies can access data to increase the customer base. He is of the opinion that reliance should enter into the banking sector
3. Shyam himself analysed the situation and realised that the higher authorities in the conglomerate are indifferent towards the insurance industry and are mainly concerned about other industries mainly power.

        Exhibit 1        

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Exhibit 2

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Exhibit 4

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        Exhibit 5        

Exhibit 6

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Exhibit 7