Kathmandu. Sanima is the Deputy Chief Executive Officer (DCEO) of Reliance Life Insurance, #Nirajan Kandel. Kandel has been active in the financial sector for a decade and a half. He entered the insurance sector from the former Reliance Life. Before that, he worked in the banking sector for 12 years. Kandel, who started his banking career from Siddhartha Bank, later worked at Citizens Bank. After Citizens Bank, he has experience working in various departments of Standard Chartered Bank. Kandel holds ACCA and a master’s degree in business. Summary of the conversation with the same DCEO Kandel on ##Insurance Talk####:
##
## ##You started your career in a bank and reached the top management level of an insurance company. How did this journey to and fro come about?
##
## I started my banking career with Siddharth Bank in 2006. I worked there for 7-8 months. Then I went to Citizens Bank. I was an employee before Citizens Bank was started. There were 45 of us. The bank was inaugurated 15 days after I left. I looked into various areas there from the beginning. I also worked as the head of the remittance department there. We also started Citizens Remit. I also became a branch manager. I worked at Citizens Bank for 3 and a half years. Everyone who worked at the bank always had a desire to work at Standard Chartered Bank. I then applied to Standard Chartered Bank. They called me there. After that, I joined Standard Chartered Bank in 2010 as a Business Planning Manager. Along with the Business Planning Manager, I also worked in the Branch Manager and Wealth Management Department. Wealth management was coming to the world. That concept had not yet arrived in Nepal. After working at Standard Chartered Bank, I realized that insurance is the main pillar of wealth management. Then, collaborations with insurance companies also started. Then, someone suggested that we work in an insurance company. Then, I joined the former Reliance Life Insurance. Now, Reliance and Sanima have merged and Sanima has become Reliance Life Insurance.
Your journey has been amazing. You have been with us since the establishment of a commercial bank, and now it is exactly the same in the insurance sector.
This is a rare experience.
Sir.
What is the difference between banking and insurance?
Both banking and insurance are financial institutions. Customers come to banks. The main product of banks is loans. More than 90 percent of the income is interest income. However, in an insurance company, you have to go out to find customers. We have 160 branches. Most branches do not have that many customers. We have to go out to find customers. Another thing is that both banks and insurance companies collect money. Banks provide loans in the form of deposits and insurance companies provide loans through premiums. If banks also invest, insurance companies also invest. However, I think there is something different in the modality of the business.
How easy and how difficult did you find working in banks and insurance companies?
Both have their own challenges.
##In general, insurance is one of the most difficult jobs. You yourself said that we go to find money. People come to the bank to pay money. They also come to take loans.
Earlier, I thought that banking was easy. In the past, the overall non-performing loans of banks were very good. Recovery was also very good. People were supposed to pay after taking loans. Banking was easier than it was then. You yourself said that insurance is a very difficult job in the world. Now, the challenge is increasing in banking. The practice of not paying loans is increasing. Due to which NPL and NBA are increasing. That is also a challenge for bankers now. However, from the point of view of sales, insurance is difficult. However, the risk asset in insurance is not that much. Because the Insurance Authority itself has made it mandatory to keep a minimum of 30 percent in the fixed deposit of commercial banks.
Banks are always at risk after saying that. As for you, it is difficult to withdraw money, but after withdrawing money, it is easy?
The situation where the money we invest sinks is very rare. That only happens when the bank itself sinks.
There was a case of how banks and insurance can be linked. One of the policies of the National Bank was that your main source of income is depositing in the bank and increasing the interest income. Now it is giving 1 percent less. On the other hand, there was the issue of bancassurance. Sometimes it is given, sometimes it is not given. How to move forward by linking these two sectors?
The distribution channel of life insurance in Nepal is very strong. Today, excluding micro, 99 percent of the business comes through agencies. More and more citizens are being involved in this. The basis of many people’s livelihood has become the insurance agent profession. However, thinking as a customer, it would be better if there were different distribution channels. If someone is opening an account at a bank, they would like to be able to do life insurance from there as well. Therefore, bancassurance plays a good role in the distribution channel. When that policy was coming, there were wrong practices. Everyone realized that and discussed it with the National Bank. It should not be closed but should be regulated. They closed it through monetary policy. However, it is not even part of monetary policy. Today, it would be better for them to start it again and regulate it. This will not be disadvantageous for the agent. It will also be convenient for the customer.
Another question in this context. Your primary source of income is interest income. However, there is a situation where if other institutions or other individuals put money in, they get more, and if the insurance company puts it in, they get 1 percent less. Does the money also have a higher value when it is put in the pocket of A and a lower value when it is put in the pocket of B?
There has been a lot of discussion on this issue. I also do not think this is right. Today, we have collected a very small amount from far away. We have reached almost all the districts of all seven provinces and brought the money. Now, it is wrong to get less interest when this money is deposited in the bank. The government should understand this. It is not understood that the insurance company will earn from this. Such issues should be taken into consideration for the convenience of the policyholder.
Are you accused of deceiving the insured in the name of bonuses? Companies have said that they will give 35 to 90 rupees per thousand for this and that product. Is it 40 or 50 or what?
Globally, the most ‘misselling’ product is insurance. Currently, we have 500 employees. There are 12-15 thousand agents. Of which 6-7 thousand are active agents. 6-7 thousand agents are providing insurance. They may have mis-sold for various reasons. It should be reduced. Now, various provisions are coming in the case of the gap being too large. It is difficult to become an agent now. An agent is a financial consultant. He should be able to understand everything. If not, there will be a miss-selling. Surrender increases. Surrender has increased a lot these days.
You brought up the issue of surrender. I wonder if the agents were not interested due to the situation of decreasing commission every year or they themselves inspired them to surrender after three years. Have you not thought of reconsidering it?
A separate department has been created to reconsider this. It is included in the current insurance policy. I think what you said is right. The agent’s commission is high until the second year. After that, it has been decreasing. That is why it may happen. Talking about Sanima Reliance, we have been able to stop the surrender that was about to happen by 35 percent. What happens to the loss after surrender? This was possible after explaining it.
Is surrender a plague for insurance companies?
This is a loss. Our surrender rate seems to be lower than others. Compared to the surrender in the insurance sector, only 1.2 percent has surrendered. While our total premium is around 4 percent, the surrender is 1.2 percent. There is also a situation where surrenders are more than the total premium of others. We are focusing on organic business, which is what made this possible.
