‘No plans for listing as we do adequate disclosures’

The life insurance sector has grown at a healthy pace this year, but there is uncertainty over growth if slowdown in the economy persists. TARUN CHUGH, managing director and chief executive officer of Bajaj Allianz Life Insurance, spoke to Subrata Panda on the company’s plans. Edited excerpts:

Has the insurance sector faced any headwinds because of economic slowdown?

Not yet. Whatever has been happening this year has been good and consumers have been saving for life insurance. It grew at around 17 per cent and persistency for the sector has been strong.

We have grown well above the industry average. But I don’t know how long this will continue, given the fact that the economy is not doing that well.

The company’s focus has been life goals. How has that panned out so far?

It’s doing brilliantly, but I have a feeling that it will be a hedge against Section 80C. The insurance regulator, from February 1, has insisted on need analysis. For us, we already had the template. The thinking and orientation of the company itself

was focusing on life goals of customers. With Irdai (Insurance Regulatory and Development Authority) insisting that every product sale has to be backed by need analysis, this has only helped us in bridging our gaps. We were earlier looking at savings as a life goal and wealth creation around that but now we are also pitching for clear life goal around term insurance.

What is your plan to improve the persistency levels?

There are some practical difficulties that are there. There is 100 per cent surrender value and no surrender charge. So, a longterm product can be played as a short-term one. And when we have products like ULIPS in the markets today, it is going to be tough to attain the 90 per cent persistency level. Also, not everywhere do we have clear information on customer details. Moreover, it also depends on the segments you are playing in. In the big cities, if you are playing in the affluent segment, then usually the persistency is very good. And products sold through bancassurance partnerships usually have a better persistency. We were largely an agency-driven distribution network. Now, the bancassurance part is going. We have tie-ups with Axis Bank, RBL Bank, and two Nri-based banks.

The regulator had said insurers who have attained a certain size should ideally go for listing. Is your company planning an IPO?

Not really. What we are doing instead is that in terms of our balance sheet, we are disclosing as much and sometimes more than what the listed companies are disclosing. The whole benefit of listing is when you require money or any larger interest from the shareholders on the governance issue. And, we are anyway disclosing everything and more because we are held by a listed company.

Do you do yearly product reviews wherein the products that are not

doing well are weeded out?

Yes, we do. In fact, last week the review was highlighted to our shareholders and 60 per cent of our sales are happening through products that were introduced in the last two years. These are our goal-based products. And, the ones that are not doing well get discontinued. Irdai usually wants us to have lesser number of products. But invariably, all the companies have more than 30 products. The feeling is that we end up confusing the customers, but that’s not usually the case. The world is at such a level that you need to keep trying new things. Child products is just 2-4 per cent of our entire sale. The sale of pension products is usually under 10 per cent of our entire sale.

How is the online channel doing in terms of distribution?

Online for us is over 10 per cent. And, the customer base is largely graduates, millennials and beyond. It is quite aligned to the life goal pitch and fairly concentrated in the larger cities. And a lot of traffic is coming from mobile.

“Products sold through bancassurance partnerships usually have a better persistency. We were largely an agency-driven distribution network. Now, the bancassurance part is going. We have tie-ups with Axis Bank, RBL Bank, and two Nri-based banks”