An increase in foreign direct investment (FDI) limit to 49% from 26% in the insurance sector will increase capital inflow in the sector, feels Vishakha RM, director, sales & marketing, Canara HSBC OBC Life Insurance. In an interview with Mithun Dasgupta, she says the revised FDI cap is, however, unlikely to change the business mix of insurance companies. Excerpts:
Do you see that raising FDI cap in the insurance sector will get foreign partners of the private insurance companies more interested in increasing their stake, thereby, giving a boost to the growth in this sector?
It would be too early to say that. Even though raising the FDI cap is a positive move as it will increase the capital inflow in the insurance sector, I donít think the business mix will change because the dynamics of a business mix is the companyís customer base, distribution strength and the kind of distribution model it has. So, what the sales are going to be is something that will not be affected on the basis of share capital or shareholding structure.
After the hike in FDI cap, will HSBC be looking to increase its stake in Canara HSBC OBC Life Insurance?
This would be shareholdersí decision. Although the finance minister has announced raising FDI cap in the insurance sector, it is yet to become a regulation.
Will there be any need for capital infusion from promoters going forward for your company?
There is no need for capital infusion as of now because we have an efficient bancassurance model. Even if we grow at a projected rate of business, we do not see immediate need to raise any additional capital.
What is your target for new business premium growth for this fiscal?
We are aiming a 40% growth in the new business premium in the current financial year. In the first quarter, we added R104 crore of the first-year premium collection. Last fiscal, our new premium business growth was almost 33%.
Talking about distribution channels, would you be focusing only on the bancassurance model to leverage branch networks of Canara Bank, HSBC and Oriental Bank of Commerce?
We have a strong bancassurance model. Most people need to have an additional distribution model only when they do not have customer base. But today we have a huge data base of our own bank customers and once we tap into this and improve the penetration level, we donít see any reason to start an