What share of your total business comes from the bank channel? What is your take on the broking model?
Bancassurance contributed 43% to the new business premiums collected by private insurers in 2012-13 and is the largest channel for private insurers. With two-thirds of business from bancassurance, HDFC Life is geared up for open architecture as we bring in a wealth of experience in terms of driving efficiencies and penetration levels. The regulators need to look at the right degree of open architecture. Also, a period of at least three years needs to be given for such a transition to both banks and insurer to put in place the necessary processes and systems. As of now, we are awaiting clarity on how the regulations will unfold.
Would each bank be given independence to decide if it wishes to undertake insurance broking? What will be the transition date?
Currently, the broking guidelines state that “not more than 25% of the insurance handled by the insurance broker in any financial year is placed with the insurance company within the promoter group”. But there is no ceiling imposed on placement by bank acting as a broker with an insurance company outside the promoter group and this creates an unfair dichotomy. Per se, we are against regulators imposing any arbitrary ‘quota-share’ but for encouraging competition.
A lot of discussion has happened on improving the penetration of insurance. However, the results aren't very encouraging.
Over the last 4-5 years, the life insurance growth rate is more a reflection of a mature, developed market than that of a developing nation. These years have seen high consumer price inflation and, hence, lower disposable incomes for consumers making insurance plans less attractive. The changes in Ulip norms were swift, leaving little time for the industry to adjust, and these were followed up by a series of other regulations. Economic returns to distributors and shareholders also reduced. This resulted in the industry rolling back branches and vacating market space.
As 77% of premiums come via individual agents, open architecture for individual agents would help increase reach. Digitisation would also be