The life insurance industry is likely to see a single digit growth in FY14, says Sandeep Ghosh, the managing director and chief executive offcier of Bharti AXA Life Insurance. In an interview with Vishwanath Nair, he talks about the strategies that the company will follow to improve its distribution and how online sales will become an important channel for mid-sized insurance companies. Excerpts:
What is the new financial year looking like?
We are looking at a topline growth rate of 30-35%. Now that is not a function of where we think the industry is going to grow, but given our current base and some of the allignments we have in terms of products, partners, strategies, we think we can achieve this kind of growth. We are expanding our presence in all available distribution channels. In the broking channel, we are tying up with new partners. In the agency and direct distribution channels, we are adding frontline headcount, though not large numbers. We are getting growth out of more productivity from exisiting people and in some select pockets we are adding additional headcount. An equally important priority for us as an organisation is to achieve productivity, profitability and business sustainability. We have done a lot of work on these fronts in the last two years and the idea is to further improve. Last year, we reported a 15% growth in the topline.
What is your expectation for the industry then?
If you look at the life insurance industry, in last two years, the growth in individual regular premium business, which is the most profitable part of the business, has been flat or has declined. We don?t expect a decline this year, but a mid-single digit growth. There was expectation for a boost to the industry through measures announced in the Union Budget and some changes in the pension guidelines, but that has not come through. We can?t expect any changes in the tax structure till the next Budget. If the regulator decides to change the pension guidelines, then that could be a major boost. In the current macro-economic environment, only the mid-single digit growth is expected.
A lot has been said on the possible negative impact the new product design guidelines may have on insurers. How do you think this will play out?
We don?t think there is anything in the new product guidelines that will dramatically alter the performance of the industry. We reckon there are a few things that require companies to make some adjustments in the products that we manufacture and sell, but we don?t think these changes will have any far-reaching consequences. The changes are by and large good and as far as we are concerned, we can implement most of the changes. We don?t agree with the view these guidelines are as bad as the guidelines for unit-linked insurance products that were announced in 2010.
Being a mid-sized insurance player, how important is the online distribution channel for you?
It is very important indeed. Today, we do 8-9% of our volume through the direct channel. We think the direct channel is going to grow in relevance in the years to come. The audience we address through the direct channel is very different from the audience we address through other channels. The direct channel audience tends to be a younger and more informed, who wants to look at multiple offerings and is extremely price conscious. This audience is only going to grow. We don?t look at online only as a medium to sell insurance, we want to create a more digital organisation. This way, people can buy a policy online and can change the correspondence address online, distributors can get their data in terms of policy anniversary and other facts. I think online sales is a very narrow view, of the overall direction in which insurance companies are going.