Despite being a relatively new player, Shriram Life Insurance is eyeing a growth of 20-25%, both in terms of new business premiums and number of lives covered, in the current fiscal. Manoj Kumar Jain, CEO & whole-time director, in an interview with Chirag Madia, says if the new regulations on Ulips are implemented, it would impact overall returns. Excerpts:
How did the company fare in the previous fiscal?
In the insurance industry, three parameters are looked at very keenly and we have fared well in all these departments.
In terms of number of polices, we grew 38% against an industry growth of 9%. Our new business premium stood at Rs 498 crore in FY15 against R390 crore in FY14, a rise of 28%. We are in the 10th year of operation and while, initially, our focus was on south India, we have started expanding to other parts. At the end of 2013, we had 195 branches out of which 90% were in South. As of May 2015, we have 460 branches out of which 50% are in other parts of the country.
What targets has Shriram Life Insurance set for FY16?
We are looking at a growth of 20-25%, both in terms of new business premium and number of lives covered. We have sufficient capital to expand our footprint and plan to open at least 70-75 branches this year.
We also plan to build our distribution network to bring in more retail investors. Coming to product basket, as of now, we have almost the entire basket of insurance for retail and group side. Having said that, products are a continuous innovation and we are looking for another 4-5 new products.
We have already filed draft for two products with Irdai. As an entry level player, we are quite aware that first-time investors need simple and easy-to-understand products. So, we will come out with products that are traditional in nature to attract retail investors.
Has your partner initiated the process to raise FDI stake? Have you started the valuation exercise?
Sanlam is a leading financial services group headquartered in South Africa and holds 26% in our parent company.
So, indirectly, they have holding in our life insurance business. Sanlam is very happy with the performance of Shriram Life and equally committed to business. However, any discussion on the topic relating to FDI usually happens at the parent company/partner level.
What are you main sales channels?
We entered the life insurance business only in 2006, when most of the banks had either become manufacturers or had tied up with other insurers. But we have two large NBFCs — Shriram City Union Finance and Shriram Transport company — and we closely work with them for our insurance business. Almost all customers taking truck loans from Shriram Transport (roughly around 5 lakh) are covered through our group insurance policy. Shriram Transport has also become a corporate agent for us and, through its branches, we sell insurance policies.
We also cover small-ticket loans provided by Shriram City Union Finance. On the group business side, Shriram Group contributes more than 60% of the total new business premium for Shriram Life. Then, we have around 6,000 agents, who are highly productive.
What is your opinion on the Irdai proposal mandating a minimum of 25% of unit-linked funds in Central government securities?
This is still just a proposal and I would like more clarity on the topic before commenting. It is not clear whether the mandate is for each Ulip fund separately or all Ulip funds put together. Having said that, in either case, if implemented, it would impact overall returns of Ulips and hurt sales.