From the onset of the pandemic, people started realising the need to protect one’s health as well as finances which prompted them to opt for life insurance policies offering pure protection and guaranteed returns.
While there is no increase in premiums currently, Aditya Birla Sun Life Insurance (ABSLI) will closely monitor the pandemic experience and will decide on the premium rates, says MD & CEO Kamlesh Rao. In an interview with Mithun Dasgupta, Rao said the company aims to grow by about 20% in group and 16-17% in individual business this fiscal. Excerpts:
After the first wave, guaranteed saving and protection products were doing well. Following the second wave, what kind of demands are you experiencing for these types of products? Are you seeing sustained demands?
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From the onset of the pandemic, people started realising the need to protect one’s health as well as finances which prompted them to opt for life insurance policies offering pure protection and guaranteed returns. People are more interested in pure protection (term plans). Besides, because of the prevalence of financial insecurity and uncertainty, life insurance solutions offering guaranteed returns have gained prominence. We are witnessing sustained demands for both term plans as well as guaranteed savings plans.
Is there any structural change in demands for insurance policies after the second wave?
Increased awareness has led people to analyse their future financial requirements, risks and uncertainties they would like to combat and accordingly plan their life insurance needs. Individuals now ask for plans which can be personalised to suit their unique needs at different life stages and can assure complete security of future financial goals. They are looking for solutions which can maximize their income and minimize risks while catering to short and long-term financial requirements.
Have premiums seen an increase? What has been the average hike? For which products has Aditya Birla Sun Life Insurance raised premiums?
No, premiums for our products have not been increased. However, the company will closely monitor the pandemic experience and will decide on the premium rates. Also, a change in the re-insurance rates through the year can be a factor which will determine premium rates.
The company’s new business premium for April 2021 saw a 51% year-on-year dip, while for the entire private sector it grew 55.18%. What are the factors that contributed to this fall?
The company clocked new business premium of Rs 128 crore in April 2021. For individual life business, we have grown the new business premium by about 38% YoY. The dip seen in overall number is due to the superlative base of April 2020 in the group business. In April 2020, we had written more than Rs 200 crore in group life business and grew four times over April 2019. Therefore, it is a base impact in the group life business, and the yearly performance will reflect a more appropriate picture.
The company’s new business premium grew 24.81% y-o-y for the last fiscal. What kind of growth do you expect this fiscal? How are individual life insurance and group life insurance businesses expected to perform?
Digital enabling, data analytics and the right set of products helped the company drive growth in FY21. However, in the current scenario, it is very difficult to have short- or long-term views. We understand that there is increased risk awareness and demand for life insurance products today and these provide an opportunity for life insurance companies. We aim to tap this momentum to grow by about 20% in group and about 16-17% in individual business, perform in line with the industry for both and do better than the last year.