Even though reinsurers have changed their rates significantly, making the premium costlier, the interest towards the purchase of protection plans have moved up.
Even though reinsurers have changed their rates significantly, making the premium costlier, the interest towards the purchase of protection plans have moved up, and thus there is clearly an upper trajectory for insurance companies with regards to protection products, says Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance. In an interview with Mithun Dasgupta, Rao says the company is speaking to regulator IRDAI to see if there can be future products where customers can pay premiums in instalments, to ensure that persistency is not hit due to cash flow issues. Excerpts:
For April and May, the first-year premium collected by private life insurance companies declined by over 30% year-on-year due to the Covid-related disruptions and the countrywide lockdown. But in stark contrast, during these two months, first-year premium of your company grew close to 40%. What are the reasons behind this?
Digital enablement of every part of our business was the key. Both our proprietary (agency) and the bancassurance channels were able to reach out to customers and do business completely digitally. The entire sales process, customer onboarding to customer servicing, was made seamlessly digital. We also used data analytics to reach out to customers with appropriate products suiting their needs. From PIVC calls to making the customer understand the product, everything happened through unified digital journeys, allowing customers to purchase our products from home. Digital enablement also led to increased productivity of the sales force. I believe we could identify the emerging need and were able to provide solutions faster, leading to positive results.
The company’s first-year premium for the last fiscal saw a 6.6% y-o-y fall. Amid deep economic uncertainties, what kind of business growth are you expecting this fiscal? On which types of products will you be focussing for the business growth? Do you expect the current strong demands for pure protection products to persist although premiums for such policies have risen sharply?
Our business in the month of May was good, and the month of June looks better. However, in the current scenario it is very difficult to have short- or long-term views. We have realised that there is increased risk awareness and risk averseness among people today. Individuals want to secure their life and money both. The trend in investment pattern is changing and there is a flight to safety. FD rates are falling down and hence long-term guarantee savings product with better tax efficiency is in focus. Thereby, there is an increased demand for protection as well as guaranteed products. At ABSLI, we will continue to have a healthy mix of products with a focus on protection and guaranteed solutions. Our recently launched child plan caters to this segment, offering an interesting combination of both protection and guarantee. We will focus on products which will be relevant for the customers from the insurance point of view, while keeping the current scenario in mind. Digital enablement and right set of products will drive the growth path of the company. In the given scenario, awareness toward the need for insurance has increased. The consciousness towards protection is going up consistently. Even though reinsurers have changed their rates significantly, making the premium costlier, the interest towards the purchase of protection plans have moved up. There is clearly an upper trajectory for insurance companies with regards to protection products.
Will you be leveraging both agency and bancassurance channels going forward for business growth?
ABSLI has a 50-50 mix between the agency and the bancassurance channels. We have one of the largest bancassurance channels with eight bancassurance tie-ups. With banks moving towards third party-led business and opting for open architecture, it will be a win-win situation for banks as well as life insurance firms. ABSLI will keep looking to increase its bancassurance partnerships to reach out to more customers with its unique set of products. The company will also focus on digitally enabling its sales force at both the agency and the bancassurance side, leading to increased productivity and thereby business growth.
Has the company received death claims arising due to coronavirus? What kind of hit in terms of pay-out is it looking at for settling Covid-19 death claims?
As the death rate of the disease is not very high, industry-wide life insurance companies have not received claims in large numbers. ABSLI has received five-six claims but not of any significant value. We are very particular in clearing these claims quickly.
Do you see a drop in persistency figures this fiscal due to the cash flow issue being faced by customers in general?
Digital enablement will be key here as well. It would be important to allow people to pay virtually when they are not able to step out. We are ensuring that our customers can pay their premiums through various digital options like debit and credit cards. We have tied up with various payment aggregators like Paytm and Google Pay for renewal payments. We are also speaking to the regulator to see if there can be future products where people can pay premiums in instalments. Steps are being taken to ensure that persistency is not hit.