‘Want to keep business as diversified as possible’

By: |
Published: October 20, 2015 12:12:23 AM

When many established private insurers are focussing on unit-linked insurance plans (Ulips), Arijit Basu, managing director and CEO at SBI Life Insurance...

When many established private insurers are focussing on unit-linked insurance plans (Ulips), Arijit Basu, managing director and CEO at SBI Life Insurance, says they have a diversified business model and have an equal share in Ulips as well as traditional products. In an interview with Chirag Madia, Basu says there is immense potential and huge scope of scaling the business from SBI. Excerpts…..

How has been the performance of SBI Life in the current financial year? Do you think insurance industry is witnessing a recovery?

This year also we have started on a very positive note and would expect to continue our growth journey. To give a little background, in the previous financial year, overall total new business premium grew by 9-10% to Rs 5,529 crore. In the current fiscal till August, the total new business premium has grown by around 60% at Rs 2,071 crore.

While we are the largest in terms of total premium, we want to achieve this position in individual new business premium too in the private life industry space. For that matter, renewal premium last year was Rs 7,338 crore. Here we grew by around 29%, and such solid performance in renewal has led to better persistency for our company. SBI Life has taken various steps such as focus on renewals in the past few months which is as important as new business to us. Secondly, we also have a mechanism by which we can connect with our customers before their renewal
payment date, and finally, we have dedicated call centers exclusively for our customers. These initiatives have helped us connect with our customers better. These are the reasons why we are witnessing a steady rise in number of policies sold, both unit-linked insurance plans (Ulips) as well as traditional policies. So, overall, we have set high standards for this year and aim to achieve those.

Despite SBI being bancassurance channel, unlike private sector players, it has not generated enough traction in terms of policy sales/market share for SBI Life. How do you plan to ensure that the group banking channel is utilised efficiently?

We have done well even on this front if one looks at the absolute number, as 58% of our individual new business premium in the current fiscal has come from the bancassurance channel. But yes, there is immense potential, and I think we have a huge scope of scaling our business from SBI. I would like to mention that the present top management of SBI feels cross selling of their own products and subsidiary products is equally important for them and can lead to better customer retention. It also adds more to other income. At present, there are around 30,000 specified persons and we plan to recruit another 3,000 this year to help ramp up the bancassurance channel.

Currently, SBI has 16,000 branches and insurance is actively sold only from 4,000 branches. Each contributing branch of SBI contributes around R31 lakh of new business premium in a year for our company. For our immediate rivals, the corresponding number is around R50 lakh. For other bank-promoted companies, it will not be even R2-3 lakh. We would like to take this number to R40-45 lakh per branch in the next two-three years. We are working to ensure more branches sell our policies.

When do you plan to become number one player in the industry? Have you chalked out any plans to achieve that target?

Globally, new business premium is considered as a benchmark for growth and SBI Life is no 1 in terms of total new business premium among private life insurers. In terms of assets, the gap with the no. 1 player is fast narrowing down and we intend to take the no 1 position in all parameters very soon. Around 32% of our total new business premium comes from selling group insurance policies, while other players have little share in selling group insurance policies, but we want to keep the business as diversified as possible. We are already no. 1 in total new business premium segment and number of policies sold. I would also like to add that other top players in the insurance industry focus more on Ulips and over 70% of their first year premium come from that segment. But, we have a diversified business model and have equal share in Ulips as well as traditional products.

What are your new marketing and distribution strategies for 2015-16?

We want to continue to focus on bancassurance channel and go extensively into online sales, which are widely accepted by the new generation of customers. We plan to use untapped potential in bancassurance channel in proper way and effectively use the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Has your foreign partner initiated the process of raising its stake? Do you plan to list the company?

The work on stake sale is on and SBI plans to sell 10% of its stake to BNP Paribas Cardif (currently, it holds 26% in the venture) and by the end of this financial year, the deal might get finalised. For listing, thoughts are already in the minds of both the partners, but it’s not the immediate priority for any of them.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.