HDFC Life Insurance chairman Deepak S Parekh on Friday said the company can continue to deliver “sustained growth and profitability” even after the new tax rules introduced by the government as the insurer has product innovation capability and diversified distribution franchise.
“On the recent tax amendment front, we believe that with the experience we have gained during years of tumultuous business cycles, our product innovation capability and diversified distribution franchise, we can continue to deliver sustained growth and profitability,” Parekh said during the 23rd annual general meeting of HDFC Life.
The government, in the FY24 Budget, removed exemption of tax relief on maturity proceeds of all non-ULIP insurance products i.e. par and non-par with more than Rs 5 lakh annual premium.
Parekh pointed out that the life insurance sector provides a “distinctive” long-term guaranteed savings product proposition that remains superior, even after the tax changes. “Protection and annuity continue to remain areas that are exclusive to life insurers,” he said.
He said the company’s objective is to capitalize on these opportunities by introducing innovative products, expanding its presence through a diverse distribution network and transforming its business and technology models to deliver best-in-class experience to the customers.
According to Parekh, the growth potential of the Indian life insurance sector remains intact despite the headwinds observed over the last financial year. Factors such as low insurance coverage, favorable demographics, increasing life expectancy, and growing consumer awareness regarding financial protection bode well for the industry.
In FY23, the life Insurance industry witnessed a growth of 18% and collected new business premiums amounting to Rs 3.7 trillion, compared to Rs 3.1 trillion in the previous fiscal. Private insurers experienced a 24% growth in individual business and a 17% growth in group business.
During the last financial year, the market share of private insurers in individual business increased by 288 basis points compared to the previous fiscal year. “The growth in market share of private insurers in individual business can be attributed to the development of various distribution channels and product innovations, with a particular focus on non-par savings and deferred annuity segments,” Parekh said.
HDFC Life recorded a 27% growth year-on-year based on individual weighted received premium (WRP) with a market share of 16.5% and 10.8% in the private and overall sector, respectively, in the last fiscal, ranking amongst top three players in the industry. AUM stood at Rs 2.39 trillion. Embedded value stood at Rs 39,527 crore as on March 31, 2023.
Notably, the company’s acquisition of Exide Life Insurance was completed on October 14, 2022, post receipt of the final approval from IRDAI. “Our post-merger integration with Exide Life and synergy realization from the combined business is progressing well, resulting in achievement of margin neutrality, ahead of the planned timeline. Further, the newly added distribution partners now have access to HDFC Life’s products and digital capabilities, thus adding impetus to our growth,” the chairman said.
On HDFC Bank becoming the promoter and holding company of HDFC Life following the recent amalgamation, he said, “We should expect deeper engagement within the group entities, leading to greater cross-sell opportunities and long-term value creation for all stakeholders.”
HDFC Bank now holds 50.4% in HDFC Life Insurance.