Despite proceeds from non-Ulip products where annual insurance premium exceeds Rs 5 lakh being taxed from April 1, Max Life Insurance MD and CEO Prashant Tripathy says the company is optimistic that the impact of the new tax is going to be only “marginal”. In an interview with Mithun Dasgupta, Tripathy says the company is very aggressive on building up its own channels and there is going to be a lot of focus on building its presence through selling more protection and retirement plans. Excerpts:
How was the growth for Max Life Insurance in the fourth quarter last fiscal? What were the factors that contributed to it?
The fourth quarter was amazing. The company grew premium by about 35% and a large part of the growth came from our own channels. We had a really good quarter and the large part of that was also aided by March (business) because of the tax changes (on all non-ULIP products, where aggregate insurance premium is over Rs 5 lakh). We have also been making significant investments in our distribution channels. There is a fair bit of product play that we operated with during the year (FY23). We launched some of the marquee products which have done very well. As a result of that we saw huge momentum in our own channels. When I say our own channels, it means our agency channel, our direct channel as well as our internet channel. All three of them saw a remarkable growth.
From April 1, proceeds from non-Ulip products, where annual insurance premium exceeds Rs 5 lakh, are taxable. Will the demand for such products get impacted?
So, of course, there was a huge demand that picked up towards February and March, and many people made the decision to buy such products in anticipation that over Rs 5 lakh policies will be taxed. For the year (FY23), close to about 2% of total number of policies and about 9% of total new sales (premium) came from over Rs 5 lakh policies. I am very happy to note that though it has not been many weeks, but for the initial period of this year (FY24), I am finding that the contribution of more than Rs 5 lakh policies continues to be in about 8%-9% range for Max Life Insurance. That means people, who are buying such policies, are buying irrespective (of taxation). So, there is no huge tax consideration that they are bringing in to the play, which is a positive news. And that gives me hope that the impact on the business of such policies is not going to be very large. It will be marginal at best and we will be able to manage that quite well. So, if the question is–will the industry growth rate be impacted because the tax benefits have been taken away? My sense is that not in a significant manner.
Despite taxation, people are buying high-ticket non-linked insurance policies. What could be the reasons ?
I think there is a huge element of insurance that also is at play. I mean people like to protect their families, right? So, the consideration is saving and insurance. My sense is that people still get attracted to this design because the insurance benefit that it provides. The only fact that I share is on the basis of my initial few weeks of observation, I have not seen a big reduction, but it perhaps need three to four months to see what the impact is. My gut feeling says basis the data that I have seen so far, I’m optimistic and I don’t foresee a big impact of the tax change on our business.
What is the outlook for growth for Max Life Insurance this fiscal?
I think growth is a big theme for us. We are very aggressive on building up our own channels. This year, we are going to start hundred new agency offices. We are ramping up capacity. We are recruiting more people in our distribution area. We are making investment in growing our digital channels. So, there is all around investment across channels. In addition, we are expanding our relationship with partners quite considerably. So far, over the past six months, we have signed up with four new banks and six brokers. So, that part of the business will start to grow through this year. Of course, Axis Bank is our parent organisation and we have a very strong relationship with the bank as well as Yes Bank. And I am hoping that we will start to see good growth from these franchises. There is going to be a lot of focus on building our presence through selling more protection and retirement plans as well as health solutions.
For the last financial year, new business premium for the company grew 13.55% year-on-year. Do you see higher growth rate this fiscal?
We will try our best to better this performance.