Most life insurers are not taking a very aggressive stance to make investments in distribution channels in anticipation of growth, says Kshitij Jain, MD & CEO, Exide Life Insurance. In an interview with Mithun Dasgupta, Jain says for the country’s life insurance industry, Covid-19 will probably not have a very severe effect as companies tend to focus on offering cover to people in the age group of 30 to 50 years. Edited excerpt:
Exide Life Insurance’s gross written premium (GWP) witnessed growth of 12% year on year in the last financial year.
What kind of GWP growth do you expect this fiscal owing to a greater uncertainty as expectations for a faster recovery from Covid-19 are shifting towards a slower recovery?
It is very difficult right now to predict how exactly the year is going to pan out because there is a change almost every week and every month. Our company and many others in the industry will find it a bit challenging to achieve growth in the first half of the year, especially when it comes to new businesses. In terms of renewals, we will certainly grow over last year, but in total premium or as you called it GWP, I suspect we will have to wait till the second half of the year — that’s the period from October to March — to be able to post some reason to grow. I think if we are able to achieve 12 to 15% of what we did last year in the second half, that will be reasonable enough. It is very difficult to predict this now. The reason being that most organisations are not taking a very aggressive stance to make investments in distribution in anticipation of growth.
How many Covid-related death claims has the company received so far?
Actually, the numbers are very few. To the best of my knowledge, we have so far received only two cases, which are to do with Covid-19 and since there is so much of heightened interest in these we have settled both of them the same day we received. But I don’t see Covid-related mortality being a very big issue for our industry and I’ll just explain to you the reason for that. You have to keep in mind that our industry typically tends to focus on offering cover to people. Bulk of our customers tend to be in the age group of 30 to 50 years. You can say that is the sweet spot for the life insurance industry, and 30 to 50 years is not the highest risk age group. The highest risk, as you are aware of, is for people in their 70s and 80s, who, very often, do not have any life insurance cover. So, to my mind, Covid for the life insurance industry will probably not have a very severe affect. In fact, in the April -June period, the actual number of claims we received as an organisation have been lower than what we normally get, and it’s too early to say. But our observation is that the number of accident-related deaths in the country has come down so dramatically that it is overcompensating for deaths on account of other reasons.
Are you focusing on onboarding a lot more young people?
It’s a very good question. You know, what typically ends up happening is that the population you focus on very often ends up mirroring the salesforce that you have in the company. It is quite remarkable that younger people tend to sell more to younger people, so on and so forth. We have, over the last few years, seen that the average age in our company has now kind of plateaued. Typically, as I said, our sweet spot is in the age group of 30 to 35 years. So, the largest number of sales we are making are to customers who are of that age. I think that tends to coincide with the phase when people have just become parents.
Being an insurer, promoted by a non-banking company (Exide Industries), what kind of optimum distribution mix (agency versus bancassurance) are you looking at?
Giving a percentage figure would not really make sense. But one thing I can tell you is that our company has always prided itself on being very strong as a multi-channel organisation. Insurance, at the end of the day, is a concept of spreading of risk. So, I think the important aspect for any organisation is to have a book of business coming from agency, from bank, from corporate agent broker and from direct, including online.
Currently, we are in a good spot, where we have a scope to be able to increase the percentage of business from bancassurance and from direct, which would then mean that we would have more balanced distribution going forward.
Will there be any need for capital infusion from the promoter going forward?
There has been no need for fresh capital infusion because the company, through its internal sources, is generating enough cash. We are currently at a very comfortable solvency position of over 210% and we don’t expect to need any capital infusion from investors because the company has been in a situation that it is throwing up enough to be able to fund its growth.