'We are setting up more branches in more tertiary terms, like tier 2 and tier 3 terms. Going forward, that is where the growth will come.'
Tarun Chugh, managing director (MD) and chief executive officer (CEO) of Bajaj Allianz Life Insurance, discusses strategies to boost sales in the remaining months of this financial year, with introduction of new products in an interview with Manojit Saha for Business Standard's 'The Banking Show'.
During the April-October period, the growth in the number of policies was around 22 per cent for Bajaj Allianz. However, the new business premium growth was only 1.6 per cent. What was the reason for this muted growth?
When you are talking of a new business premium, it has a few components.
In the new business premium, it doesn't matter what premium you pick up, whether it is retail or corporate, whether it is gratuity, superannuation, group funds, non-funds, all of that.
It's the first premium that you pick up. And there, the base effect is a little different.
Our last year number for group schemes was very high.
In fact, it was a little inflated because customers had switched from one policy to another.
Hence, the base became high. So, that is looking overall low, but that's just a technicality.
In terms of the fresh premium that we have got, we are the fastest growing.
What is the new business premium growth projection for the current financial year?
See, being a listed company or owned by a listed company, I can't talk about projections.
But what I always maintain is we will at least be two times the growth of the sector.
And the sector is expected to grow faster than the GDP growth.
What are the strategies you have in place to push growth in the last five months of the current financial year?
After March of last year, when it was a phenomenal increase, largely because of the tax breaks that were going away from April.
So, it was important for us to keep our agents a little excited, because they had already sold a lot of insurance.
We, hence, broadened our width of products that we had.
Plus, we got into hyper action in terms of launching newer propositions for customers and for agents to take to the customers.
Second, our focus on agency has really helped.
So, among the private companies, we are one of the largest agencies in the country and the fastest growing as well.
Our bancassurance channel has been doing very well because we've been only adding more and more bank partners.
So, we've added four more bank partners within this quarter itself. So, that is also helping.
So, the width of the distribution is going up.
The other is, we've invested in the growth of India.
And we are, therefore, setting up more branches in more tertiary terms, like tier 2 and tier 3 terms.
Going forward, that is where the growth will come.
Will there be more emphasis on non-participatory policies, guaranteed policies?
It will be a mix. If you see this year, the non-par actually hasn't really picked up much. It has really been ULIP which has sold much more.
For us, it has been ULIP and it has been more par.
What is the contribution of bank assurance channels to the new business premium growth, in the year so far?
About 45 per cent of all our business comes from large partners, banks and wholesale distributors.
Recently, Life Insurance Corporation of India announced a new product, guaranteed returns product, essentially to revive premium growth.
Are there any new products that you have planned in the next few months to boost sales?
Yes, we have. Usually, this is the period to launch more products.
What LIC has done is perfect. We intend to do similar things.
So, we will have a few launches that will happen, because 50 per cent of the business has only just come; the 50 per cent is yet to come.
So, November, December, January, and February are 50 per cent of the business. So, I think you will see that coming.
What was the impact of levying tax on high value insurance policies?
It has an impact. Last year, we, of course, had phenomenal growth in the entire sector. We had 42 per cent growth last year.
But what we are finding is that, the tax bracket of Rs 5 lakh and above, where the tax rate has now gone away, is contributing less and less to the top line.
So, initially, the same period last year, we had about 9 per cent of our business coming from Rs 5 lakh and above policies. Now, it is under 5 per cent.
Feature Presentation: Aslam Hunani/Rediff.com
