Birla Sun Life Insurance is open to partner a bank to enhance its bancassurance channel. Jayant Dua, MD & CEO, tells Niladri Bhattacharya that opening up a bancassurance channel would not promote misselling and if a bank can understand one company’s product, it will understand other company’s products too.
For the first time, Birla Sun Life has reported profits for the whole year. How do you see the business going forward, particularly taking into account the new regulations which came into force since September last year? Have you launched any pension plan after the Insurance Regulatory and Development Authority (Irda) insisted on guaranteed products?
During 2010-11, we made a profit of Rs 305 crore. Basically, it came from two facts. One is the confidence of the policy holders which is reflected in 83 per cent persistency, and the 41 per cent growth in renewal income. We have reached that critical mass from where we can aim for higher growth. The total premium income as of March 31 stood at around Rs 5,600 crore, of which the first year’s premium was at around Rs 2,100 crore. Going forward in the current financial year, we are looking at 15-20 per cent growth.
The new regulations has made unit-linked plans far more customer-centric and talks more about the protection side. Regarding the pension plans, we have not launched any plans under the new regulation. Discussions are going on between the life insurance council and Irda. There are certain issues where the regulator is working on some solutions. The entire industry is hoping the regulator will come out with something so that we are able to launch these products again.
How has been your claim settlement performance?
The settlement ratio for 2010-11 for individual life claims was 94.66 per cent and the repudiation ratio for these improved to 4.99 per cent from 10.62 per cent last year. Overall, we have settled 10,554 claims worth Rs 201.83 crore.
Now that the company has broken even, any plans to go for a public issue?
The total capital base of the company is at Rs 2,450 crore and in the current year, we will not require any capital infusion. The decision to go for a public offer will be taken by the promoters. Having said that, as of now, we don’t have any such plans.
The Irda bancassurance committee, which recommended that banks be allowed to tie up with two sets of insurers, has drawn mixed reaction from the industry. There are apprehensions that this might increase misselling. What are your views?
From policyholders’ perspective, it is a very good move as it will provide them more choices, which, in turn, will help them take more informed decision. We have given our comments to the regulator and are looking forward to the final guidelines.
Misselling is a function of training, among other things. I don’t think allowing banks to sell products of two insurers will increase misselling activities. It is not that you will be selling complex products on one hand and simple products on the other. The product basket of each insurer is largely similar, so if a bank can understand one company’s product, it will understand the other company’s products, too.