Canara HSBC Life Q4 net up 69% at Rs 1.28 bn on bancassurance drive

While customer experience has been key, the opening of affordable insurance products will drive the future

Canara HSBC Oriental Bank of Commerce Life Insurance company posted a net profit growth of 69 per cent at Rs 1.28 billion for the quarter ended 31 March 2018, from Rs 753 million in net profit posted during the same period of the previous financial year.

Business Standard spoke to Anuj Mathur, chief executive officer of Canara HSBC Oriental Bank of Commerce Life insurance company to gauge the company’s growth strategy over the past few years, and where he sees the market growing to.

“We have done really well through our bancassurance model. Our penetration has increased in the past three years and we are now entering the Tier-3 and Tier-4 cities. Our traditional insurance plans in the product mix would continue to increase as customers in these areas are typically risk-averse,” Mathur said.

On an annual basis, Canara HSBC Oriental Life’s net profit has soared 51 per cent from Rs 1.1 billion in net profit in FY17 to Rs 1.68 billion in net profit at the end of FY2018.

“Growth comes from two areas, one is bancassurance and the other is digital. While the latter is relatively small, we believe it would play a huge role in our future growth. Because the banks are our primary distributors as well, we have seen a 34 per cent growth, mainly coming from bank customers,” he said.

Gross premium revenue has grown to Rs 9.23 billion in Q4 of FY18, from Rs 7.80 billion during the same quarter of the previous year, registering a growth of 18 per cent. For the financial year ended 31 March 2018, the life insurer’s gross premiums grew 21 per cent on an annual basis to Rs 27.8 billion.

Individual new business premium has grown 34 per cent from Rs 6.13 billion in FY17 to Rs 8.18 billion at the end of FY18. Over the past three years, individual new business premium has grown at a compounded annual growth rate (CAGR) of 36 per cent to Rs 27.81 billion at the end of FY18.

The introduction of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), with the premium rate set by the government so that everyday people can purchase an insurance cover for the assured sum of Rs 200,000, has introduced a new ‘affordable’ segment of products in the life insurance market.

Around 1.35 million Canara Bank customers have been brought on board PMJJBY, by the life insurer’s banking partners viz. Canara Bank, HSBC Bank and Oriental Bank of Commerce, and another 450,000 Oriental Bank of Commerce customers will be brought on-board for the current year.

“We feel that there is a huge market in the mid segment, in tier 2,3 ,and 4 cities. If your product is affordable and competitive, like our recently launched Point-of-Sale product that includes a return of premium at the end of the term, growth is going to come from mainly these affordable products,” Mathur explained.

The life insurer said PMJJBY was a profitable product for it, unlike for other life insurers who have reported losses in the segment.

Mathur believes not only would governments continue to introduce such affordable insurance products, but that private life insurers would also begin competing in this segment.

“Mass market products like PMJJBY and other affordable products, would see a much higher penetration” and in the future, “these customers will step up and move on to buy traditional products, so there is future possibility of cross-selling and up-selling opportunities,” Mathur said.

The life insurer paid around Rs 17.86 billion in FY18 towards claims, marginally higher than the amount of benefits paid to claimants in the previous year which was Rs 17.83 billion. The claims settlement ratio in FY18 stands at 97.18 per cent.

Solvency Ratio has decreased to 382 per cent at the end of FY18 from 401 per cent posted in FY17. The 13th month persistency ratio at the end of FY18 stood at 77.9 per cent, marginally down from 78.1 per cent in FY17.

The company will launch a health product this financial year, subject to IRDAI approval, and it would include a cancer product and a heart product. During the last year, the company launched five different products with innovative features.

They have also launched a grief support system, a one-of-a-kind service, so that when something unfortunate happens to a customer or their family, the insurer can actually reach out and help the customer or his/her family automatically, without needing to be informed by the customer/family directly.

These innovations and the future growth strategy, Mathur says, is based entirely on the intent and philosophy of the company, which for the past few years has been focused on customer centricity.