Expect regulator's nod to raise FDI cap in insurance soon: Sandeep Ghosh

Interview with MD & chief executive, Bharti AXA Life Insurance

Private life insurance company Bharti AXA Life Insurance is among the first insurers to get approval from the Foreign Investment Promotion Board. Sandeep Ghosh, managing director and chief executive of Bharti AXA Life Insurance, talks to M Saraswathy about the company’s growth plans. Edited excerpts:

You have been one of the first insurers to get the FIPB nod to raise foreign investment in the company. However, the insurance regulator is yet to give its nod...

We are waiting for the final approval from the Insurance Regulatory and Development Authority of India (Irdai). We believe that it should come shortly. We are among the early movers and in some ways, we are also like a test-case. Once two or three companies have their approvals, with some norms and precedents being set, the process will be faster. It is only fair that we give it (the process of approval) some time.

Overall, the Indian management control provisions look a little stringent. What is your view?

While I cannot comment on what is enshrined in the Insurance Act, it’s ironical that certain aspects, which were not in focus when the foreign partners had 26 per cent stake, are now in focus when they have 49 per cent. However, a law is a law and the relevant regulatory bodies are the ones to interpret it. Our shareholders will work within the law and find the right path forward.

You are not a large player in the single premium space. With the launch of a new single premium traditional plan, do you expect higher business from this segment?

A lot of insurers have stayed away from the single premium space since they only look at it from a top-line growth perspective. This product doesn’t generate volumes for companies, with the exception of the Life Insurance Corporation of India.

We’re looking at this product as one which can bring a lot of first-time buyers of life insurance and a lot of young people. We believe if you acquire a customer through a single premium, simple product, conveniently delivered, then you have all the time and flexibility to cross-sell and up-sell. The objective is to add to customer base and not to add to the top-line growth.

By when would the company be posting statutory profits?

From an IFRS (International Financial Reporting Standards) standpoint, we tuned profitable in 2014. We are a short distance away from making statutory profits as well. That will happen in the next couple of years. At present, we are continuing to invest in the business and are looking at banks, distribution tie-ups. We need the scale and are investing in technology and digital processes. So, it is on track.

The recent IRDAI guidelines on corporate agents (like banks) has been a dampener, especially for insurers without bank tie-ups. Do you see this channel opening up?

We are still optimistic because what it needs is one to two banks to become catalysts to bite the bullet and say that it has worked well for them and their customers. If that happens, it will create a different mind-set among banks. Suddenly, we are seeing an interest among banks, especially private banks and those without tie-ups.

However, while banks are important channels but there are other alternative distribution channels that one needs to focus on. The 11 new payment bank licenses throws up whole host of opportunities as well.