Loss of two major bancassurance partners during April-September has pulled down premium income of Aviva India Life Insurance — a company which collects more than half of its first-year premium income through banks.
While Aviva’s contract with Canara Bank was terminated after the bank started its own life insurance business, its deal with Centurion Bank of Punjab ended when the bank got merged with HDFC Bank.
Both Canara and HDFC Bank sell insurance products of their respective brands. Indian regulations do not allow any entity to sell more than one insurer’s products.
Aviva Life Insurance — a 74:26 joint venture between Dabur and Aviva of the UK — has recorded a 7.7 per cent fall in its first-year premium in the first six months of 2008-09 to Rs 3.47 billion.
Confirming that the exit of Canara Bank and HDFC Bank has affected its premium growth, Aviva India Managing Director and Chief Executive Officer T R Ramachandran said both the banks put together contributed 20-25 per cent of the premium collected through bancassurance tie-ups.
Bancassurance contributes 55 per cent of Aviva’s total premium income.
The private sector insurer eyes 30 per cent premium growth in 2008 to Rs 12 billion.
At present, Aviva has tie-ups with 38 banks, which sell its insurance Products. A majority of these banks are from the co-operative sector.
In September, decline in premium income was 30.7 per cent year on year to around Rs 600 million. Ramachandran, however, attributed the fall to high base last year.
“September 2007 recorded the highest growth in the full year,” he said.
Future plans
Aviva India is looking at 50 per cent growth in the first year premium in 2009, Ramachandran said.
“We are in the process of closing the plan for 2009. Both the partners (Aviva and Dabur) are willing to invest further in the company,” he replied to a query on the company’s capital infusion plans.
The insurer, which has infused about Rs 5.5 billion in January-September, said it will increase its branch network to 400 from 223 now over the next one year.
