Don't see major impact of proposed mis-selling norms: Axis Max Life MD, CEO

Sumit Madan talks about RBI's proposed guidelines on mis-selling and their likely impact on the company and the sector, the firm's business plans going forward, among other issues

Following Axis Max Life Insurance’s Q3FY26 earnings, Sumit Madan, managing director (MD) and chief executive officer (CEO) of the company, spoke to Aathira Varier and Subrata Panda in a video interview about the Reserve Bank of India’s (RBI’s) proposed guidelines on mis-selling and their likely impact on the company and the sector, the firm’s business plans going forward, and the status of its reverse merger with Max Financial Services, among other issues. Edited excerpts:

 

What is your initial sense of the RBI’s draft norms on prevention of mis-selling?

 

From a customer standpoint, the circular appears positive. If penetration and mis-selling are concerns, the circular is moving in the right direction. I view it rather positively. There has been some discussion around credit life being the impacted segment. For Axis Max Life, credit life contributes around 1 per cent or less to the overall business. At this point, I do not see any major impact on the company. 

There has been considerable discussion on the impact on the credit life segment...

 

The intent of the circular is that a credit life product should not be unduly pushed or mis-sold to a customer who has come to take a loan. In the banks we work with, there is a detailed process in place. An interest analysis is conducted and separate consent is obtained from the customer. While the regulation is somewhat generic in nature, most banks have already implemented the necessary changes. Moreover, we are relatively small in the credit life space, with total sales volume from this segment at around 1 per cent.

 

Your profits have declined slightly in the quarter. What led to the decline?

 

The decline in profit is largely due to the impact of removal of input tax credit (ITC) post rationalisation of goods and services tax (GST). In the second half (H2), we had indicated that the ITC impact would be around 300-350 basis points (bps). Of these 300 bps, we have recovered around 100 bps so far. Discussions with distributors are at an advanced stage — some have been successful, while others are still underway. We have also worked aggressively on cost optimisation, and some of those measures are now bearing fruit. A combination of these factors has helped us maintain margins at current levels.

 

Your ULIP business has de-grown on a nine-month basis, while peers have grown. Was this a conscious strategy?

 

It would not be accurate to term it purely as a conscious strategy, but we have strictly followed a need-based analysis. This has resulted in sustainable changes in our product mix across channels. The benefits of GST 2.0 were passed on to customers that helped drive protection sales. Since the implementation of GST 2.0, protection sales have grown significantly. Initially, we believed this could be pent-up demand, but the growth has been sustained. We have seen nearly 99 per cent growth in protection. All our Q4 campaigns are focused on protection. We believe the current product mix is well-balanced and sustainable in both the short and long term, and we should be able to maintain it.

 

What is the status of the Axis Max Life-Max Financial merger?

 

Following the changes under Sabka Bima Sabki Raksha, we have received board approval and initiated the necessary steps. The process is progressing well. The revised structure is clearer and simpler, providing greater clarity for the companies involved.

 

What is your ideal channel mix going forward?

 

We are comfortable with the current 50:50 split between proprietary and partnership channels. Earlier, Axis Bank contributed around 65 per cent of sales; this has now come down to 45-46 per cent, not due to reduced counter share but because the overall business pipeline has expanded. Our focus is on increasing the overall pipeline rather than altering the mix.

 

How do you see margins and growth closing this year?

 

Margins should remain broadly in line with current levels, with some potential upside. Most of the GST impact has already been absorbed, although a minor impact may continue in Q4. Protection growth remains strong, including in January. The industry has been positively surprised by the impact of rationalisation of GST on demand for protection products, and our focused campaigns have further strengthened this momentum.

 

Is there discussion around reducing high commissions or acquisition costs in the industry?

 

Technology is changing the paradigm across several areas by reducing costs in underwriting and frontline sales. AI and automation are improving efficiency. As for commissions, any steps taken by the government that help improve insurance penetration should be beneficial for the industry. GST 2.0 is a case in point — there was initial scepticism, but it has resulted in positive sales growth. Any measures that support long-term growth should benefit the overall industry .