Eyeing synergy with Aditya Birla Health; losses to be wiped out soon: Birla Sun Life

Private life insurance company Birla Sun Life Insurance, which has adopted a cluster approach to distributing products, has seen an improvement in persistency and reduction in complaints. In an interview with M Saraswathy of Moneycontrol, Pankaj Razdan, MD & CEO of the insurer talks about the new product plans of the company and business growth strategies. Excerpts:

How has the business panned out post the changes in your distribution strategy?

In 2014, we decided to rebuild our business and the problem we were trying to solve was of customer trust deficit. We designed a business model where clients would discover their insurance needs. In 2015-16, our first-year premium started growing even though we had fewer branches. Our persistency also improved.

Since April of this financial year itself, we are seeing a growth in new premiums. This is despite lower number of sales, employees and fewer branches. Our complaints are abysmally low and renewals are above targets.

Since the Aditya Birla Group now also has a standalone health insurance company, will you be bringing out combination products?

A lot of product combinations may happen with Aditya Birla Health. It adds lots of synergy in terms of distribution capabilities. We have to start doing pilots in some places and we are also thinking of some joint products with Aditya Birla Health.

Now that the equity markets are showing a rally, would you be looking at increasing your unit-linked insurance plan (Ulip) product business?

For us, the product focus is not the lead indicator of business; consumer focus is the lead. For us, majority of business is traditional. We have 70 percent traditional while 30 percent will be unit-linked products (Ulips). However, if a customer specifically seeks a Ulip, we will help them buy the product.

Will bancassurance be an area of focus?

We have built a robust existing distribution network and we have been productive. About 75 percent business comes from agency channel while the rest comes from bancassurance and other channels. We are confident of securing large bank relationships over a period of time. However, we have cut down on many partners who were not in line with our business vision.

Are you looking to have a large agency force?

We do not want to simply add agents who may just end up selling one or two policies a year. Being productive is a focus. In the industry, about 5-10 percent of advisors who are full-time, the rest are part-time. We want that proportion to change. Hence, the focus is on their training, on-boarding and hand-holding.

Will you require additional capital to support business growth?

We are sufficiently capitalised and growth is in place. We have enough cash flows to support business growth and expansion. Further, the losses are also reducing in the balance sheet. They will be wiped out in two years.