Home-grown companies understand Indian consumers better than foreign players: HDFC Life MD Vibha Padalkar

HDFC Life managing director and chief executive officer Vibha Padalkar.

Discounting the need for a foreign equity partner, HDFC Life Insurance managing director and CEO Vibha Padalkar has said home-grown companies understand the needs of Indian customers better than their foreign counterparts.

Recalling her experience with an FMCG company in the early days of her career, Padalkar said even at that time, as a rookie, she felt that the Indian ethos wasn’t not fully understood by another country.

“There are reasons why millennials in India think differently about their parents and grandparents to whom I am trying to sell pension and savings (products) and so on. Those nuances are lost,” she said.

Explaining how HDFC Life built a wide product suite, Padalkar spoke about the constant engagement the company has had with its customers. “HDFC Life has been a product factory because we talk to our customers and even those who did not buy our product,” she said.

No need for foreign hand

Abdrn, or Standard Life Aberdeen, fully exited its stake in HDFC Life Insurance in December 2022 after a 22-year-long partnership.

Presently, HDFC does not have a foreign equity partner. When asked if she would be interested, Padalkar said, “I think that ship has sailed where we need any intellectual horsepower from elsewhere.”

While she supports the possibility of 100 percent foreign direct investment (FDI) in the insurance sector, Padalkar said foreign investors haven’t had much success.  “Realistically, if I were to look at numbers, not that much capital has come in after taking it (FDI limit) up to 74 percent for whatever reason,” she said. A lack of clarity on the long-term regulatory roadmap could said have been a stumbling block, she added.

After several years of lull, Zurich Insurance Company recently acquired a 74 percent stake in India’s Kotak General Insurance.

“If there's a road map on regulations and it is not done by 1,000 cuts, then there will be some business models that will work for the foreign investor,” Padalkar added.

Acquisitions not on the table

When asked if HDFC Life would be open to acquisitions, the CEO was quick to say that unless they bring something accretive to the table, she is happy growing organically. “In the past, we have looked at about four, five targets. If there is a good opportunity, we are willing to consider it. But it (acquisition) has to make sense and be accretive,” she said.

Calling Exide Life a great buy for HDFC Life, Padalkar said, “It added to our agency proposition very well. Now it is growing faster than our erstwhile agency channel. It is also selling a lot more term (life policies) than at a company level. At a company level, we are about 6 percent on term policy, while they are about 2x of that”.

If something similar comes the way, the company would consider it, she added. Exide Life acquisition was completed during the peak of covid pandemic in January 2022.

The acquisition also helped HDFC Life gain a presence in Tier- 2 and 3 cities, which was core to Exide Life. “Persistency has also moved up quite meaningfully,” she said.

Padalkar isn't too keen to explore composite licence when it becomes a reality. “Those life insurers who want to get into health may do so. As far as HDFC Life is concerned, we are interested in expanding the pie and not just redistributing the pie,” she said.

She said the preference would be to increase comprehensive life offerings through products with cancer or cardiac ailments in addition to a life cover. “We might even cover pension, that is one missing part in the fixed indemnity piece but that does not mean that I am wading into their territory,” Padalkar said.

The Insurance (Amendment) Bill, 2023 seeks to make changes in captive licences (where industrial houses can own insurance companies), composite licence (seek a single licence for general and life insurance business), investment-related regulations and FDI norms as well. The bill is yet to be passed by Parliament.