RM Vishakha, MD and CEO, IndiaFirst Life Insurance
The life insurance industry suffered severe losses because of the Covid-19 pandemic, especially in the second wave, but RM Vishakha, MD & CEO, IndiaFirst Life Insurance, is confident of a quick recovery and the sector’s long-term growth prospects.
As of September 20, 2021, IndiaFirst Life’s total assets under management stood at Rs 17,565 crore with year-on-year growth of 18 per cent. In Q2, the firm recorded Rs 345 crore individual new business annual premium equivalent – sum of the initial premium on new annual-premium policies, plus one-tenth of premiums on new single premiums) — and APE of Rs 495 crore in H1FY22.
Besides, the company also paid Rs 481 crore in Covid-19 claims to over 13,000 families, with a claim settlement ratio of 99.06 percent.
In a freewheeling conversation with Moneycontrol, Vishakha spoke on a range of issues, including the company’s listing plans, growth strategy, risk factors, distribution and product strategy, and more. Edited excerpts:
What is your outlook for the life insurance industry?
When you link it directly with GDP, we have a trend that we show in some of our industry discussions: invariably the industry grows at 2x of GDP, and on that basis, the industry should grow at 18 percent.
So, how’s the growth been at IndiaFirst Life?
We have been rocking; we have had y-o-y growth of 71 percent in individual new business, 3.9 times the overall industry and around 2.3 times the overall private life insurance industry.
People say: ’Don’t measure based on last year as it was a pandemic year; look at 2019.’ Even then, this October, we grew 89 percent compared to 2019. YTD October we grew at 58 percent.
Even if I ignored last year, our growth record is quite good this year. As compared to the industry, we have seen tremendous growth. So, I’m happy about it. I think there’s been a social change both in buyers and sellers — there’s a slight nudge about insurance.
Life Insurers have paid Covid-19 claims with complete empathy and support and written huge losses on account of Covid-19.
Are negotiations underway with reinsurers on pricing?
Reinsurers can take a stand, they have to recoup losses, so the rates increase. That’s the way insurance functions. So, as risk goes up, the price will go up. That’s pretty basic.
Have you increased prices?
We have increased our term price but are still the lowest in the market. We did not further load the prices from what reinsurers gave. We are not trying to recoup our losses. We believe insurance is a long-term business, and we have to understand that.
Our concern is more with losses on PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana), because those losses have been rising steadily. The increase in losses is disproportionately high; it goes against the principle of insurance. To continue to write a policy that is not priced correctly is against the principle of insurance.
There’s no reinsurance support for PMJJBY, and no amount of underwriting practices can mitigate poorly priced risk.
How’s your distribution strategy? Banca to remain your forte?
Bancassurance is strong, but this year we also firmly ventured into agency and broking. We completed the entire business of last year by November this year. Agency is growing really well, almost at 117 percent.
We have been trying to do a lot on direct marketing also, through the website. Those efforts are on and seeing some growth.
From a channel perspective, bancassurance will always continue to be a significant part of our growth. The contribution of different channels will continue to grow but not at the cost of bancassurance.
How’s your product composition, and how comfortable are you with that?
Based on the number of customers or premium?
I’m counter asking because the premium size of a term plan will always be small; you can get a Rs 1 crore cover at Rs 9,000 premium. If you want to do a Rs 1 crore savings cum insurance, it will be approximately Rs 1 lakh premium for a ten-year policy period. You can’t compare Rs 9,000 with Rs 1 lakh.
If I look at it as a percentage in terms of premium, you will always find it to be less than 6 percent. But, if you look at the number of customers, it’s on the higher end. We have a very clear way of looking at it. First, I say look at the customers, and it might sound clichéd.
In today’s environment, there’s a pull towards pure protection and guaranteed returns. However, there is also a pull towards equity based on risk appetite, which is why we run with all products.
I’ve never believed in pushing a product because the moment you push a product, you might sell it today, but persistency will fall. Today, our persistency is steadily growing, and it’s at 82 percent.
Do you think that the impact/awareness around Covid-19 with regard to protection/insurance is fading away?
While there’s no data or market research, anybody who’s experienced this (Covid-19) will believe in protection against risk. It’s been so hard-hitting, they are always going to look for protection.
The intensity and duration of the impact of a significant change in risk orientation and protection will vary based on how far you are removed in your own experience.
The way the pandemic has impacted people, insurance has stopped being a bad word or a word people need to be defensive about.
You said it’s been 12 years, and you have been able to get in the top 10. Is a listing plan on the cards? BoB’s MD & CEO recently said a listing might happen in next fiscal?
The 12-year journey, especially since 2015, has been really great. We wanted to build the corpus while we started the company, so there was a particular focus on group funds to have a minimum corpus.
We moved to ensure the potential of banks was being thoroughly utilised, and catering to the banks. So, from 2015 to 2019, we focused more on banks, ensuring we have a good sales process and building processes.
For the past four months, we have been clocking Rs 100 crore. In 2015, we did Rs 130 crore, and today we do Rs 100 crore every month. So, that’s the growth trajectory we have been on.
We grew from 1,100 employees in 2015 to over 3,500 employees as of today. Many of them are in sales, not back-office, where we continue to invest in automation. In the last three years, we explored moving into new areas. As a result, we are now into agency, brokers, digital aggregators and strategic alliances.
Listing is a dream, and it would be something I would really look forward to. Our team is equally excited about the prospect of listing. Everything we have been doing is the right thing for a listing, though we didn’t do it with the intent of listing.
As a management team, we believe a win-win proposition is a long-term solution. So, we will be happy to support Mr Chadha (IndiaFirst Life Chairman and BoB MD & CEO Sanjiv Chadha) in realising it.Would it be correct to say you’re ready for it?
You are talking to somebody who believes perfection is a moving target. We are ready now, and we will be even more ready one year from now. We have got growth, VNB (value of new business), consistent and predictable sales, good tie-ups, we are a great place to work, the top 20 in financial services, the top 10 in insurance...