Private life insurer IndiaFirst Life Insurance is looking to double its credit life business in FY20.
In an interaction with Moneycontrol, Rushabh Gandhi, deputy chief executive officer, IndiaFirst Life Insurance said that they have already written Rs 145 crore worth of business in the April to October 2019 period. That is more than the credit life business for the whole of FY19.
The insurer had written Rs 140 crore of credit life business in FY19.
Credit life insurance refers to a policy that is taken as a cover against loans taken by an individual. The insurer pays the outstanding loan in case of the death of a borrower.
Gandhi said that unlike other insurers who only offer this product for housing loans, IndiaFirst Life Insurance offers the product for auto loans, MSME loans, education loans as well as personal loans. This is a group product.
Overall, IndiaFirst Life Insurance is eyeing a 35 percent plus growth in premium this year and is looking to touch Rs 1,000 crore of retail premium by end of FY20. The insurer has written premium of Rs 325 crore in H1FY20.
"Usually the second half of the financial year is a stronger period than the first half. We are hopeful of reaching Rs 1,000 crore by the end of this fiscal in the individual non-single premium segment," he added.
The merger benefit
IndiaFirst Life is a joint venture between Bank of Baroda (44 percent), Andhra Bank (30 percent) and Warburg Pincus (26 percent).
Gandhi said that the life insurer has benefitted from the merger of Dena Bank and Vijaya Bank with Bank of Baroda.
"With the new banks (Dena and Vijaya) being added to our distribution channel, we have access to 4,000 branches and hence have been able to use this to distribute our products," he added.
Of the Rs 325 crore premium collected, Gandhi said that 20 percent came from Dena and Vijaya Bank.
With a focus on core business by public sector banks, there are talks of several banks like Andhra Bank looking to exit their insurance venture. Also, Andhra Bank is to be merged with Union Bank of India and since the latter has a life insurance venture (Star Union Dai-ichi Life), it is not clear how the former's stake will be looked at. As per insurance laws, one bank cannot hold more than 10 percent stake in more than one life or general insurer.
Gandhi explained that while that will be a shareholder decision, the company is now slowly expanding the non-bank distribution channel. This channel now stands at 15 percent and includes agents, broker and common service centres among others.