In an interview with Moneycontrol, Ashish Vohra, CEO of Reliance Nippon Life talks about the business and plans for FY18.
Private life insurer Reliance Nippon Life Insurance which has one of the largest agency forces in the industry is now looking to improve its persistency in the fifth year bracket to 50 percent. In an interview with Moneycontrol, Ashish Vohra, CEO of Reliance Nippon Life talks about the business and plans for FY18. Edited excerpts:
While renewals were healthy for the insurer, new premiums have seen a slump. What was the reason?
For us, the last financial year was spent in reshaping the company. We needed to enhance customer retention and, therefore, a large amount of focus was placed on persistency. We geared the organisation like that, placed emphasis on renewals and persistency.
[Persistency refers to the volume of business that a life insurance company is able to retain]
For the industry, 61st month or fifth year of persistency is the worst with less than 30 percent policies getting renewed. Do you see that improving?For us, the 13th month persistency grew from 59 percent to 65 percent.
For us the goal is to take up the fifth year or 61st month persistency to 50 percent from 31 percent.
Overall, your financials were positive and losses also came down year-on-year though you ended the year in the end.
We saw a 11 percent growth in embedded value. Further, we also saw an 8 percent growth in the assets under management to Rs 17,300 crore. We focused on areas that could bring about profitable growth and we need to deliver on the bottom line.
The loss is on account of reserving and we have taken a conservative view on interest rates and because we write a large quantum of guaranteed products. The average tenure of our products is 15-20 years. In the long run, it will balance out for the company.
Agency channel is the biggest channel for you. Are you looking to expand the numbers?
About 77 percert of our portfolio is traditional and only the rest are unit-linked insurance plans. For us, agency is our big focus. We have about 75,000 active agents and this the biggest for private sector.
We have embarked on a programme called the transformation agenda to make agency much more efficient than it is today. Agent retention is also a problem for the industry and we hope that our initiative helps resolve this issue.
Employee costs have also gone done for you in FY17. Why?
Last year, we reduced the total headcount of employees and reduced a few branches. We found an opportunity to consolidate branches and thereby reduce headcount. That is why our expenses have also become efficient. Even this year, we target to become more expense-efficient.
Do you think having a bank partner would be helpful?
Bancassurance is an efficient channel of distribution. With open architecture, we think this opportunity will come about. We are in discussions with some banks.
We are strong on the direct channel. We have about 3,500 direct sales employees and we also have over 2000 women employees fully involved in insurance selling.
What about the new channels introduced in the market?
We are particularly interested in the point of sale (PoS) channel and these products are simple to use and simple to understand. We are awarding this higher priority than others because size of the prize could be higher in this area.
Is listing on the markets on your mind?We will first take our time to consolidate our operations, deliver on some of the strategies that I have laid out before we are ready to go to the market. Both our shareholders are patient and will wait for value to accrue before we go to the market.