In a shift in its traditional stance, private life insurance company SBI Life Insurance is looking to tie up with about eight to ten banks in this financial year.
In its post earnings call with analysts in April, management of the country's second largest insurer said that it's looking to grow the credit life business through this.
Till now, over 60 percent of the company's business came from banking channels, dominated by the SBI. The insurer now wants to change this.
On the other hand, it's parent State Bank of India (SBI), which exclusively sells SBI Life's products, has clarified it will not be tying up with other life insurers.
SBI Life is a joint venture between SBI and BNP Paribas Cardif.
Sanjeev Nautiyal, MD & CEO, SBI Life Insurance said that when it comes to bancassurance, they believe that the non-performing assets (NPA) problem in the channel will be behind them.
“We should tie up with at least eight to ten banks this year. This could include public sector banks, private banks, payments banks and even non-banking financial institutions,” he said to analysts during an earnings call.
Meanwhile, a senior SBI executive said the bank has no plans to sell insurance products of other life insurance companies.
“We are only confining to SBI Life insurance products for the time being. As of now, we do not want to look at it because if our company is doing well, why should we look at other products,” the official added.
The life insurance company is in talks with India Post and Vijaya Bank among several other banks. India Post has received the payments bank licence and is eligible to tie-up with insurance companies to sell products.
SBI Life had in the fourth quarter of last financial year, tied-up with South Indian Bank and Punjab and Sind Bank to distribute their products. In their analyst call, the insurance company management said that around 69 percent of their branches are active and it is up from 58 percent in FY17.
A branch is termed 'active' if it generates business of at least Rs 6 lakh a year.
“We will also be meeting many more entities to see that we have the tie-ups with place and that we grow credit life business. The focus is on banks that offer home loans,” the insurance company said.
The insurance regulator has allowed banks to tie-up with three life, three non-life and three standalone health insurance companies. The SBI official quoted above that this is an option provided but it is essentially meant for those banks who do not have production within the group and that they already have it.
Insurance Regulatory and Development Authority of India (IRDAI) has encouraged banks to open up their branches to other insurers. They are also required to give out information on the strategy for opening up.
The bank channel has among the highest rate of productivity for the life insurance company. As per the investor presentation, it was Rs 24.33 lakh per bank branch per annum.
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