In an interview with Moneycontrol, Amitabh Chaudhry, MD and CEO of HDFC Life, says that their business from banks saw a dip during the post-demonetisation period.
Private life insurance company HDFC Life Insurance, which is among the top three private life insurance companies, is awaiting a nod from the insurance regulator on a merger with Max Life. In the meanwhile, it is gearing up for the Goods and Services Tax (GST) regime that will come into force from July 1.
In an interaction with Moneycontrol, Amitabh Chaudhry, Managing Director and Chief Executive Officer of HDFC Life Insurance, talks about the growth strategies for this financial year. Excerpts:
Have you seen premium growth across all channels of distribution?
On the agency channel side, we have always been very cautious because we think this is a model that should be grown brick by brick. We would want the model to be profitable. While the pace is not at the rate at which the industry has grown, we are happy with the number.
You ended the financial year among the top three private insurers in terms of premiums. What led to the growth?
On the group business side, we saw a very good rate of growth. There was a drop in the bank-led businesses in the previous financial year, leading to a drop in growth. However, new premiums for the individual segment saw 9 percent growth.
But several banks saw a big jump in the insurance business during the demonetisation period...
Our bank was focused on collecting money from the right customer. Because of this, they acted tough. For them, the focus was to serve the customer properly and to not cross-sell products. It was important that we support the bank in their efforts. So we did not gain any benefits of demonetisation.
Now, banks can sell products of multiple insurers. Do you see bigger banks opening up?
HDFC Bank has opened up and signed up new partners. Some of the smaller banks are also beginning to open up. That is the way to go. Some public sector banks are also talking about it. Gradually, you will see movement, though some of them who have exclusive agreements may be unable to get into multiple tie-ups.
The July 1 deadline for implementation of GST regime is approaching. What are the preparations of the insurer on that front?
We do not know the rates yet and are hoping that this will be discussed in the GST Council’s meeting in May.
However, I expect that the new regime will lead to chaos in the initial days. A lot of work has to be done in areas like technology and compliance. We are doing regular reviews as to where we are and I believe that we are on track.
Last fiscal, your cancer product was well-received. Is there any blockbuster product on the anvil in FY18?
HDFC Life Cancer Care product was well-received and some insurers even replicated it. We are launching a different type of term product in May 2017. However, the innovation in the product side is not easy. The way you sell it is where more innovation will happen.
Max Life merger with HDFC Life appears to be taking time...
We are waiting for the approvals to come through so that we can focus on integration. It is taking time so we are keeping our fingers crossed. Even if we get the structure approvals in 30-45 days, it would not be completed till the fourth quarter of this calendar year. After the insurance regulator’s approval, multiple other regulatory nods will be required. However, we will be automatically listed and that will be happen with the merger.
Would you look at expanding your pension portfolio?
On the pension side, there is a problem on expense of management. The money that we have been allowed to spend as expenses in this space is low. While this has made it difficult for us to sell pension plans, we will not stop selling them.Doubl- digit growth should happen in this financial year. We are going to increase the pace of growth in some channels.