High operational expenses pose a challenge for life insurance companies: Anil Kumar Singh, Birla Sun Life Insurance

Birla Sun Life Insurance Company

 

The Indian life insurance industry currently stands at around 2.7% of the GDP has 24 Life Insurance companies in India, including LIC. Birla Sun Life Insurance Company Limited (BSLI), a joint venture between the Aditya Birla Nuvo Limited and Sun Life Financial Inc., Canada’s leading international financial services organisation, ranks 5th in India amongst private life insurance companies in terms of annual premium equivalent with nation-wide distribution presence.

Replying to Manish Joshi of Newsbarons, Anil Kumar Singh, Chief Actuarial Officer, Aditya Birla Sun Life Insurance Company Ltd.  informed “2018 will witness emergence of unique distribution models like the India Post Payments Bank (IPPB) getting into selling insurance products.”

NB: What is your outlook for life insurance industry in 2018?

Anil: India’s Life Insurance penetration is comparable to Asian peers at 2.8% of GDP; however, the protection gap is alarmingly high at 92%. With the average age of an individual improving and uncertainty with respect to life worsening, people are living longer but in fear. On the positive side, individuals have realized the importance of life insurance solutions to protect them and their family’s financial goals.

Riding on a confluence of factors like increase in the working age population, structural rise in financial savings (as a percentage of household savings), greater financial inclusion and further penetration through digitization, the life Insurance industry is definitely set for rapid growth in the year to come.

Mr. Anil Kumar Singh, Chief Actuarial Officer, Aditya Birla Sun Life Insurance Company Ltd.NB: What are the challenges for growth of Life insurance in India?

Anil: Lack of adequate awareness around the importance of life insurance solutions, especially protection, is the biggest challenge for the sector. A large number of people still perceive life insurance as just another savings/investment product and ignore the risk coverage aspect of it. Customer retention is another key issue for the life insurance business, since many fail to acknowledge that life insurance create value for the policyholders in the longer run. High operational expenses also pose challenge for the life insurance companies.

NB: What is your distribution strategy?

Anil: Distribution channels like agency, bancassurance and online distribution have widened the reach and reduced costs for life insurance firms.

2018 will witness emergence of unique distribution models like the India Post Payments Bank (IPPB) getting into selling insurance products. Such channels along with the traditional agency, bancassurance and digital interfaces will ensure better distribution and penetration of life insurance products.

NB: What is the Protection Solution’s Outlook for 2018?

Anil: The increase in the percentage of mind-shift of people perceiving Life Insurance as one of the best safeguard against risk and not merely a savings instrument for future. Life Insurance companies should focus on unique need based plans basis the life requirements of customers. To protect people’s lives, dreams and goals, the life insurance industry will expand its protection solutions bouquet.

With falling interest rates and people looking for wealth conservation, guaranteed life insurance solutions will also gain prominence. With the bullish stock market, ULIPs will hold the current momentum of growth. To increase penetration and provide life insurance for all, many new-age over the counter life insurance solutions will also be offered to customers to allow easy and on the go purchase of such products.

NB: Brief us about your new product launches?

Anil: The company has launched BSLI CritiShield Plan, a first of its kind comprehensive non-participating traditional health insurance plan. It also launched the ABSLI Guaranteed Milestone Plan, first of its kind non-linked non-participating life insurance plan to offer a joint life benefit. The company also launched the ABSLI Income Shield Plan, a first of its kind non-linked non-participating term insurance plan.

NB: Brief us about your Financials?

Anil: During 2016-17, it recorded a gross premium income of INR 5,724 crore, registering a y-o-y growth of 3% and posted a net profit of INR 123 crore. Our Asset under Management (AUM) stood at INR 34,523 Crore as on FY 17.