'If through growth and serving the customer we become number one, we will be very happy and very proud.'
Anup Bagchi, who took charge as managing director and chief executive officer of ICICI Prudential Life Insurance in June, says one should not be fixated on margins as those are a function of product mix in a video interview with Manojit Saha/Business Standard.
The question that is in everyone's mind is whether you will bring back the focus on growth for ICICI Prudential Life?
Yes, absolutely. Kannan (N S Kannan, Bagchi's predecessor) has done a great job, leaving a great foundation by diversifying the product portfolio, distribution channels.
Now, the focus certainly is on absolute VNB [value of new business] growth.
Margins are of course there but the focus would be really on growth.
Drive growth by penetrating into different customer segments, through a wider proposition and diversified channels.
Now, we have the best set of diversified products and the best set of diversified channels.
We have 40 banking partners, 400-plus non-banking partners.
We really have the width of channels, width of propositions with a wide variety of underlying clients whom we can serve.
What kind of new business premium growth do you expect in the current financial year?
We do not give guidance on growth. If you look at the numbers of last quarter, month-on-month we are improving.
June was much better than May, which was better than April.
Just to give a perspective on growth when we look at data, within our channels there are underlying customers who are with the channels.
If you have a non-banking partner, they will have their own customers.
In all levels, the penetration levels are not more than 1-1.5 per cent. In fact, in most channels it is 0.7 to 1 per cent.
ICICI Life is at the third position in market share among the private sector life insurers. Do you aspire to become the market leader?
The aspiration will be to keep growing. If through growth and serving the customer we become number one, we will be very happy and very proud.
The focus is...there is an opportunity. There is a path that we have set out to capture that opportunity.
I think life insurance as a sector addresses some of the core issues of financial planning.
Using that path, we certainly aspire to climb up. The end goal is to serve the customer well.
On the flip side of growth is margins. Value of new business margins dropped 100 basis points to 30 per cent? Do you see some more corrections as the company proposes to focus on volume growth?
If you see the drivers of margins, it is essentially the product mix.
The margins came down a tad because Rs 5 lakh and aboves products went away, and so did guaranteed products, which gives slightly higher margins than ULIPs and others. So the product mix changed.
Should companies like us get fixated on margins? The answer is no. Because margin is an outcome of product mix.
We should see if we are serving different kinds of customers. The diversity of products should reflect on the margins.
Because of the tax on high premium policies, resulting in shift in product mix, do you see margins further dipping?
When the announcement came, we informed the exchanges that our impact is between 6-7 per cent.
Yes, there will be some impact this year, but over a period of time it all evens out.
We have seen the customers of these high-value policies, they are migrating into ULIPs, a little bit into annuity, a large part into non-participatory products.
Retail protection has done well this quarter, what are the drivers for this kind of growth?
If you look at retail protection, we were at 62, there were others who were at 40-45 and there were others who were at 20s.
So the gap is very wide, there is a large dispersion in growth which is not seen in any other products.
All other products are largely clustered around similar growth.
Three things really drove our strategy.
There are four things which we are doing. We are doing deep data analysis of our customers.
We are also coming out with a diversified proposition which resonates with our customer base.
We are using a lot of digitalization to ensure on-boarding and underwriting are as smooth as possible.
And fourth is depth in partnership.
We went to see our database, we have 20-year data now, what is the profile of our customers who are taking protection products, with which partners are they sitting with.
So let us create capabilities within those partners, let is refresh the capability development, let us do deeper data analytics to see what can we do from an underwriting perspective and from a partner perspective digitalization of on-boarding and diversified proposition within protection so that we have different cuts of underwriting where we have pre-approved savings sum assured products.
I must add we are also seeing some bit of societal shift towards protection policies.
It is not an expensive policy. It is no longer seen as a death benefit product, rather morphing into a responsibility product.
Are group protection policies facing headwinds due to increased pricing during the Covid period?
Post the Covid period it has increased, now it is normalizing. There is no headwind in group term policies.
What is happening is the cover that you get is not very large.
Group term will be there till you are there in a job.
If the job is not there, group term policies will not be there.
We should all have independent protection which is independent of our job.
ICICI Bank has more than 6,000 branches? How do you plan to leverage the bank's distribution network?
ICICI Bank has two roles. One is as a shareholder, and another is as a distribution partner.
I must say both ICICI Bank and Prudential are very fine shareholders.
They are very supportive of what we do. As a distributor, which is a different hat, as you know ICICI Bank focuses on core banking products.
On the insurance side, it has said it will be supportive of protection and annuity.
Today they contribute around 15 per cent to our topline, thus we are well diversified and not fully dependent on ICICI Bank.
ICICI Prudential Life has 39 bank partners. What is the share of new business premium coming from these banks, excluding ICICI Bank?
Last quarter it was 16 per cent. No partner has more than 2-3 per cent concentration with us.
Is ICICI Prudential Life looking at composite insurance, for example in the health insurance space?
Finally, this is a shareholder discussion, on composite licence. Because it could have capital repercussions as we have a general insurance company.
If you were to ask the management, our view generally has been that health is an integral part of life, it fits very well with life.
Health insurance is something that we would certainly be interested in. We already do benefit; we do not do indemnity.
Feature Presentation: Aslam Hunani/Rediff.com
