More risk in our book helps us become more agile: MD, Bajaj Allianz Life

In a Q&A, Tarun Chugh dwells on how his firm became the fastest growing in its space, recent Irdai initiatives, and the company's future plans

Bajaj Allianz Life Insurance has grown at a brisk pace in the current financial year and aims to sustain the momentum as the industry enters its busiest quarter. Tarun Chugh, MD & CEO of the firm, spoke to Subrata Panda on how the company has managed to become the fastest growing firm in the sector, the recent initiatives of the regulator, and the company’s plans going ahead. Edited Excerpts:

To what extent has the business grown during the past few months?

We grew by 32 per cent in Q2 and were among the fastest growing companies in the sector. In Q3, October has seen healthy 28 per cent growth and even November was good. Overall, the company is expecting a good Q3.

Have the supply side constraints eased in the retail protection segment?

As far as supply side issues are concerned, the reinsurer bit has not been sorted out completely. But we are hearing the right kind of things from them and they are opening up. But that has not played out yet. The reinsurer’s openness is getting better. In some segments, it has already gotten better, especially in segments where the data is quickly available and does not come with a lag.

The insurance regulator has extended great support on term business by allowing the “use & file” procedure. This allows us to offer various term plans based on different parameters. If companies are agile with their products and in meeting the needs of various customer segments, they will rule the roost in Q3.

Is there a plan to increase retention in your books?

We have already done that. For retail plans, we have increased our retention to Rs 1 crore. It used to be Rs 40 lakh earlier, and Rs 20 lakh even earlier. So, we are taking more risk in our book and that is helping us become more agile and nimble. It is also helping us reduce supply side constraints.

With FD rates moving up, how have your guaranteed products been impacted?

Yes, they have begun getting impacted to some extent. That said, no FD can give you guaranteed returns for 10 years. As people are seeing volatility in FD rates, we are seeing smart thinking from customers, where they are locking in the benefit for a longer term. While the competition is increasing from FDs, which is in some way impacting the guaranteed segment, we still find that for longer term products, people are interested in locking in with life insurance companies.

Now that markets are touching all time highs, has the Ulip segment recovered?

Yes, Ulips have gotten better. Investors were a little concerned because of the external world. While equity markets are touching new peaks, the euphoria has not yet gotten to Ulips but the undertones are getting better, and perhaps December will be a stronger month for these products.

Which segments would you be focusing on, going forward?

Out strategy is different. We work with customer segments and distributor segments. So, we let customers decide what they want. About 4-5 years back, we were a mass segment player. But today, we are well distributed across India and Bharat. We have a good presence in each and every segment and it is getting better. Unless our distributors change their stance, which is led by the customer, I do not see a big change in our products.

How do you view the regulations that Irdai is planning to introduce in EoM and commissions?

It’s very forward looking. Earlier, there was too much micro management. Now, the regulator has said that the expense of management (EoM) limits are not going up and all our expenses have to be kept under the limit. The good thing is that the regulator is saying that as the benefit of scale starts coming, resulting in EoM getting lower, the benefit of expense reduction has to be then passed on to the customer. So, it's a customer-friendly move more than anything else. Because they're not looking at every line item, it becomes liberating in some way.

What are your thoughts about the “Bima Sugam” platform?

It’s a positive move and the way it pans out for life insurance and general insurers may be a little different. Standardised simple plans will do very well on this platform. Even complicated products that require aided sales will do well because being on the platform means there will be a lot of trust and transparency. Thus, the volumes will go up significantly. I feel most customers will buy from the agents and distributors because one would still need clarifications. Yes, it’s a UPI moment or demat moment for the life insurance industry.

Would you buy some stake in the platform?

We will be very happy to take equity in the platform, but it will depend on how these regulations come.

How do you plan to meet the growth targets set by the regulator?

We take anything that comes from the regulator very seriously. So, we are putting all our might into it. That said, the targets are very stiff. If anybody is close to achieving them targets, it will perhaps be us because we are one of the fastest growing companies in the sector.