Axis Bank JV to drive volumes: Max Life Insurance MD & CEO Tripathy

PRASHANT TRIPATHY, MD and CEO of Max Life Insurance, is confident the alliance with Axis Bank is a mark of a new beginning for the company, both in terms of growth and better customer satisfaction. In an interview with Hamsini Karthik, Tripathy explains why savings products would continue to propel growth in the near term. Edited excerpts:

With Axis Bank becoming a stable Banca partner, what does it do to Max’s growth potential?

Axis Bank has been with us for over a decade as a bancassurance partner, under which we have serviced long-term savings and protection products to nearly 2 million customers. The closure of this transaction marks a new phase of growth and stability for Max Life. The joint venture (JV) strengthens our brand. It brings Max Life on a par with the top three bank-sponsored life insurance firms.

Some peers that are bank-led life insurers are trying to reduce their dependence on bancassurance. What is Max’s philosophy?

Max Life is the one of the largest non-bank life insurance companies, but with the Axis Bank JV on its side, it now has the best of both the worlds. Our bank relations­hips collectively bring about two-thirds of our sales and 55-60 per cent of that is contributed by Axis Bank to our individual premium business. This JV will drive further momentum in not just overall greater volumes, but also superior customer experience with customised products. Online is the highest growth engine for Max Life. E-commerce accounts for 12 per cent of our policies, which has been growing over 50 per cent YoY.  Our focus will not only be on strengthening the banca tie-ups, but also nurture and grow our proprietary channels.           

At 24-25%, have value of new business (VNB) margins peaked?

For the nine months ended December 31, 2020, Max Life’s margins went up to 25.9 per cent from 21 per cent in the year-ago period. The VNB written during 9MFY21 rose 37 per cent YoY. Margin improve­ment was led by a shift in business mix towards non-par savings and protection. Individual protection grew 54 per cent YoY and penetr­ation rose from 8 per cent in 9MFY20 to 10 per cent in 9MFY21. We will continue to drive margins by leveraging non-par savings and protection and tap new opportunities like health and retirement.

How do you see the mix between protection and savings evolving in the next year? 

The industry has not been able to leverage as much as it should have around key offerings for protection, health, and retirement. Savings will remain because Indians prefer to save and life insurance is seen as a safe vehicle. I think there’ll be a gradual progression towards products with more protection, health, and retirement coverage that are under-penetrated markets today. Though the pandemic has embedded this notion, penetration remains a long-term challenge. The mix of protection will progressively continue to increase.

There’s a notion that protection business has done its rounds and has perhaps peaked in terms of growth. Your take?

That notion may not be accurate. India continues to remain very low compared to developed industry on sum assured per capita, which indicates that Indians are not appropriately protected. Our India Protection Quotient has indicated that every year. In terms of growth, we have massive scope expansion around the country. With the right level of education/awareness, customised product offering, and robust sales channels, the industry can witness higher participation.