Bajaj Allianz displaces Birla SunLife, takes No. 2 slot

A year after taking over reins of Bajaj Allianz Life Insurance Company as chief executive officer, Sam Ghosh has steered the company into the second place in terms of premium income among private life insurers.

The company mopped up premiums of Rs 494.05 crore for the eleven months ended February 2005, which is a growth of 333 per cent.

In the process Bajaj Allianz has displaced Birla SunLife Insurance Company, which had been in the second position for the past couple of years.

Birla Sunlife witnessed a growth of 95.76 per cent in premium income in the period, mopping up Rs 484.54 crore as per the figures released by the Insurance Regulatory and Development Authority (Irda).

If one were to look into the numbers, however, about Rs 199 crore of Bajaj Allianz's total premium income comes by way of single-premium policies.

As per international standards, one needs to take just 10 per cent of this figure. This coming to a little less than Rs 2 crore, would bring down Bajaj Allianz's total premium calculation.

In comparison, Birla Sunlife's single-premium income amounts to about Rs 16 crore, and that for ICICI Prudential Life Rs 114 crore.

Nevertheless, since Ghosh took over from James Walton on January 1 last year, Bajaj Allianz was at seventh place among private players.

The name change from Allianz Bajaj Life to Bajaj Allianz Life was just one of the marketing wheels Ghosh set into motion that helped Bajaj Allianz Life improve business.

With the change in leadership, Bajaj Allianz adopted a decentralised approach whereby "there are mini-CEOs in each city, who are empowered to take most decisions," said Ghosh.

Each branch has been empowered with better arsenal in terms of an expanded product portfolio with the introduction of various unit-linked plans, as they eye higher ticket customers to grow the topline.

"We have told our individual branches to benchmark themselves with the competition within their city, instructing them to be among the top three," said Ghosh.

What Bajaj Allianz did to ensure its being on the top was to set up itself in a large number of towns where the only competitor was the Life Insurance Corporation of India (LIC).

Over the last one year, Bajaj Allianz has established presence in over 300 centres as it adopted the hub and spoke business model. It boasts of having the largest set up in the private sector.

"Our strategy has been to focus and move into small towns, where we would only be competing with LIC," said Ghosh. The idea is to bring down costs in terms of salaries and real estate rentals.

Further, the high 20-25 per cent attrition rates in the insurance sector is not an issue in small towns where job opportunities for employees are not as high, he added.

Focus on alternate distribution channels has also helped boost premium income, though this is expected to take off better in the current financial year.

Bajaj Allianz mopped up over Rs 200 crore through tie ups with banks to sell its products. Standard Chartered Bank managed to mop up the maximum first year premium income of about Rs 130 crore.