Jayant Dua has been steering Birla Sun Life Insurance as managing director and chief executive officer since August 2010. In an interview with M Saraswathy, he shares the company’s plans. Edited excerpts:
Your performance in June was relatively weak. What is your outlook on growth for the rest of the year?
The entire economic cycle in the country is subdued. This is an industry that is close to the sentiment of the people and the economic cycle of the nation. We expect some pick-up in the second half of the year, as pension products would be available by then. If you get back a product that accounted for 25 per cent of your sales, you would automatically start getting the benefits. We expect better days ahead.
As a life insurer, what are your key concerns?
There is consensus among us (life insurance companies), in terms of concerns. While we need to find a solution to the taxation issue, concerns remain on bancassurance. In bancassurance, it is necessary to have an open architecture. The more the choices for the consumer, the better it is for the industry.
Is mis-selling of products still a concern? What steps have you taken to address this?
Mis-selling would always remain a concern for the industry. The unfortunate part is when the economic cycle is down, the tendency of mis-selling rises. We have many teams working to ensure adequate training for advisors and corporate agents. We are also contacting customers to check whether they have understood the risks.
The network of corporate agents is declining. Will this trend continue?
I think at this point, everybody is revisiting their business model. Every change takes some time to be assimilated. I think now, the process (of reducing corporate agents) is coming to an end. The challenge, however, would be managing the cost of customer acquisition.
The insurance regulator will release new product guidelines soon. Is there concern the new norms may hit your business?
We will assess the impact once the final guidelines are released. The industry has already shared its views on the draft guidelines with Irda (Insurance Regulatory and Development Authority). We have suggested adequate time should be given to the industry to manage the change. We should also have collaborative discussions on the required changes. So far, the discussions have been positive.
Most life insurers have reduced their portfolio of unit-linked insurance products (Ulips). Are you also focusing more on traditional products?
I think Ulips are very important for Indian consumers. We are still maintaining a very balanced portfolio; Ulips still have a share of 54 per cent in our portfolio. Our belief is very simple — we would rather have a rounded-off product strategy, not lean heavily on one product. One should look at insurance from a long-term perspective. Returns from the stock market (over a long-term period) are better than the yields on gold and debt investments.
Have you filed for new pension products?
We have filed for individual pension products and are awaiting a response from the regulator. The pension market continues to have very strong growth potential. The guarantees expected (from these products) were far too onerous over a long-term horizon. Also, the instruments were not supporting these. Hence, insurers were not filing for new pension products. But now, it is based on capital guarantee, and I think product filings have started.