 "We will enter the market when we have a full range of products: P Nandagopal")
What is the reason for not filing an individual pension plan, when your peers have entered this segment?
We have got an approval for group pension products and have started getting subscriptions for it. We have not filed for an individual pension plan. Customers generally prefer a pension plan in the accumulation phase, with a corresponding annuity product. However, players in the market have a very limited range of annuity products. Our stand is that we will enter the market when we are able to offer a full range of annuity products and a full range of pension.
What are the fallouts of not having a wide range of annuity products?
What is now being sold is not seen as fulfilling annuity needs. Sometimes, consumers and distributors confuse the accumulation product with the simple investment product. It has serious tax implications if perceived that way, as the Direct Taxes Code proposes to tax a normal savings plan and a pension plan differently. So, whether these products are positioned as a pension product and whether they are bought for the same purpose is a matter of debate.
In terms of new business premiums, group single has emerged as a big segment for you. Have you taken a conscious decision to go strong on the group segment?
As a company, we have positioned ourselves as having a 50-50 mix for group and individual segments. For us, group and individual are both significant business opportunities. Not many companies are focused on the group segment, as it is difficult to meet customer expectations and achieving the scale to justify the thin volume business. So, we thought that developing our footprint in the group business is an essential factor for our success in the long run.
You have set a Rs 1,000-cr premium target for this financial year. Which segments would contribute to this growth?
There would an equal contribution from both the individual and group segments. In the former, the regular smart saving plan and money balance plan contributes about 75 per cent. The remaining 25 per cent is the single premium version of the above two. Further, health is a segment where we have filed for a new product and await approval from Irda (the sector regulator).
You headed the committee on micro insurance appointed by the finance ministry. What are the main findings?
Our proposition is that micro insurance is profitable at the current cost and even at a reduced cost. This has dismantled two myths. One, that micro insurance is not profitable. Second, that it is only profitable at current costs. We said it would be profitable even if costs were reduced. Though it is a powerful opportunity, it will take a route of slow growth.
The final guidelines regarding Solvency-II requirements are expected soon. Have you adjusted the internal procedures to comply with the new regime?
The process hasn't begun yet. Solvency-II is a complex subject. As a concept, it is good. But, more than Indian firms, the bigger challenge is to adopt and comply with Solvency-II is for West-based companies, especially those in Europe. If that kind of capital requirement is suddenly made a norm, it will be a difficult exercise for them to comply. It would not happen in a hurry here, as Indian insurers are very small, compared to Western insurers. However, the methodology to have risk-based capital is a good idea.