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Star Union Daiichi Life Insurance has achieved break-even in sixth year of operation, with profit of Rs 12.8 crore. Girish Kulkarni, managing director and chief executive officer, talks to M Saraswathy about the strategy and progress. Edited excerpts:
You achieved break-even in six full years of operation. Was having a bank partner an important reason?
Having bank partners on the distribution side is an obvious advantage in managing costs, as you deal with a predictable environment. The bigger advantage comes from having banks as promoters, as you get to use their brand strength and trust in any joint initiatives. This brings cost advantages in managing processes and products. And, most important, helped get visibility.
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Bancassurance remains at the core of our existence. We have continued our growth trajectory of 20 per cent (annually) in retail premium over recent years and this growth is largely fuelled by our growth in bancassurance. This growth has also come riding on the right parameters like product mix, including 90 per cent regular premium products.
Do you expect a similar growth trajectory in this financial year?
Having shown consistent annual growth over the past few years, we are now more prepared to raise the bar. We are expecting a growth trajectory of 30-plus per cent for the current year in the retail business, our core focus area.
Is persistency a challenge for you, as for the sector?
Persistency is a challenge the sector as a whole has been facing, for various reasons. We, too, had significant challenges managing the conservation side of our business. However, we have been able to improve our Year-1 or 13-month persistency to about 55 per cent; and the combined persistency of Year-2 and above to about 85 per cent.
As a company, we have set up a separate business conservation group unit to enhance our focus on the policy life-cycle management of customers, through various means involving technology and people. With all these efforts, we expect our business conservation ratio to improve further in the next year and reach a 75 per cent overall conservation target.
Now that the Insurance Bill has been passed, has the process been initiated for your foreign partner (Dai-ichi Life) to raise its stake in the venture?
We have three promoters -- Bank of India, Union Bank of India and Dai-ichi Life Insurance, Japan. They have started talking to each other on the subject. The joint venture agreement provides scope for the foreign partner to increasing stake by 18 per cent immediately upon the increase in the foreign direct investment limit. Any further possibility needs to be discussed between the three promoters and the process is on.
