IDBI Fortis Life Insurance, a joint venture between IDBI Bank, Federal Bank and Fortis European Banking and Insurance Company, started operation in March 2008. The new participant in the insurance industry is upbeat on growth prospects. IDBI Fortis Life Insurance Managing Director and CEO Nageswara Rao spoke to Shilpy Sinha about the company’s strategies during the slowdown.
What is your current strategy in a market that has so many players?
When we entered the market, we were the 18th life insurance company. So, we wanted to create a new product that specifically caters to specific needs. There is a principle that if you cannot be the first mover of a product, then try to design it in a way where you can be the first. Products always differ.
Just as Marlboro created a perception of masculine cigarettes after it came, we wanted to create different types of products. The products that we have designed are related to wealth assurance.
Our products are linked to market conditions. Many products face challenge when the stock market goes down because they especially offer equity-related investment options. But we offer a full basket, which not only includes unit-linked products, but also fixed-assured returns. Therefore, we are able to cater to investors of any type of risk appetite. We also allow unlimited free switches.
Do you see a rise in premium rates of life products?
Premium rates will not rise on the back of the recent terrorist attack in Mumbai. We have product covers like death due to terrorist attack and so we are not looking at launching any new product in this segment.
Given the problems at home, will Fortis raise its stake to 49 per cent when the insurance Bill is passed?
These are hypothetical questions. We will only address them when changes happen. As of now, our joint venture is not affected by Fortis’ international operations.
How much of your business comes from Ulips?
More than 90 per cent of the business comes from Ulips. We have collected Rs 200-crore premium income so far. Of the 50,000 policies sold, 95 per cent are wealth assurance products. So far, we have insured a sum of Rs 15,000 crore. We have seen that 60 per cent of our customers choose fixed-assured returns, whereas 40 per cent go for equity returns.
How do you leverage the parentage of IDBI Bank and Federal Bank?
At present, 75 per cent of the business comes from bancassurance, while the remaining 25 per cent is from the agency network. Both the banks have almost 1,100 branches with 10 million customers. At present, we have 30 branches and the target of 100 branches can be achieved by early next financial year.
What is the premium income target for this financial year?
We would not like to put a figure to it now as we have exceeded our expectation in the past. We will launch a new product in less than a month. It will be a mix of Ulips and traditional products. Besides, two to three other products are in the pipeline.
Irda is working on evolving M&A guidelines. How will the insurance industry react to them?
It will take some time for the market to become active and respond to the proposed norms. There are 21 life insurance companies and considering the size of the market, there are many new players.
