SBI Life to focus on corporate clients

SBI Life proposes to capitalise on the State Bank of India's (SBI) corporate relationships.

The focus of the company in fiscal 2004 was on insuring SBI's home loan customers. "We are aware of SBI's strong corporate client base, and this will be a big focus area for us in the coming fiscal," said SBI Life's newly appointed chief executive officer S Krishnamurthy.

However, this business will need more capital in view of the claims ratio. SBI and its French partner Cardif infused Rs 50 crore into the life insurance firm last Saturday, taking the share capital base to Rs 175 crore.

Acknowledging the prevalence of a rate war in the corporate insurance business, which makes it unviable, Krishnamurthy said: "SBI Life needs to be in this segment. We cannot afford not to be."

With most life insurance companies marketing group products to corporates, the latter have the ability to negotiate the best deal. This sometimes results in premiums falling below the actual claims, which he added can be huge. On what would be SBI Life's major challenge in the future, Krishnamurthy said: "Ensuring the success of the bancassurance model will be the key channel."

SBI has partially met the management's mandate of ensuring 50 per cent of fresh home loans are taken along with an insurance cover of the borrower. Since December SBI Life has processed 12,000 home loan proposals monthly, and expects this number to increase to one lakh by the end of fiscal 2005. "The idea behind cross-selling is to leverage on SBI's (80 million) customer base by offering a variety of products to ensure the bank is able to retain its customer," said Krishnamurthy.

SBI Life expects to close fiscal 2004 with a premium income of about Rs 170 crore. "Majority of our income has come from non-metro towns and not from the top eight cities. This is because we do not have an unit-linked product, which has attracted demand from metro cities," said Krishnamurthy.

SBI Life will introduce its version of an unit-linked plan in the early part of fiscal 2005. These products have become crucial at a time when interest rates are falling and unit-linked plans allow insurers to pass on the investment risks to policyholders.

Where does Krishnamurthy see SBI Life in the coming years? "Definitely among the top three players. It will take at least one decade for any player to top the Life Insurance Corporation of India," he said.