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Private life insurer Reliance Life Insurance plans to reduce the Ulip (unit-linked insurance plan) portfolio in its overall business mix. In an interview with M Saraswathy, chief executive Anup Rau talks about the company's strategy and the way forward. Edited excerpts:
Reliance Life has seen growth in market share and average ticket size. Have both traditional plans and Ulips contributed to this?
About 80 per cent of our portfolio is accounted for by traditional products. I think unless a policyholder has a long-term view (at least 10 years), Ulips might not be the appropriate product. We have been able to see healthy growth, even without selling a large quantity of Ulips.
This financial year, too, we will continue with that strategy. In fact, we plan to bring down Ulips to about 15 per cent of our product mix in FY16.
While new premiums have seen growth, profits have fallen. Why?
There was a drop in profits purely because we strengthened our reserves. We will continue to do that if interest rates fall.
The agency and direct channel contributed the most to premium growth. Will this continue?
For us, individual agents and the direct channel contribute about 80 per cent to the business. Our direct channel helps up-sell and cross-sell to existing and new customers. We have 1,900 people as part of direct selling; this contributes about 10 per cent to our top line.
Is the absence of a bank partner a challenge? Do you expect open architecture to be a reality in India?
A bank partner would be an advantage. But unless open architecture is made compulsory, we do not see big banks opting for this model. Having an open model would give more choice to customers.
Since many years, we have had enabling regulations for banks to become brokers. But none decided to take this route. In many Asian countries, though there might be regulatory norms for open architecture, many have adopted it, though it isn't mandatory. Open architecture will be adopted in India, though it might take time.
With the insurance Act being passed, will your joint venture partner, Nippon Life, increase stake in the life venture?
We are studying the norms and will wait for more clarity from the regulator on the rise in foreign direct investment. Nippon Life will increase its stake after that. We expect it to do so by the end of this financial year.
