 "Sandeep Ghosh")
Private life insurer Bharti AXA Life Insurance is on track to book statutory profits in the next couple of years and has also enabled sales through tablets. In an interview, Sandeep Ghosh, managing director and CEO of Bharti AXA Life Insurance, tells M Saraswathy how foreign direct investigation (FDI) will impact the sector. Edited excerpts:
The 26 per cent cap on FDI in insurance is likely to be raised to 49 per cent. Will foreign partners rush to increase their stake, once the Insurance Bill is passed?
With respect to FDI, the Insurance Bill looks more likely to be passed now than ever before. However, we have to see what form and shape it would be in. The exact implications of the comments made by the finance minister in the Budget has to be seen.One is about the FIPB route, which is a departure from the present automatic route. Another grey area is around management control. Generally speaking, neither the regulator nor the government gets into control discussions of individual companies. Control is something for shareholders to work between themselves since in all these joint ventures, the foreign partner brings domain experience and the Indian partner brings knowledge of the Indian market and relationships with government and regulator. It is for these partners to define their relationship. But the government can have a view that the largest shareholding has to be Indian.
The draft Insurance Bill that will be tabled in Parliament will provide some clarity on FIPB, composite and management control. FDI hike will lead to incremental capital coming in and incremental investments. It will also increase the foreign partner's stake in the Indian operations, with respect to their ownership and skin in the market.
Bharti AXA Life Insurance is yet to post profits. Will this happen in the current financial year?
Our statutory profits will come in the next couple of years. Last year, we had a 31 per cent growth in top line and there was a marginal increase in statutory loss on account of certain investments that we had done in the business. In the underlying earnings, last year, we saw our first profits from an IFRS (International Financial Reporting Standards) perspective. We had one of the fastest growth rates in the industry. Business is becoming much more profitable.
Direct selling as a proportion of your total business has seen a jump. Will there be more offerings online?
With respect to the number of polices, direct selling is touching eight to nine per cent of our total volumes. In value terms, it is less since the pure-term product is low-ticket. Direct selling through online selling has not taken beyond the pure-term product. Beyond this, there are few examples of very simple products. The pure-term products have reached a plateau and the market has reached saturation. For direct channel to get the new wave of growth, you need more product ideas. We are working on a few product ideas, although it is at a very early stage.
Is there any capital infusion on the anvil, since last year there was some infusion?
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Every year, we need fresh capital to fund losses (that are albeit reducing) that we have as well as capital from a solvency perspective. We are doing a lot of business that is protection, which requires a higher solvency capital and that is good capital. Capital for us in not a constraint in any way.
Selling through tablets is another mechanism that you have adopted. Has it generated good volumes?
Tablet selling is a means to an end. It is to ensure need-based selling and is a way to deliver better customer experience and sales person gives more consistent experience to customer. Though the tablet, a financial need analysis is done before giving a benefit illustration to customers. We will keep enhancing the platform. From a company perspective, it has given us a huge productivity increase.
