We are trying to rebuild the selling process: Pankaj Razdan

Neha Pandey-Deoras and M Saraswathy
Business Standard
26 March 2014

Private life insurance company Birla Sun Life Insurance already has more than 10 products in its portfolio under the new product regime and is adding many more in the next few months. In an interview with Neha Pandey-Deoras and M Saraswathy, Pankaj Razdan, MD &Chief Executive Officer, Birla Sun Life Insurance and Deputy Chief Executive - Financial Services, Aditya Birla Group, who took over as company head a few months ago, talks about their product strategy and growth path. Edited excerpts:

The company had a 35.7 per cent d;rop in net profits for the nine-month period ended December 31, 2013. Do you see better numbers going forward?
Our profitability is a function of the normal business plus the function of some dividend payouts and buybacks. Profits are a function of the underlying business growth. So, I am bullish over a long period of time on our business. Our focus is to build a large franchise around customers, though margins might be under pressure. I'm certain that sustainable profit growth would be far better.

How has the transition to the new product guidelines been? Is your product portfolio complete?
These guidelines are very strongly focussed on the customer this time. But it could be that the change was so fast and so sudden that people took time to absorb it. But certainly, anything that is so customer-focussed, has to do better. I sense that this would make the insurance industry a much better industry than what it was till sometime back, from a customer's point of view.

We had filed for a lot of new products. This month, we got approval for 3 to 4 products. We got approvals for 5-6 group products. Overall, we had filed about 13-14 individual products and have enough products to sell right now. Basic products are in place and this is the case with most others. I think it is a question of one month here or there; everybody will get their products in place. In our case, it was much more because we were very Ulip-focussed (unit-linked insurance plans) earlier. Hence, many products underwent change.

Will your Ulip-focussed strategy continue to be followed?
Our strategy is the customer and customer-outcome. When you focus on the outcome, the customer himself will decide what is best and what is not best for him. We are trying to rebuild the whole selling process to start from a customer. It won't be easy, it is a journey. Even if a part of your distribution team starts today, you will slowly see the conversion (in customers) happening. I will provide all traditional and Ulip products.

With the traditional guidelines being passed, in the short-term, do you see some stress on the new business premiums?
Initially, there will obviously be some stress on new business premiums. If I am an agent, I was able to sell a similar kind of outcome either through a traditional plan or through a Ulip. Another function that is also being seen right now is that though my average ticket size has been reduced, one can also go and sell more number of policies now. Thus, you will start seeing more retail participation for which the middle class segment are normally looking for a certain outcome.

This trend has just started though it is still early. If an agent sold policies with an average premium of Rs 50,000 earlier, it has come down to Rs 24,000 now. But the same agent is selling more number of traditional plans as it is easy to explain that since markets have not been doing well, one can get money-back or have a guarantee and so on. Hence, traditional is being picked up and agents have also realised that they can sell more.

Reports suggest you are looking at Aviva's India business. What do you have to say?
We do not comment on speculations. Our focus is to do business in the right way. Whatever comes in the future is a different thing.

Is health insurance a space that you are looking to enter?
We have always been exploring business opportunities. We are a financial conglomerate, so we keep looking for all business opportunities. There are so many businesses like broking where we were never there when we started, but now are present.

As a business house, when we want to offer end-to-end services, we keep looking for opportunities, whether we are ready for those opportunities or not. We have business interest in all verticals and are waiting for the opportune time.

When FDI in insurance was talked about, there were expectations that it would be passed. But it didn't. Is that why the interest in IPOs that had suddenly spiked, also came down?
An IPO is also one of the ways for growth in the industry. People wish to go for an IPO when the growth is stabilised, sustainable and foreseeable. Markets have also undergone so many changes — capital markets and regulatory. That could be one of the other reasons. Lastly, you opt for IPO to raise capital. I think most large insurance players have quite deep pockets. So only those who are strained of capital, may go to the market.