Whether it is the right time to invest in insurance or what will happen in the short term is unknown, however, by the looks of it, the insurance growth story is very much intact for the longer term, said Rushabh Gandhi, deputy chief. Managing Officer of IPO joined IndiaFirst Life Insurance.
In an exclusive conversation with ET BFSI, the industry veteran told the story of when he used to be a banker in the 2000s, and then moved to life insurance. At that time, many people used to ask him about his move into life insurance and after talking to many experts, colleagues and the who’s who of the BFSI segment, he came to know about the upcoming sunrise industry.
Interestingly, if someone were to ask him that question even today, he believes that insurance is still a sunrise industry.
First of all, life insurance penetration continues to hover around the 3%-4% mark, which is grossly underpenetrated as a % of GDP. The protection gap in a country like India is huge. Technology is getting smarter every day, so the complications in buying a life insurance product will continue to decrease.
People, five to seven years down the line may not need any doctors or submit any proof of income because the insurers will already have it with the client’s consent. The process will become much easier and more people will be encouraged to buy.
Insurance will become more of a pull product than a push product, and as a result, anyone who invests in life insurance with a long-term view is likely to make the right decision,said the deputy CEO.
He believes that insurance for all within 100 years of independence is a distinct possibility. The only footnote or the only asterisk he would like to put here is ‘100% of the insurable population’.
Even from a regulatory point of view, the sector sees that the IRDAI is extremely active and is actually trying to develop things. Even the insurance companies in terms of knowledge and expertise are very close to 10 today on a scale of 0 to 10, having learned from their mistakes.
I don’t foresee 80-year-olds getting insurance or four-year-olds getting insurance. But I certainly foresee that everyone who is insurable will be insured by 2047,he added.
Companies just need to act a little more responsibly when it comes to playing with consumers. IndiaFirst is at least trying to do that and if everyone else also follows the same practice, unless there is something catastrophic like COVID or a massive global tsunami, Gandhi sees no obstacle in the growth story of the Insurance sector.
IndiaFirst Life Insurance is currently ranked 10th in the private sector today, which is why it benchmarks the nine companies above it. The stated goal is to grow at a rate that is faster than the growth rate of the top nine companies, he emphasized.
The plan is to keep their 10th position and going higher is not part of the agenda now.
With new players entering the Life Insurance segment after a long journey, how do you view the competition?
Competition is always welcome. It helps make the industry stronger, easier and more agile. Now, will a lot more life insurance licenses be handed out? Probably yes, but that doesn’t mean everyone will succeed. To have a successful insurance business, there is only one thing you need and that is distribution.
So, either you come in partnership with someone who has a massive distribution network, or you support your digital capabilities. This is what players like Acko and Go Digit will end up doing. They have a proven model on the GI side. They did some disturbing things. But their focus, at least Acko’s focus, was on the digital side of the business. You might get some – issue (phonetic) in three steps, life insurance in three steps, some kind of thing coming up. But I don’t think it will be very disruptive.
The biggest difference between GI and Life is that Life is such a long term product that you may not want to buy it from Acko or Go Digit but buy it from SBI Life or IndiaFirst Life because of its parentage,Gandhi said.
Briefly explain the distribution model of IndiaFirst Life Insurance? What works for you?
Our stated objective since many years now is that IndiaFirst Life will be a bancassurance-led multi-distribution channel organization. It effectively means that bancassurance will always be our dominant channel, but we will always be in every other channel that exists.
Even today, Bank of Baroda does about 70% of our business, Union Bank does about another 16% to 18% of our business. Everything else is shared between all channels.
We have an agency business, not necessarily a very large one, but we have a unique niche agency business that we are now expanding. We work very closely with people who share our thoughts in terms of mental space, etc. If we have to do something that is out of our comfort zone, we won’t. But still we have a presence with all the brokers that are related.
We have a link with the common service centers (CSC). In fact, it is a strategic link because we actually hold a stake in CSC, and as a result, we actually do 90% of the insurance business there. We have a micro-business in which we credit life with micro-finance institutions.
We have a corporate finance business that manages the bonus judgment and exit collection funds of large corporations. In addition, we have a direct and digital business, in which we are in the process of revising our website to make it more user-friendly.
How important is it to capitalize on the ‘Bharat segment’ and how do you plan to do it?
To give you data, we have already sold policies in more than 90% of the pin codes in India and this was possible because of our technological prowess. Today, having a brick-and-mortar model and going to every nook and corner in the country and picking up a thousand-rupee check is not worth it. So, the focus on Bharat will continue.
Bharat is the next big thing. It will be the place from which the delta comes. To leverage or benefit from this delta, you have to be a strong player on the technology side, which we are. We anticipate more business coming from rural India than from urban India,added the industry veteran.
The advantage we have here is that we have about 8,000 branches in BoB, about 8,500-9,000 branches in UBI. We have about 5,000 branches among our Regional Rural Banks. We are there in every corner and we have sold policies in every corner.