Life insurance striding back to normalcy with growth

ICICI Prudential Life Insurance Company, the private sector market leader on the life insurance space, has registered growth in terms of various product sales in the just concluded second quarter of the current fiscal, ending September 30, 2020. Its non-linked saving business registered a robust growth of 45.2 percent, whereas the unit-linked business has also shown a strong sequential improvement during the period under review. "The company believes that the trend will continue in future too," Amit Palta, Chief Distribution Officer, ICICI Pru LI tells the Bizz Buzz in an exclusive interview

How do you see the life insurance industry now? Is the worst over? Where do you see the industry by the fiscal end?

With the gradual opening up of the economy and restarting of business activity, the life insurance industry is striding back to normalcy with growth in the new business received premium.

The amplified demand for life insurance is an outcome of increased awareness amongst consumers on the importance of life insurance as it ensures financial safety of the family in the absence of the breadwinner. Life insurance is therefore pivoting from a push to a nudge product. We believe that innovation in products and services aided by the increased level of awareness among consumers augurs well for penetration of life insurance in the country.

Which kind of products are selling more these days? ULIP sales have shown better growth. Will this trend continue in future too?

The number of Covid-19-related death claims is a fraction of the number of total lives lost, highlighting the protection gap in the country. There is a definite shift in consumer preference towards term insurance plans with a critical illness benefit. Likewise, there is an increased demand for non-linked saving products since these products offer stable returns and a guaranteed capital protection.

Our innovative product offerings on the protection and savings platform have resulted in robust growth despite the challenging business environment. In H1FY21, the share of our protection segment in the total Annualised Premium Equivalent (APE) grew to 20 percent from 14 per cent in H1FY20. The protection segment constitutes of innovative term products like 'iProtect Smart,' which is the first and only term insurance product guaranteeing critical illness premium rates for 30 years.

Our non-linked saving business which constitutes products like 'Lakshya' that offers the safety of capital while providing customers with an array of income options to choose from, registered a robust growth of 45.2 percent in Q2FY2021 over Q1FY2020. The unit-linked business has also shown a strong sequential improvement with Q2FY2021 nearly doubling over Q1FY2021. We believe this trend will continue as building a long-term savings pool continues to remain one of the priorities for consumers.

ICICI Pru has registered marginal growth in its net profit in Q2. What is your outlook? What is your view on VNB?

Given the nature of the life insurance industry, we believe Value of New Business (VNB) is the appropriate metric to ascertain the profitability of the business.

VNB is the present value of future profits from the new policies written in the period. In Q2FY21, we reported a robust VNB performance with the VNB margin improving to a market-leading value of 27.4 per cent from 21. percent in Q2FY20. Our focus on maintaining balance sheet resilience through a robust risk management mechanism and stringent investment policy has helped ensure zero Non-Performing Assets since inception and across market cycles.

Besides, on the basis of total new business sum assured, which includes both savings and the protection business, we are the private sector market leader with a market share of 12.5 percent for H1FY21, a significant improvement from our FY2020 market share of 11.8 percent

We have set ourselves an aspiration to double our FY2019 VNB by FY2023. We are confident that the 4P strategy of premium growth, protection business growth, persistency improvement and productivity enhancement will enable us to achieve this objective.

We recently raised Rs 1,200 crore through the issuance of non-convertible debentures, the largest in Indian insurance, to support business growth and further strengthen the company's solvency ratio, which is already above IRDAI mandated levels.

How is digital sale happening in the Covid period? Which kind of discount are you offering for online purchase of policy?

During this period, our robust digitalisation solutions have helped our customers and distribution partners to effectively replace the physical handshake with a virtual one. The sales force and distribution partners have been equipped with various collaboration tools to provide customers with a contactless, frictionless and paperless onboarding experience.

Our multi-channel distribution network offers customers an array of touchpoints to easily purchase life insurance; there is only a minor difference in the price of products purchased by customers either online or offline. We are conducting video calls for medical underwriting and for cases that meet specified requirements policies are being issued almost instantly.

Customers have the option to use our digital enablers like WhatsApp, Mobile App, Chatbot LiGo and the Company Website to upload the required documents. For H1FY2021, approximately 97 per cent of new business applications were initiated via the digital platform. The digital touchpoints have enabled us to simplify the customers' journey and offer them convenient 24X7 servicing options.

What about the Covid-19 special products' response?

All our existing life insurance products provide cover against Covid-19. Besides, we have also filed a Covid-19 related rider with the regulator. Our approach in these challenging times, which has disrupted lives and livelihoods, has been to handle Covid-19 related claims with the utmost sensitivity. We have settled approximately Rs 74.44 crore worth of Covid-19 related health and death claims as of September 30.

Technology-enabled solutions have ensured we are able to settle genuine claims quickly. For H1FY21, the average time taken to settle a genuine claim was 1.4 days, which we believe is one of the best in the industry.

Our 'Claim for Sure' service initiative promises to settle all eligible death claims in one day after receipt of all documents. As of September 30, we have settled 3,249 claims amounting to a value of Rs 210.38 crore under the 'Claim for Sure' service initiative.