Q& A from: Birla Sun Life Insurance Spokesperson: Mayank Bathwal, Chief Financial Officer, Birla Sun Life Insurance Co. Ltd

Q& A from: Birla Sun Life Insurance

Spokesperson: Mayank Bathwal, Chief Financial Officer, Birla Sun Life Insurance Co. Ltd.

How has this year been so far for Birla Sun Life in terms of new business?

BSLI has recorded a good start for the year in Q1 of the current fiscal. It registered a growth of 5{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} well supported by a strong performance by all product lines and distribution channels. The broadening of product mix to include more than 10{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} sales from non unit linked products helped derisk the new business share for the company, especially in an uncertain environment facing the industry, given the extent of regulatory changes.

As per the IRDA data, we consolidated our Top 5 position in terms of new business market share. This was supported by a very strong closing to the quarter in June 10, with a sales growth of 13{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5}.

BSLI also posted its maiden profit of Rs. 9 crores for Q1 FY11 against a loss of Rs. 111 crores in Q1FY10. This was aided by increase in renewal premiums by 27{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} YOY, reduction in Opex ratio by 200 bps and improvement in the product mix which now includes a larger share of traditional products thus reducing the new business strain

What are the challenges for the industry now?

The recent regulatory changes re-establish ULIP as a long-term protection cum savings instrument but there is a growing need to further broad base the product mix to include a healthy proportion of non unit linked products. An important area to focus for the industry will be to increase efficiency across its operating model covering both sales and distribution structures and the back end operations model to optimize the current cost structure, which is essential to be able to operate within the new limits on charges through the ULIP products.

Despite these challenges, we continue to remain bullish on the opportunity that the life insurance sector has to offer to the players and see continued strong sales growth in the years ahead

Are your expansion plans on track, since the new guidelines are forcing insurers to tighten their belts? What is your strategy to sustain margins in the wake of the new IRDA guidelines?

BSLI has a PAN-India reach through over 600 branches, 150,000 advisors and over 600 third party relationships. We believe that this distribution scale and reach gives us the ability to meet our aspirations of a large and national life insurance player. We continue to look at new and alternate channels of distribution, including channels to tap the rural segment opportunity.

The impact of margins can largely be insulated by focusing on a balanced product portfolio and achieving higher efficiencies. We are actively working on various initiatives to optimize the current cost structure to achieve these efficiencies.

And also, how would the new regulation impact future products from your company?

What is your current product mix? Would you be taking a relook at the product mix?

One of our core strengths has been product innovation and we will continue to lead the market in this space by ensuring that we offer a wide range of products on all platforms, both ULIP and non ULIP. We are working on introducing a wide portfolio of even more competitive and efficient ULIP offerings post the reduction in charges across the product lifecycle. Similarly we are increasing our range of products on the non ULIP platform.

Currently, close to 25- 30{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} of policies sold are contributed by our traditional product range. Our recently launched BSLI Bachat Endowment Plan has seen very positive customer response

How have the product segments performed? Any new launches that you are looking at in the immediate future?

As mentioned earlier we already have a good traditional product portfolio and will work towards strengthening the same while we introduce a revised ULIP product range. The idea will be to create a favorable mix of Non-ULIP and ULIP products in our product portfolio. These product offerings will be for meeting customer needs across their life cycle including, protection, wealth, savings, retirement and health.

For further information, please contact: 
Atul Malikram 

We have many more Life Insurance Help Articles Now Available.