While growth in the life insurance industry’s new premium income remained flat this financial year, Shriram Life was able to maintain growth in both premium and profit. What was your strategy?
From the beginning, we have been frugal with our expenses. We have a huge customer base and distribution network in place. Every second policy we sell is to rural customers. Therefore, while the industry contracted about 50 per cent since September 2010, in terms of the number of policies, we have grown 100 per cent.
Our average ticket size is as low as Rs 12,000, while the average ticket size for the industry is about Rs 25,000. We have covered 9,50,000 customers on the retail side and 10,00,000 customers on the group side. Last year, we recorded 1,54.000 policies and Rs 618 crore of total premium. We are looking at 20 per cent growth in premia this year.
You are a major entity in rural India. Are there any specific micro-insurance initiatives you are considering?
We are working with Shriram Transport Finance. Through this, each borrower gets a loan protector policy from us. We have developed a niche market there; we cover 50,000-60,000 lives a month, with 100 claims a month. It is a single-premium product with no distribution costs; it is adequately priced and is bundled with loans. From this segment, we have premium of about Rs 15 crore a month. Now, Shriram Transport Finance Company is also our corporate agent. About 60 per cent of our premia is accounted for by captive customers.
With Shriram City Union Finance, we provide cover on consumer durable loans and loans to small and medium enterprises, again bundled with the product. We have also partnered microfinance firm Grameen Koota to distribute our products in rural areas.
Direct business is the largest segment in your distribution network. Would this include the sale of online policies, too? Would you ramp up the agency channel, as your peers have?
Our customer base is not one that would opt for policies online. As part of the direct business, we are setting up offices across the country, except the South, as we are already present there. We have opened 30-35 offices in the 12-16 months. We plan to open another 30-40. These would have trained manpower to sell products.We have about 6,000 agents of which 34 agents have had highly productive business. We will continue to keep hiring. Also, the attrition rates among our agents are low.
You do not have banks as corporate agents. Following the insurance regulator’s nod to banks to act as brokers, have any agreements been signed?
We are in talks with banks. But unless the Reserve Bank of India gives a go-ahead, banks would not be able to act as brokers. Being a late entrant, we did not have any bank partner and the bulk of the industry business is coming from bancassurance.
We do have tie-ups with cooperative banks and are also looking to do so with one or two cooperative banks in Rajasthan. However, these might not get us a high ticket size. We need high ticket size premium, which would take care of our persistency and premium.