We are expanding into annuity and pension buckets in a big way: Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance

by Emma


On the group and corporate business, there has been higher number of enquiries for renewals.

Bajaj Allianz Life Insurance has settled more than 1,400 Covid-related death claims amounting to around Rs 116 crore by mid-June, informs MD and CEO Tarun Chugh. In an interview with Mithun Dasgupta, Chugh says the company bolstered its additional mortality reserve for Covid claims during Q1FY22. Excerpts:

Bajaj Allianz Life’s new business premium grew 21.90% year-on-year for the last fiscal against 16.29% posted by the entire private sector. What kind of growth do you expect for the company this fiscal?

We will continue to remain steady on our growth path. Our recently launched annuity product is gaining traction and now accounts for a substantial part of our overall sales. I see term and guarantee products continuing to be preferred given the Covid variants emerging. Finally, as the markets are showing some highs, those individuals who have additional income are investing in ULIPs as well. Given these trends, I believe the individual business will stay strong. On the group and corporate business, there has been higher number of enquiries for renewals.

The company’s market share stood at 2.27% at the end of last fiscal compared to 2% in the year before that. What are your strategies to have a bigger pie of the market?

India continues to remain under insured and the uninsured population is high. I see that as an opportunity to develop and offer more value-packed products for customers. We are carefully analysing customer needs, customer segments and offering solutions to them.

Most of our customer base is under the age of 45, and it is easy to underwrite all of that. Now, we are expanding into the annuity and pension buckets in a big way, where the age of entry is 45 plus.

The company’s distribution has traditionally been agency dominated. It has tied-up with banks, small finance banks and payment banks to scale up the bancassurance channel as well. At present, what percentage of premium comes from the agency channel?

Two years back, the company hardly had bancassurance channel, it is going up now. The company will continue to expand its distribution model and we are doing so by variablisation of our agency model, and partnering with more banks. This has ensured we have a fairly balanced channel mix among agency, bancassurance and direct sales. During the first quarter of FY22, agency channel grew faster than bancassurance channel, which now contributes around 30% of the business for us.

The company’s 13th month persistency ratio stood at 79.2% for FY20, while for 9MFY21, it stood at 77.8%. Do you see the second Covid wave impacting the persistency ratio?

Our persistency at the end of last financial year was at 80.3%. We are ensuring we are continuously engaging with our customers and their policies remain active. We have introduced several measures for this, including auto payment, which is a simple way to stay on track with premium payments. We are encouraged by the positive response from our customers so far; and we will have to wait a while to analyse the impact of the second wave on persistency.

What is the total amount of Covid claims the company has settled so far?

In FY21, in respect to Covid claims, the company settled more than 1300 claims amounting to over Rs 74 crore. By mid-June this year, we have settled more than 1,400 death claims amounting to around Rs 116 crore.

As claims related to Covid have gone up significantly, will it put pressure on profitability?

Our solvency ratio is among the highest in the industry and stands at 666% as compared to the 150% as stipulated by the regulator. We are very well prepared to manage the claims from our customers. Further, we are leveraging analytical models and monitoring claim trends to ensure we are creating adequate reserves for claims payment, so that we uphold our promise to all our customers. Our company had created an additional mortality reserve of around Rs 40 crore last fiscal for Covid claims. In the Q1FY22, we bolstered the reserve significantly.

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