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

by Joseph K. Clark

IThere has been a higher number of inquiries for renewals on the group and corporate business. According to MD and CEO Tarun Chugh, According to MD and CEO Tarun Chugh, Bajaj Allianz Life Insurance has settled more than 1,400 Covid-related death claims amounting to around Rs 116 crore by mid-June. 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. There has been a higher number of inquiries for renewals on the group and corporate business. Finally, as the markets show some highs, those individuals with additional income also invest. Given these trends, I believe the individual business will stay strong.ITon the group and corporate company.

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

Tarun Chugh

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

Most of our customer base is under 45, and it is easy to underwrite all that. Now, we are expanding into the annuity and pension buckets in a big way, where the entry age 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. At present, what percentage of premium comes from the agency channel?

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

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 persistence at the end of last financial year was at 80.3%. We ensure we continuously engage with our customers and that their policies remain active. We have introduced several measures, including auto payment, a simple way to stay on track with premium prices. We are encouraged by the positive response from our customers so far, and we will have to wait a while to analyze the impact of the second wave on persistence.

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

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

As claims related to Covid have increased significantly, will it pressure profitability?

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

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