Money & Banking
Private life insurer plans to roll out more products in annuities space in coming years
Bajaj Life Insurance Company Ltd (BALIC), a private life insurer, sees ‘deferred annuities’ emerging as a blockbuster product for the company in the coming days, said Tarun Chugh, Managing Director & Chief Executive Officer.
This company, which sold deferred annuities worth ₹400 crore (first-year premium) in FY22,sees this product remaining a significant growth driver in the current fiscal as well, said Chugh.
“ If I look at the 49 per cent growth in Individual rated new business (IRNB) that we clocked in 2021-22, nearly one-third of this growth came from deferred annuities. I used to sell about 1,600 annuity policies. Last year I sold about 30,000 annuity policies. Each policy is twice my average premium. Deferred annuities contributed 11 per cent of my product mix last fiscal as against 2 per cent in previous fiscal. It is becoming a blockbuster product for us and industry as well,” said Chugh.
In FY22, BALIC recorded IRNB of ₹3,686 crore, up 49 per cent over ₹2,468 crore.
Chugh, who recently completed five years at the helm of BALIC, said he sees the current demand tempo for deferred annuities continuing and noted that the company would roll out more retirement solutions around annuities.
Put simply, a deferred annuity is an insurance contract that generates income for retirement. Besides building up one’s nest egg for retirement, it also generates income once retirement age is reached for the customer. There are different types of annuity products.
Chugh highlighted that 20 per cent of India are above the age of 50, and their core need is deferred pension. “In India the awareness for saving for retirement has gone up. So has the life expectancy for an Indian,” he added.
Chugh also said BALIC currently has no plans to float any subsidiary for pension funds management, even as it is focussed on having a large annuity business in the days to come.
He said BALIC would be focussed on customer-centricity in its journey going forward, and leverage technology and product innovation to achieve this objective. “We will now be more customer obsessive than what we were earlier. It is not that we were not customer focussed earlier. But the level will certainly go up even more with customer-centricity being the main plank of our strategy,” said Chugh.
“We will put customer first in all that we do. We see business growth as a by product of this customer centricity approach. It will help us be agile to customer demands. Not just only for product or service demand, but also for aspects like simplicity demand and ease of onboarding demand.”
Chugh did not want to be drawn into the company’s business growth aspiration numbers for the current fiscal, but noted that BALIC would surely strive to grow double the growth rates seen at the industry level.
BALIC is currently the fourth among private players in terms of new business premium in 2021-22. It is ranked fifth in terms of gross written premium among private players in 2021-22.