Money & Banking

Sales of ULIPs are likely to start picking up: Tarun Chugh

Surabhi Mumbai | Updated on November 15, 2020

The life insurance sector, which has slowly been seeing a revival, should register growth from the fourth quarter this fiscal, believes Tarun Chugh, Managing Director and CEO, Bajaj Allianz Life Insurance. He added that with the stock markets now doing well, sales of ULIPs could also see an uptick.

In an interview with BusinessLine, Chugh said that Covid-related claims have not been an issue for the life insurance industry as yet but noted that frauds could prove to be a concern. Excerpts:

Life insurance sales now seem to be picking up. What is your outlook?

The first quarter was flat for us and negative for the industry; but from the second quarter, there has been an improvement month on month for the sector as well. Sales are coming back and we are seeing a positivity in the market and good uptake of all products. From the fourth quarter, there should be growth as well. For the sector, the third quarter is difficult to predict, but it should be flat if not register growth over last year.

Are guaranteed and term products still the main draw in the sector?

Guaranteed and term-life products will keep seeing an uptick. But with markets also now doing well, sales of ULIPs are also likely to start coming back.

What has been your strategy to reach out to customers in the Covid-19 pandemic?

Given that customers have wanted to keep a distance, it is really the digital assets that have popped up. We have tried to keep safe and simple consumer technologies across the board. We have come up with a lot of innovation such as a screen-to-screen sharing platform specific to our apps. It is almost like Zoom or Teams app, and that’s helping a lot.

What kind of Covid-related claims have you got?

Initially, in the first quarter, claims were quite low, with just three claims. It is only when unlocking started in July that claims started coming in. In the second quarter, we have got 260 claims, and now in the first month of the third quarter, we have got 260 claims. So in total, we have had about 483 claims and momentum of claims is picking up. Maybe initially, people were not reaching out, but now they are figuring out that there was a term policy and are coming forward. Claim settlement is being done as quickly as possible.

Are Covid-related claims not a big issue for the life insurance industry?

It’s not such a big issue as it has all been priced in. But I can’t make a forward-looking statement because we don’t know how it will be going forward. One bit which concerns all of us are frauds. If somebody has Covid and suddenly a term policy is written on that person’s name and they don’t declare it, then it can be a problem. But most of the Covid claims are known so we get to know. There is a form which has to be filled in by the customer, if that is done then there is no problem.

Are low returns from investments and persistency a challenge?

Investments have done quite well because a lot of us have hedged our guaranteed plans. IRDAI allowed the forward rate agreements (FRAs) with banks, which has helped. A lot of investments are in equities, and as equities have gone up in the last six months, many of us are in a happy situation.

On persistency, the lockdown was effecting everybody. We were also affected by about 3-4 per cent in our persistency but now we are rigorously following us. Although there is an impact but starting October, things are looking up on persistency as well.

Published on November 15, 2020

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