Money & Banking

Share of protection business will go up due to Covid-19: Max Life MD

Surabhi Mumbai | Updated on June 10, 2020

Prashant Tripathy, Managing Director and CEO, Max Life Insurance

Life insurance premium may have declined by nearly 30 per cent in the first two months of FY21, but Prashant Tripathy, Managing Director and CEO, Max Life Insurance, believes the industry may recover in the second or third quarter as there is a flight to capital in times of uncertainty. In an interview with BusinessLine, he also expressed hope that the definitive agreement between Axis Bank and Max Financial Services for a joint venture in the life insurer will get regulatory approvals by the end of this year. Excerpts:

How do you see the Covid-19 pandemic and new tax structure impacting life insurance sales?

There may be some impact. Max Life Insurance is bucking all the trends; we were running at 80 per cent of last year’s run rate in April and May. My sense is that life insurance will not see as much de-growth as some of the other industries as there is always a flight to safety in times of uncertainty. Also, the share of protection business will go up due to Covid-19. The demand for protection has gone up. Our protection share of 8.6 per cent last year has gone up to 20 per cent this fiscal. More than 50 per cent of the policies we have written in the last two months are protection policies. Hopefully, the industry will not be impacted too much as deficit in savings business will be compensated by protection business. Life insurance will get favour from customers and, if things improve, maybe in the second and third quarter, growth might come back.

What is the status of the deal with Axis Bank?

We have gotten into a definitive agreement with Axis Bank and it is at the regulatory approval stage. We have filed for approvals and are hopeful to get them in place by the third quarter between October and December. This is just an equity transaction. Both organisations have worked together and we will continue it that way.

How many Covid-19-related claims have you received?

So far we have received three Covid claims and all have been honoured. We are not receiving a large number as our customers are largely in the age group of 25 years to 55 years, and mortality is not that high in this segment. Max life has been very particular on claims overall as well as this is the ultimate measure of performance. We have, in the last many years, maintained a significantly superior position in the market. We had a claims paid ratio of 99.22 per cent in FY20.

Are you looking at new products in the current situation?

We are very aggressive on new products and have filed for some products. We are in the process of looking at two segments – non-participating savings segment as customers look for areas with more certainty in such times. The other is protection business. We will come up with another variant towards the second half of the year. These will be over the next three to six months.

Published on June 10, 2020

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