Pankaj Razdan, MD & CEO of Birla Sun Life, says the company has been focussing on improving the quality of its business. With a series of changes, Razdan, who is also Deputy Chief Executive-Financial Services, Aditya Birla Group, expects to see a complete turnaround in the company’s business. Edited excerpts from an interview:

While Birla Sunlife has seen overall growth in new business premium collection in the six-month period ended September, it has seen a dip in individual collection. What do you attribute this to?

We wanted to make a fundamental difference in the way we run our business. At present, there is a deficit in trust and to tackle that we have created a new framework. Earlier we would measure our capacity saying that we have 700 branches or 1 lakh agents, but now we are focusing on the number of agents who are active. We have removed many agents, agency managers, and sales people who we believed did not have the attitude to work towards the customer’s benefit.

In qualitative terms my renewal premium is higher and our persistency, which had touched a low of 50 odd, has moved up to 61, thereby showing a massive improvement. While overall we should have seen growth, there is a gap as we have stopped the broker channel because of frauds. We have taken a conscious call to work only with partners who agree with our terms and conditions and follow our sales practices. So, that channel has de-grown. We also lost our bancassurance partner Citibank. 

What is your product mix currently?

We are doing about 35 per cent unit linked insurance plans and 65 per cent traditional products. 

After the passage of the Insurance Amendment Bill, the regulator has come out with several regulations. What impact have you seen?

There are some regulations that can have a severe impact like the regulation that says that you cannot reject a claim after three years even if it is a fraud, that’s why we are focussing on doing the right underwriting and building a sustainable business.

The regulator is planning to allow insurers to structure agency commissions. How do you expect this to pan out?

The model may not really differ across insurers. Most insurers will start paying up front because it is definitely tough to sell as agents are selling products with a 30-year tenure, so there certainly should be enough incentive for a distributor to sell. Also, we should be able to incentivise them for keeping a customer for a long duration in the form of milestone or trail commissions. So, the structure will be such that agents do not just get commissions up front but also get a punishment if the customer does not stay for long, to ensure there is no misselling.

The new IRDA regulations allow banks to tie up with up to three insurers. However, banks have not tied up with other insurers…

When banks are operating well with one partner they may not want to disturb this arrangement unless the second partner is able to provide something different either in terms of product or service or if the compensation structure is more favourable. However, currently products have become so standardised that there is not a lot of differentiation in the products offered.

The life insurance sector has seen low profitability compared to other markets…

Our domestic market has taken the lead in transparency, which is good in the long-run but has resulted in a temporary dip due to lower margins.

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