ICICI Prudential Life has witnessed a shift from linked to non-linked products and it has resulted in a rise in the value of new business (VNB) margins, says NS Kannan, managing director & chief executive officer. In an interview with Mithun Dasgupta, Kannan emphasises that the insurer’s objective will be to try to maintain around 15% market share in terms of sum assured.
ICICI Prudential Life Insurance posted a strong performance for FY23. What were the drivers of the performance?
The most important parameter was the value of a new business (VNB), which stood at Rs 2,765 crore for FY23. It was a 28% growth. Of this, roughly about 12% growth came from the top line, which is the APE (annualised premium equivalent), on a year-on-year basis. And the balance came from profitability. The profit margin (VNB margin) improved from 28% in FY22 to 32% in FY23. Our product mix was a bit different from FY22. We marginally increased mixed in terms of protection. Protection products are usually higher-margin ones compared to savings products. Higher non-linked business and higher protection business compared with FY22 were the drivers of the margin improvement in FY23.
How does the company plan to grow bancassurance channel going ahead as regulator Irdai raised the maximum limit of tie-ups with insurers for corporate agents?
If you look at the bancassurance, around 30% of our business is coming from it. Non-ICICI banks have started contributing 16% to our business. And, we will continue to focus on several banks that are looking to add as partners. We will be very aligned to this opportunity. It is a great opportunity for us. For a bank-promoted company, we are one of the largest in terms of number of bank partnerships. We have 39 bank partnerships.
The company’s market share in terms of first-year premium remained more or less stagnant. What are the plans to grow the market share?
The way we look at market is more from a sum assured perspective. We believe that if you are looking at an insurance company, what matters is not the collection of premium from customers, but what matters is how much of insurance they are underwriting. So, how much of insurance we have underwritten is largely reflected by the sum assured. On the sum assured basis, our market share has grown to 15% and we are the leader among the private players on that matrix. That was about 13.5% in FY22, and we were able to grow it to 15%. And, our objective would be to try to maintain this kind of market share as we move forward. So, on this basis, we have not lost any market share.
Now, all insurers have the flexibility to pay commissions to insurance intermediaries after the Irdai rule. How will the company plan to tweak its commission system to grow business?
Our existing structure of EoM is well within the proposed regulations. We do not expect any regulatory compliance issues on this matter. We do believe that we are appropriate in terms of the compensation we pay to our distribution partners. So, we do not see any reason to deviate from the current practice. I feel that the Irdai would also expect the companies to be very disciplined, because if you start paying too much to distributors, then the customer interest would get compromised.
You are completing the tenure in office in June. What would be your future endeavours?
Anup Bagchi will take over from me in June. So, between now and June, I will be very focused on driving the business and ensuring that the transition is very smooth. After that, I have not really planned for anything. As of now, I have not really thought about what to do after retirement.