Despite being a new entrant in the life insurance space, Edelweiss Tokio Life Insurance is poised to take advantage of the positive sentiment in the market, says Deepak Mittal, managing director and chief executive officer. In an interview with Vishwanath Nair, Mittal talks about the possible downside of disruptive pricing in the online space and future growth plans. Excerpts:
In all these years, the private sector insurance players have not been able to make a significant dent in LIC's market share. What would be the strategy going ahead?
The growth in the private life insurance space earlier was largely because of unit linked products. Once the regulatory changes happened and the market slowed down the focus on unit linked plans has come down. Other than some significantly bank-led distribution, unit linked sales have been significantly less for all other channels. In that sense it has been somewhat of a fresh beginning for us with traditional products.
We could see the private sector now come back in to growth, even faster than LIC because the base is smaller for us. Our initial focus was to get our agency right. Having built that base we are now focussing on the alternative channels of distribution. The next three to four years should be good for the private players as well the customers since hopefully the asset classes will perform better and give better returns.
Some life insurers have started moving towards the online space. How do you think the space will grow from here?
There has been a lot of traction online in disruptive pricing. It started with airlines, online retailing and term insurance. I think the space has now become too crowded and believe that from what one is seeing, it will become more difficult for reinsurance to support prices lower from what they are now. We do see health moving very significantly online, since price is an important factor though not the only deciding factor. Another key growth area for online would be to bring convenience to the customer, rather than keeping on fighting the pricing battle.
Being a new entrant, what are the challenges?
I think every advantage is a challenge too in some form. The one good thing is that we haven't had a lot of bad experiences with our customers. At the same time, we don't have enough customers because most people believe insurance is still a brick and mortar business. We are at about 58 offices now, but a reasonable number should be 100-150 offices. Also there is a wealth of knowledge exists in established firms due to failed experiments, which we don't have.
What is your outlook for the year?
Last year we did an annual premium of about Rs 80-85 crore and a total premium of Rs 100-110 crore. This year we are looking to cross annual premium of Rs 100 crore. We will make ourselves relatively well known in the alternative distribution space, specially in the broker-led space. We are at about 58 branches now and this year we will spend in consolidating whatever we have grown in the past. We will surely add four or five branches, but there will be consolidation and improvement of our processes.