In an interview with ET, SBI Life Insurance’s newly appointed MD & CEO Atanu Sen said that he was focusing on micro insurance, longer-term products & credit insurance
The only insurance company to declare dividend, SBI Life Insurance is nowhere close to listing. In an interview with ET, the newly appointed managing director and CEO Atanu Sen said that he was focusing on micro insurance, longer-term products and credit insurance. Excerpts:
What banking experience are you planning to apply in insurance?
I was looking at risk management in SBI. I have learnt that in any industry, if you can take control of the processes, the risk is taken care of. Whether it is insurance industry, manufacturing or IT, the risk is the same. You have to see that corporate governance is in place, should not do things outside regulatory realm, and avoid credit risk, service risk, etc. It is basically serving the customer and serving them well. As it is said, what gets measured gets done. So, if we can measure complaints correctly, we can bring the change.
The difference in risk here is that we are looking at a group of people, unlike in mutual fund industry where it is focused on investment. In India, insurance penetration is low. If you look at the health side, there is no safety net. The actuarial calculation has to take into account longevity and mortality, come out with a product and price it correctly so that it is a win-win situation for both companies and the insured. With banks, there is only credit.
How is it heading a life insurance company?
The number of bank branches we have is a great strength for SBI Life. SBI and its associates together have around 20,000 branches. We can leverage that to our advantage. Our retail channel is the best in the industry. The combination of these two has helped the company do well in the past three-four years. We were the first to announce dividend last year. Though the economic environment is hard, we are still growing.
New policy sale of SBI Life is down in April-July 2012. Why?
The industry can grow either by selling single-premium products or regular-premium ones. In the past two-three years, the industry was getting aligned to the mutual fund industry. People were not being educated enough. They were putting money, thinking they will get it back in three years. It was a kind of surrogate to the mutual fund industry.
Insurance play a different part, and course corrections are taking place now. We are moving from single- to regular-premium to long-term products. The current accounting profit will be protected as we are doing more of regular premium now. We are going in for products that will not just add to the current accounting profit, but will also add to profit as we go forward.
What is your plan for SBI Life?
We are going in for a course correction. We are focusing on products that give protection to customers, and micro insurance. With so many regional and rural bank partners and SBI branches, we can do micro insurance and make profit out of this. We will also focus on credit insurance and sell products along with home loan, car loan, etc.
Now, that you have declared dividend, will you list?
I t is not necessary that all companies list soon. There are two kinds of companies — one requiring capital to grow and another not requiring capital to grow. We are in the second category. We have been profitable for the past 4-5 years and have given dividend to SBI last year. Cardiff is also very happy to get return so early, as insurance companies take a lot of time to declare a surplus.
Current regulations say you should get listed?
Ye s, the regulation says that companies have to list and Indian promoters have to bring down stake from 74% to 26% over time. But it is not going to happen in a hurry. With listing, there will be more transparency and disclosures. I think the government will take a call after the market stabilizes, which could take a year or two. The economy has to be attractive enough for companies to come out with a public issue.
