Tech That: Banks, agents best sellers for Bajaj Allianz Life

Mumbai: Digital may promise to be a big driver of business from hotels to logistics, but when it comes to insurance, the traditional people-led sales model will continue to dominate the scene as it requires advice based on individual needs, said Tarun Chugh, CEO of Bajaj Allianz Life Insurance Company.

The insurer sells half its policies through banking channels, up from just about 5% in fiscal 2017, and expects the trend to continue increasing to 55% in the immediate future.

"In 2016-17, about 91% of our business was from agencies. We have banks of all sizes and shapes. Agency now makes for 41% of our business. In the last five years, the compounded growth of our business from institutions, largely banks, has been 68%," Chugh said.

Till 2016, Bajaj Allianz had only Dhanlaxmi Bank among commercial banks as its partner. Since then, it has added Bandhan, Axis, IDFC First, City Union, RBL, Karur Vysya and Tamilnad Mercantile Bank.

According to the new business statement for October published by the Insurance Regulatory and Development Authority of India (IRDAI), Bajaj Allianz is the fifth-largest private life insurer in terms of total market share, behind SBI Life, Max Life, HDFC Life and ICICI Prudential Life.

Chugh said the regulator's recent moves allowing banks to have up to nine insurance partners and to introduce a product in the market without seeking permissions will boost growth for the company, which does not have the backing of a bank, like its larger peers.

"For us, it's an opportunity and we are constantly chasing all proposals floated by banks. Use and file is going to be a big mover. Earlier, every product used to take six months and you could not think about more than five or six products in a year. We can now do use and file and make changes to a product even after introducing it," Chugh said. He expects to grow at least twice the industry average in the next five years.

Chugh said the insurer can now offer tailor-made products for different categories of bank customers like wealth management, private banking or NRIs, allowing them to help their banking partners grow their business pie.

"Despite all the stuff we are doing in technology, not more than 0.30% of policies are bought by customers end to end. They always want some support. Technology is mostly at the back end, like profiling a customer, data analytics or product design. People still want to check and have many questions before buying a policy because it's a long-term, high-value investment," Chugh said.

Over the last five years, the share of unit-linked plans in the company's product mix has fallen to 39% from more than 74%. At the same time, the share of non-participatory saving plans has increased to 27% from 5% in the 2016-17 fiscal.

Chugh said customers are preferring guaranteed income products because those are simpler to understand, but rising rates could force a rethink.