SBI Life Sees New Business Driving Growth In Rest Of FY21, CFO Says

SBI Life Insurance Co. Ltd. expects the second half of this year to be much better as its new business collections improve every month.

“This quarter (ended Sept. 30) has been better than the previous, and sequentially every month we are registering growth,” Sangramjit Sarangi, president and chief financial officer at SBI Life, said in an emailed response. “Today, almost 97% of proposals are sourced digitally—paperless, pen-less policy—and 85% renewal collection is through digital mode. All these factors have assisted in building up the momentum and added in ease of doing daily activities.”

The sector coming out of this crisis looks completely revamped, Sarangi said. As people come to terms with the unpredictability of the situation and its impact on well-laid plans, financial or otherwise, he said, insurance is clearly emerging as one of the ways to financially protect themselves.

SBI Life, like peers, saw protection policies drive top line and expects the share of protection policies to improve further over the years.

"We offer child plans to retirement plans, pure protection to endowment plans for both individuals and corporates,” Sarangi said. “Over a period, share of protection will improve.”

SBI Life’s share of protection in total annualised premium equivalent improved to 13% in the first half of this fiscal from 9% a year earlier, while the share of savings portfolio declined to 88% from 91%.

Sarangi, however, said all products are seeing traction. “Apart of term plans, there is demand for savings plans—non-participating guaranteed returns as well unit-linked and annuity products," he said.

There is demand for protection products, guaranteed returns products, retirement plans followed by annuities. “Initially, ULIP products faced the heat of market volatility but as the market stabilises, interest in ULIPs is building up.”

According to the company:

SBI Life’s total APE contracted 32% year-on-year in the first quarter as the lockdown froze the economy and stopped walk-in at branches. But it recovered to 4% year-on-year contraction in the second quarter as the economy resumed and digital push.

• ULIP APE contracted 13% in the second quarter compared with a 50% contraction in the previous three months.
• Participating book contracted 20% in the second quarter, an improvement from 60% decline in the previous quarter.
• Bancassurance and agency new business APE declined 8-18% year-on-year compared with a contraction of 35-40% in the quarter ended June.
• SBI Life's profit more than doubled, rising nearly 131% year-on-year, to Rs 300 crore in the quarter ended September. That came as its total cost ratio—commission ratio and operating expense ratio—fell to 8.6% during the first half of the ongoing financial year from 10.4% a year earlier.
• Gross premium rose 28% to Rs 13,090 crore, aided by 28% growth in renewal premiums.

"We are positive that this improvement in momentum will continue and the company will close this financial year at good note,” Sarangi said.