Rel Life will top non-LIC pack this fiscal

Rel Life will top non-LIC pack this fiscal

To drive home the point that the tasks of selling life insurance in India and growing as an insurer in the industry border on the impossible, Malay Ghosh, president and executive director of Reliance Life Insurance, takes recourse to the Bhagavad Gita. “Most Indians seem to take the assertion that we are all immortal too seriously. No one wants to believe death is a real possibility. Everyone seems to think death is something that happens to others and only others. Life insurance is seen as something optional.” And a strict regulatory regime is not helping matters either, he says. In this interview with Siva Sankar, Ghosh takes stock of the company he heads and ponders over the future of the life cover segment in India.

Reliance Life Insurance has posted its first-ever full-year profit of `373 crore in fiscal 2012. Do you think it’s a fantastic figure? What are you going to do with that money? Well, I think it’s a decent profit. A small part of it has been given as dividend to the shareholders. The remaining money will help us maintain a healthy cash flow to be able to invest in areas that are enabling, like institution-building activities. What is the vision of your boss Anil Ambani for life insurance in India? About once a month, we, the chief executives of all the group units and Anil Ambani, meet. On all the occasions that I have met him, the significant message that has come from him is to be focussed on customers, creating customer lifetime value, developing synergies between various articles of financial service, creating customer loyalty, listening to him and changing the processes and technologies to meet his needs. He always asks us to be conscious about the money we are spending to keep the service affordable for the customer and treat him as an equal, if not more. Ambani thinks opportunities are huge in life insurance in India. He sees opportunities in every deficiency that this country has because the country will be doing everything required to remove those deficiencies. In life insurance, he likes us to learn from LIC. He wants Reliance Life Insurance to be so efficient as to be the most admired insurer in the industry, not only at the national level but also globally. His vision is for an Indian company with global standards. That is why when we were forging the tie-up with Nippon, he himself went to Japan for discussions. He can speak Japanese fluently. That helped in communicating better his long-term vision for life insurance in India to Nippon executives. How did Reliance Life Insurance make the transition from a non-profitable firm to a profit-making company? What did you do right? We did everything right like any other life insurance company, right from the beginning. What people saw as losses initially are actually investments to build various aspects of the business: distribution, capabilities, technology back-up for service and manpower. Life insurers don’t see these as losses though that is how the Indian accounting system would label them. The exponential growth we saw over a 5-year period (2005-09) needed the investment (of `3,000 crore) we made. Consolidation was necessitated by the macroeconomic scenario and we scaled down our investments and began working on the capacity already built up. What we had done over the last four years is, we have not invested heavily in expansion, distribution or infrastructure building, but worked on the capacity and distribution that had been created already. What this meant is that the intrinsic merit of the policies already sold started coming to the fore. In 2008-09, our losses were `1,000 crore; in 2009-10, the figure shrank to `250 crore; in 2010-11, it came down further to `120 crore; and in 2011-12, we posted a profit of `373 crore. Mind you, it was a normal progression. Only, the focus was on getting the value out of the investments we had already made. What lies ahead now? I would say we got the profit as planned. That is why, we think it is sustainable over a long period of time as long as we continue to sell a critical mass of new business. Theoretically, we are at a stage where even if we do not sell a single new policy, we should be able to serve our existing 9.5 million customers with the expenses already provided for. In that case, do you have any targets at all? Of course. We are targeting a new business premium of `2,300 crore this fiscal. By the end of this fiscal, we believe we will regain our top position among non-LIC insurers, in terms of the number of policies. The long-term target is to be among the top three in terms of number of policies and premium income. We do not have a bancassurance partner. So, we have a distribution gap. We hope in the next year, we will have a significant bank partnership too and we will be able to bridge this gap. Through them, we can have good number of sales, too.