SBI Life to go slow on expansion

SBI Life Insurance Company, the second largest private life insurer in the country, has decided to go slow on its expansion plans.

“We will go slow on adding more branches and agents. The focus will now be on improving efficiency and consolidation of the existing business as we don’t see growth happening immediately,” Mr U.S. Roy, Managing Director and CEO, SBI Life Insurance, said.

Mr Roy said he expects growth to pick up only by January 2010. Yet, the current year could see a growth of 25-30 per cent as for insurance business the last quarter is always the best.

“We will take a call on increasing the number of branches and agents only by the end of 2009, when growth picks up,” he said.

The company will target Tier-2 and Tier-3 cities to aid its growth, capitalising on the huge branch network of its parent — SBI, he said.

Growth

In 2007-08, SBI Life grew by over 90 per cent. However, in the just ended fiscal, the company grew by around 20-25 per cent, against a targeted growth of 70 per cent, Mr Roy said.

Growth has been much slower than what was estimated. The growth started to slow down only in the last part of the third quarter of 2008-09, he said. The company has collected around Rs 6,000 crore in fresh business premiums in 2008-09.

The company, which has bancassurance and the agency channel, is planning to improve the efficiency of its existing channels rather than exploring other channels.

SBI Life has around 70,000 insurance advisors at present. It will try to increase the activisation rate of the agents, that is, the number of active agents who sell policies.

With a paid-up capital of Rs 1,000 crore, the company is adequately capitalised. “We don’t have to fund our accumulated losses. Our solvency ratio is around 2.5 per cent. Keeping the economic environment in mind, we will not need funds in the first quarter of 2009-10. In the second quarter, we will review the solvency margin and will infuse capital only if it falls below 2 per cent,” he said.

Product plans

The company is also looking to bring out products later this year. “The product plan for the year is being put into place. We are looking to launch both ULIP and traditional products that will catch the public eye,” Mr Roy said.

The company collected Rs 300 crore through its SmartULIP within a three week period which was much more than the target. The product guarantees that the highest NAV over the next seven years or the NAV at maturity, whichever is higher will be protected, he added.