ET OnlineIn an interview with ET, Vignesh Shahane, Whole-time Director & CEO, IDBI Federal Life Insurance, talks about the impact of demonetisation on the insurance business, and the role and reach of digital platforms in the industry.
Post demonetisation, the regular functioning of various businesses of the banks has been impacted. Will this, according to you, impact the life insurance sales by bancassurance in the last 5 months of this financial year?
In the initial days of the announcement, as the country was trying to grapple with the change, at IDBI Federal, we took a strategic call to avoid active sales through bank branches. We, instead, chose to support our bank partners in their service efforts. Now, with new currency flowing back into the system, queues becoming smaller and digitisation picking up, life is going back to normal. So we don't expect slowdown in bancassurance channel from here on. In fact, since a lot of money has come into the formal channel, the financial industry is likely to see further growth. Not just insurance, but even other financial products would see a growth and this trend is here to stay at least for the next few months.
The Finance Minister (Arun Jaitley) has announced certain discounts/credits for buying insurance policies on the portals of insurance companies owned by government. What is your view on this and will the private industry also consider similar offerings?
Right now, digital sales constitute only a minuscule portion of the overall income for life insurance companies. Also, not many life insurers have identical products that could be sold, both online and offline. While this is a step in the right direction, it may not have far-reaching effects in the immediate future.
Do you see any impact of demonetisation on fresh premiums in both rural and urban India, especially keeping in mind the last three months of the financial year?
It may have some impact on companies that have heavy business dependence on rural areas, but not in urban areas. Today, insurance companies offer multiple payment options, including e-wallets. In fact, the excess liquidity in the system is expected to move towards other financial services products, especially in urban areas, given the volatility across other sectors like gold, realty. At IDBI Federal, cash payments constitute less than 3% of our premiums. As a practice, we have never encouraged premium payments by way of cash, so we don't expect much impact.
Post demonetisation, the regular functioning of various businesses of the banks has been impacted. Will this, according to you, impact the life insurance sales by bancassurance in the last 5 months of this financial year?
In the initial days of the announcement, as the country was trying to grapple with the change, at IDBI Federal, we took a strategic call to avoid active sales through bank branches. We, instead, chose to support our bank partners in their service efforts. Now, with new currency flowing back into the system, queues becoming smaller and digitisation picking up, life is going back to normal. So we don't expect slowdown in bancassurance channel from here on. In fact, since a lot of money has come into the formal channel, the financial industry is likely to see further growth. Not just insurance, but even other financial products would see a growth and this trend is here to stay at least for the next few months.
The Finance Minister (Arun Jaitley) has announced certain discounts/credits for buying insurance policies on the portals of insurance companies owned by government. What is your view on this and will the private industry also consider similar offerings?
Right now, digital sales constitute only a minuscule portion of the overall income for life insurance companies. Also, not many life insurers have identical products that could be sold, both online and offline. While this is a step in the right direction, it may not have far-reaching effects in the immediate future.
Do you see any impact of demonetisation on fresh premiums in both rural and urban India, especially keeping in mind the last three months of the financial year?
It may have some impact on companies that have heavy business dependence on rural areas, but not in urban areas. Today, insurance companies offer multiple payment options, including e-wallets. In fact, the excess liquidity in the system is expected to move towards other financial services products, especially in urban areas, given the volatility across other sectors like gold, realty. At IDBI Federal, cash payments constitute less than 3% of our premiums. As a practice, we have never encouraged premium payments by way of cash, so we don't expect much impact.
(Your legal guide on estate planning, inheritance, will and more.)
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