Private sector insurer HDFC Life Insurance has its plan “ready” on the composite license regardless of when and when it comes into effect, Managing Director and CEO Vibha Padalkar said.
“If you recall, of all the committees that were formed (under Irdai), HDFC Life chaired the development and penetration committee. And in the report that we submitted, we asked for a mixed permit. No wonder he passed. We asked for a whole host of other things like the genesis of Bima Sugam and to have a market. We also talked about being allowed to distribute other financial services products, including those regulated by Irdai. So we’re glad that hopefully sees the light of day when the bill will pass and we’ll be able to do that,” Padalkar said on an earnings conference call with analysts and investors. investors.
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Notably, Irdai had convened a meeting of insurance company chiefs in March to discuss various provisions of the bill, among other issues.
A composite insurance registration will allow insurance companies to write multiple types of insurance, except reinsurance, through a single entity. The government has released draft amendments for further reforms in the insurance sector, including a provision for composite licensing. In November 2022, the Ministry of Finance had requested comments on proposed amendments to the Insurance Act 1938 and the Insurance Regulatory and Development Authority Act 1999.
On how HDFC Life Insurance plans to offer health products – either in conjunction with HDFC Ergo or on a stand-alone basis – under a composite license, Padalkar said he wasn’t really interested in redistributing the cake. because he wants to make the cake bigger. “We don’t just want to play in the mediclaim space, juxtapose between life and mediclaim, there are many layers… in terms of riders it could be in terms of integrating health solutions into a life product and so right now. So we have some ideas… if we are allowed to sell it.
“In the previous committee, we requested authorization to at least distribute health products, if we are not authorized to manufacture. Yes, this is certainly not the best result. So all of these options are open, and global health is much closer to life and underwriting becomes easier, understanding patient health conditions becomes easier and so on. So, we’ll wait and watch, but we definitely have our plan ready based on one of the avatars we’re allowed,” the MD said.
Notably, during the month of March this year, HDFC Life experienced a phenomenal 83.45% year-over-year growth in its first-year premium, according to the Life Insurance Council. This strong growth in new business premiums was due to an increase in the business of untied insurance policies with an annual premium of over Rs 5 lakh. A large number of pre-bookings of these policies have taken place to escape the impact of the change in taxation announced in the Union budget.
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Regarding the contribution of premium policies to the overall business in terms of percentage, the insurance company said that for the last fiscal year it was around 12-14% and around 35% in the fourth. quarter. “February had almost no impact. Most of the impact came from the second week of March, and there the delta (budget impact on premium) is around Rs 1,000 crore said Padalkar.
On the Reserve Bank of India allowing HDFC Bank to hold more than 50% equity in the life insurance company, the CEO said: “As they (HDFC Bank) are now our future parents, this (contribution of HDFC Bank to the upcoming business activities of the bancassurance channel) should start to increase.And these are the conversations that will take place, because if you look it’s not just HDFC Bank, if you look from other new partnerships, we’ve made significant inroads even without them being our parents, so we have the best triangulation of product and price, brands, and claims settlement.
At the end of the fourth quarter of the prior year, HDFC held a 48.65% interest in HDFC Life.