Saturday, February 22, 2014
Date: February 22, 2014
Following is the translation of Eenadu story of February 22
Headline: It is difficult time for Insurance sector for two more years.
Blurb: online sale on upward trend
Difficult to show divergence in policies
Hyderabad: Aegon Religare managing director and chief Executive officer K S Gopalkrishnan has felt that the insurance sector is in difficult times. It may take two more years for it to recover. With the decline in national economy, gross earnings of people have also come down. This has led to people incapable of making savings. It is difficult for people to buy insurance policies in times of crisis.
In an interview with Eenadu, Gopalakrishanan has felt that it is now difficult to incorporate divergence in the policies because of strict rules imposed by the IRDA. Novelty, too, cannot be inducted into the policies. This, too, is affecting the progress of the insurance sector, he said. It is decade since the private sector has been permitted in insurance sector. The sector registered progress between 2001 and 2008. But the recession hit the sector later. This difficult time may last for two more years.
Online sale of policies: Aegon Religare has started online sale of policies. The Religare is selling policies through four different ways. But the online sale has registered growth. The Religare has 60 branches and employed 700 agents. For time being, this marketing infrastructure is sufficient. The challenge before the management is how to increase the business. Online sales of policies have registered fourth of total sales. The online business is expected to grow further.
In reply to a question on type of policies which have demand, Gopalkrishnan said term policies are in greater demand. Next in line are Endowments and Money Back policies which have greater demand. Unit linked policies have lost their charm. But the demand for unit linked policies is still high in Gujarat.
Religare is in retail insurance business only. Last year, it registered Rs 125 crore premium revenue. The revenue is expected to increase to Rs 140 crore during this financial year. The revenue from renewal of policies is expected to be in region of Rs 300-Rs 325 crore. The company is still facing loses. It will take two to three years before the company reaches break-even stage. The company’s principal capital is now Rs 1265 crore. Of it, Religare share is 44 per cent, Aegon 26 per cent. There is no need as of now for mobilising capital for expansion of business. After reviewing the situation, policy decision will be taken on mobilisation capital will be taken.
Though the insurance sector is facing crisis now, prospects of its growth in long-term are bright, Gopalakrishnan said. The number of policies being sold has increased from 2 crore to 2.5 crore year. Population is growing. Young population is more now. If all these factors are taken into consideration, insurance will become a business in future. At least 20 per cent of our policy-holders are buying more than one policy. This is something rare. We are trying to take this trend forward.