Private life insurance company Shriram Life Insurance, which currently caters mostly to the mass-market (aam-aadmi) segment, is looking to deepen its product offerings, especially in the unit-linked insurance (ULIP) space.
In an interview with Moneycontrol, Casparus Kromhout, Managing Director and Chief Executive Officer, Shriram Life Insurance, said that this will require some relaxations in guidelines.
“After the change in the ULIP regulations in 2010, there was reduction in yields as well as changes in commission structures. This reduced incentives for the agents who were selling these products,” Kromhout said.
Owing to several incidents in the past where ULIPs were missold, the regulator cracked down on companies by changing the structure of the products, ensuring transparent returns and also reducing commissions.
“We want to sell more ulips and it is a very small portion of our portfolio. We are finding it difficult to sell it because the commissions are lower for ULIPs. We are hoping that some of those guidelines can be relaxed for the lower ticket size to make access to those groups easier,” the CEO added.
Shriram Life Insurance has a strong presence in tier-2 and tier-3 towns, especially through the touch-points of the Shriram group. Kromhout said that while the company is open to join hands with new banks to sell products, it is not the number one priority.
“Shriram group has large non-banking financial institutions which are very large and are significant partners. We have good access to customers through them,” he said.
In terms of performance of the business, the CEO explained that the company also looked at branch profitability and closed a few unviable ones, which should reflect in its growth.
While several of the company’s peers have had a high rate of 13th month persistency, Shriram Life has faced challenges on that front. Kromhout explained that 13th month persistency is the company’s biggest challenge.
“This has to do with the customer segments that we cater to, especially since they tend to have very seasonal incomes. However, we ensure that the customer is fully educated about the product that is sold. Further, we are also trying to increase the number of times we contact the customer each year,” he said.moneycontrol