MisterFund dot com

Image credit to google

Bajaj Allianz Life Insurance is the second largest private life insurer in India. At the helm of Bajaj Allianz is Kamesh Goyal, regional CEO for Allianz Middle-East, North Africa and South Asia Region and CEO Bajaj Allianz Life Insurance. In an interface with ET, Mr Goyal speaks of his strategy for this high growth market.

How has ‘07-08 been in terms of business? How has the IRDA ban on complex unit-linked insurance plans and the crash in stock markets affected your sales?

We have witnessed good growth for the first six months of the year. Somewhere around August 2006, our Capital Unit Gain insurance plan was withdrawn in keeping with the new regulations. This led to an expected slowing down of growth in October and November.

But interestingly, we managed to bounce back in December and January to regain the growth rates that we had seen in the first half. However, growth slowed down in February and March again. This was more due to the stock market volatility, which affected all companies. For instance, in February ‘08, we managed to increase our marketshare despite growing slower.

Overall, the growth in annualised premium for this year is expected to be in the region of 75-78%, which is good considering the slowdown in the last quarter. Our results are under audit and the exact picture will be available next month.

What is the relevance of Bajaj Allianz to Allianz’s global business?

One important aspect is that since Allianz owns only 26% of Bajaj Allianz, our business does not get consolidated with Allianz’s. Last year, Allianz had around euro 100 billion of revenues. India’s contribution is likely to be around 2.5-3% of the total revenue in 2008.

Bajaj Allianz Life and non-life generated revenues of Rs 12,000 crore in ‘07-08 and employs around 30,000 people. Given our growth rate it will be getting more and more significant for Allianz. Our region South Asia, Middle East and North Africa is a new region and India contributes to around 84% of the region’s revenues.

Other companies are now following Bajaj Allianz’ strategy of building up scale through a huge distribution network and selling investment linked plans. How do you retain your edge?

If you really look at financial services over a period of time, number of branches and number of people cannot be a competitive edge for more than six months to one year. These can easily be replicated, particularly in the insurance business, where there are no restrictions on opening new offices.

I think the cutting edge would be the brand; how reliable is the brand from the customer’s perspective? How productive is your distribution force? Productivity is important because expenses are becoming a huge differentiator and thirdly, how are your the service levels? Merely having offices does not give an edge to anyone.

I read this articles on Economic Times. While in the banking sector, we have seen private banks with five to six hundred branches doing much better than public sector banks with over 2,000 branches. I think the focus has to be on increasing productivity, improving the brand and services. In the last six months, we have not focused on opening offices, the focus has been on beefing up our IT infrastructure. This year too, the focus will be on infrastructure rather than opening of too many new offices.