Canara HSBC Oriental Bank of Commerce Life Insurance Company (CHOLIC) put competition on notice when it clocked a maiden profit of Rs 23.5 crore in 2012-13 and that too in its fifth year of operations itself.
Distributing exclusively through its shareholder banks — Canara Bank (51 per cent stake), HSBC (26 per cent) and OBC (23 per cent) this life insurer has a potential customer base of five crore bank clients.
Launched in June 2008, the life insurer had as of September 2013 sold 4.15 lakh policies and recorded gross written premium of Rs 7,310 crore .
With an entrenched bancassurance play, the life insurer’s Chief Executive Officer John Holden says that the company does not see any commercial case in having an agency channel.
The company is not going to build an agency force. It will also not enter into health insurance to cash in on this segment’s strong growth in recent years.
Holden’s vision for the life insurer is to put a policy in the hands of all the five crore bank customers of the three shareholder banks.
He shared the company’s game-plan in an exclusive interview with Business Line . Excerpts from the interview :
Now that you have registered a maiden profit, will you look at setting up an agency force?
No. When we started we said we are not going to have an agency and that absolutely remains our position. We have three very large banks with five crore customers and we have a relationship with them.
So our vision is that our policy should be in the hands of every bank customer. We have got five crore bank customers and four lakh policies standing. Still have loads to go. My work will be done when there is a policy in the hands of every bank customer.
To build any agency service, I have to go head to head. Agency is an expensive, high cost business. Our strategy has been crystal clear, that is, to have a bancassurance model which makes us sustainable, scalable and profitable.
Your main shareholder Canara Bank has entered into a bancassurance tie up with Apollo Munich Health Insurance. Will you get into health insurance?
No. We are a life insurance company. There are no plans to get into health insurance business. We have got our business strategy. We have so much runway in front of us; we don’t need another product category to make my strategy right. It’s about sticking to our knitting.
What are your aspirations for the business this fiscal?
In the current year, we have had a lot of success in growing the licensed branch staff. About this time last year we had 1,800 licensed people, today we have nearly 3,500. We are growing our distribution footprints too. So that’s a big strategic thrust for us. We look at ourselves as the insurance department of the banks. We exist because the banks exist. We cannot exist without a bank. We need distribution. So we have significantly increased the licensed branch staff.
Our aim is to reach one person per branch by 2015 and have 5,000 licensed people by that year. Canara and OBC alone are going to launch 900 branches this year.
Do you see some consolidation happening in the life insurance industry?
The market opened up 13 years ago, but there are still new people coming in. It’s a huge market and it’s going to get bigger.
May be there can be same consolidation. It’s part of the market economy. What is important for us is that all our shareholders have reason to remain because they are banks and they understand bancassurance business. They are also distributors.
There are rumours that HSBC may exit the joint venture in line with its global strategy.
They are all market rumours, we don’t comment on market speculations. HSBC is still here. Lot of speculation, but nothing has happened. Ownership doesn’t change our strategy — have long-term distribution with the banks.
Also, globally, HSBC has exited the general insurance segment in a big way. In India, there is no change.
The strategic rationale remains intact. Business is as usual. We have not changed our strategy and have not been distracted. We share a good support from our shareholders.