Tectonic shift towards guaranteed products, says Tarun Chugh of Bajaj Allianz Life Insurance – The Hindu BusinessLine

Bajaj Allianz Life Insurance has registered strong growth in guaranteed products and expects it to continue for the remaining part of this fiscal year.

“The big theme for us is that almost 36 per cent of our top line in the first three quarters has been guaranteed products, This is a tectonic shift, which has happened silently. This used to be in the early 20 per cent range,” said Tarun Chugh, Managing Director and CEO, Bajaj Allianz Life Insurance.

In an interaction with BusinessLine, Chugh said the strong growth in guaranteed products indicates that when there are greater risks like Covid and markets are volatile, customers are willing to look at guaranteed products compared to market based products.

“In these two months of the fiscal, I am expecting that the trend on guaranteed products is only going to just increase. So I wouldn’t be surprised if guarantee products almost become like 40 per cent or thereabouts,” he said.

Guaranteed life insurance products provide a fixed return to policyholders irrespective of the prevailing interest rates. Chugh said that unit linked insurance plans (ULIP) also continue to see good demand. But while December was a great month for ULIP sales, January proved to be slow.

Smarter customers

“People are also now getting a little smarter as they have realised that markets are up and it is not clear what the US Fed will do. We see liquidity drying off a little bit, at least globally. And then we have to see what the Reserve Bank of India does further on,” he said.

Typically, the month of March sees big ticket sales of ULIPs. “March is usually the 50 per cent ULIP kind of a month. But I’ll be surprised if it hits such a high percentage,” Chugh said.

Overall, the private sector life insurer has seen strong sales in the first nine months of the fiscal year although the first few days of January had slowed down due to the third wave of the pandemic. “Relative to the first three quarters, the fourth quarter has slowed down due to the impact of Covid as well as a higher base,” he said, adding that this has been across the industry.

However, the third wave of the pandemic has resulted in very low death claims, he further said. For the month of January 2022, Bajaj Allianz Life Insurance reported a total new business premium of ₹684.01 crore. For April to January this fiscal, the insurer’s new business premium was at ₹6,584.10 crore.

Published on

February 17, 2022