Insurance Sector is looking at ways to expand penetration of Health Insurance in India: Vibha Padalkar, MD & CEO, HDFC Life

Vibha Padalkar, Managing director and CEO, HDFC Life talks about the impact of COVID-19 and lockdown on her business, product offerings in the post COVID era and feasibility of allowing life insurers to sell indemnity-based health products during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: COVID-19 and lockdown have had an impact on almost every business. But there is a surge for term plan in the insurance sector. So, what is your assessment and how will you summarize the last two months? Also, provide the outlook for the future and how are you gearing up for the post-COVID world?

A: We have gone through a series of changes. Lockdown 1.0 had an impact on all industries and each one of us was thinking that this is a very difficult time and how we will sail through this. But now what we are finding is that especially though digital mode and we have end-to-end digital offering for new business as well as service to the existing customers. Hence, the prospective customers’ are thinking about how many more days this lockdown will continue and life has to go on. They are also getting more used to the digital ways of buying insurance and that’s why appointments are being offered and they are being engaged, which is increasing our sales. That’s why you will find that de-growth has been much lower in April. And, HDFC Life’s de-growth has been at 29% Vs 44% overall for the sector. We were also number one in terms of the number of policy that were sold in the private sector and market share was number one at the individual level. Again what is happening in the industry, we are faring better.

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Q: Can you tell us about the new product offerings that will come from insurance companies? What innovative will be offered as there is a slight change in the mindset of people?

A: Term policy is being phenomenal and people are willing to buy them because they feel that they are underinsured and COVID has brought a negative sentiment at the home. This is why people are thinking about protecting the family. So, the term is something and we have been the market leader in term starting of about 6-7 year ago. Apart from this, we have always had the focus to sell term through online and digital means and that’s why it is easy to reach the end customer to open up discussion and we can do it end-to-end. And, that is continuing. As far as product innovation is concerned than last year we had two blockbuster products, namely (i) Sanchay Plus, which was a category first-of-its-kind to India and that is continuing to do well. It is a junction where people can put their money and an average investor will think that way and against that Sanchay Plus is doing exceedingly well. (ii) Sanchay Par Advantage where the participating product of monthly income. So, immediate income starts in the process and that is very attractive in the COVID time when there is a need for cash flow. That is an offering that customers are taking it very well. These two are a combination. ULIP linked is a bit down because of the market but even that I think public memory remains short and in the post-COVID era I am sure that it will start doing reasonably well.

Q: How are you reading the challenge in which decreased incomes will lead to surrenders? Are you seeing an uptick on that front?

A: Definitely, we will get to know about what percentage of people are paying the premium after the moratorium period on insurance comes to an end. IRDAI has provided moratorium till May 31. Moratorium on insurance is slightly different because unlike the banks where the trigger of interest remains on. There is no downside here to people taking full advantage of the moratorium and it is happening. A lot of the cases are genuine as there will be a cash flow crisis and we duly understand it. But post-May 31, 2020, when the moratorium will come to an end we will appeal to our customers to not surrender your policies as it is in your interest, especially at a time when such a pandemic is spread. You need to continue getting covered. We can offer you loans against policies over the counter at a very attractive interest rate and no charges will be slapped for early prepayment. But, we will get to know about the real picture after May 31, 2020.

Q: There were reports that life insurance companies could also sell health insurance. What is your view on this development and will it provide some sort of relief to life insurance companies?

 A: Definitely. Because in our, both HDFC Life as well as the industry, view that health insurance is underpenetrated and largely average Indian is paying from his/her pocket. Secondly, the pandemics and another kind of health situation can send setback to one generation, if not to two generations, because after paying out of pocket the family is effectively wiped out because of the burden of loan that they take. So, as a sector we are saying that let us focus on expanding, we are not interested in taking each-others shares of the health business. We will expand to make sure that the customers are better protected. The final reason is that customers are quite confused about to whom they should approach for one part of the health and to whom for the other part. We also sell health in terms of cancer and cardiac care but not for indemnity. So, they will have to approach to standalone health for indemnity and to HDFC Life or some other life insurance for cancer care as well as to general insurance company for overseas insurance. So there is a lot of confusion and we don’t have any one-stop-shop. When as a life customer I go for medical there is a small incremental conversation that you can cover your health as well.

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Therefore a committee has been formed and I am a part of that committee and so is the LIC chairman. The intension is to provide ease of service to the customer and how should be expanded penetration of health insurance.