Pricing for PMJJBY should be increased: RM Vishakha, IndiaFirst Life Insurance

'The plan to raise FDI limit in insurance to 74% from 49% is a welcome step', says RM Vishakha, MD & CEO, IndiaFirst Life Insurance. Vishakha during an interview with Anurag Shah, Zee Business, said, "the pricing of the Pradhan Mantri Jeevan Jyoti Bima Yojana should be increased as it will allow us to offer the scheme profitably and increase its penetration". Edited Excerpts:

Q: The government mulls to raise FDI limit in the insurance sector to 74% in the February budget from 49%. Had it consulted you on the aspect, if yes, then can you let us know about the suggestions that were provided from your side? Do you think there is a need to increase the FDI limit in the sector?

A: We have got a communication asking for our opinion on the same. It is also happening through our life counsel. I am a co-chair of CII National Committee on Insurance & Pensions and we are sending a representation behalf of CII highlighting our view on it. I think, 74% is a welcome step and should be there. If you have a look at all the companies then you will get to know that only 24 life insurance companies are present in India but no new life insurance company came into existence since 2009-10. For the matter of concern, Indian shareholders of many of these are looking to divest their stakes, while the foreign companies are willing to take it over but are not able to do so due to unavailability of such provisions. I think, 74% is required as it provides flexibility. Interestingly, it is not a mandate but is an enabling provision, under which companies those who don't want to go for it will not be forced to do so. The same thing happened when the FDI limits were raised to 49% as there were several companies who didn't opt for it.

Q: IndiaFirst Life Insurance has completed a decade of its existence so Are you willing to list your company on the Indian stocks exchanges? Also, inform us about the next big step that your company will take in the recent future?

A: We usually say '10 Saal Bemisal' (10 wonderful years) about our company as this journey of 10 years has been wonderful for us. We have used all provisions of IRDA. We were the first company to raise Rs100 crore from listed NCD issue. Listing is important but thought should be given on why the listing is necessary. I don't understand that you are listing it for transparency because it should be maintained and we file everything to the regulator. We are answerable to the public as the money belongs to them. Whether there is a listing or not but transparency should always be there in your dealings. That's why I would not like to link the two aspects together. Companies are listed for different reasons like raining funds, to go for public issue. Thus it is a very different obligation. Obligations that arise after listing in terms of corporate governance turns up to be difficult one and every company has to see towards the cost advantage/benefit for taking the burden of corporate governance and follow the regulatory compliances. But transparency should be there irrespective of listing and that's why the two must not be linked.

Q: Tell us about budget expectations of the insurance companies of India?

A: There are several things but I will like to talk about a few of those. (i) The price of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)- a good product and first scheme that provides a universal scheme - should be increased. And, I think the government is doing something on it and we would like to request the government to increase its prices. Raising its prices will allow us to offer the scheme very profitably and increase its penetration. (ii) Protection should be increased as risk management is a bit low in India. I think it takes life insurance should be mandated with every loan at least for the AWAS Yojna and JD accounts to take care of the pain when the bread owner does not fulfil his responsibility. (iii) It should relook the taxation rules of annuity, which is the principal amount is given back to you with certain interest over a longer period of time. So, the government must not tax the principal amount that a person gets it may tax the interest amount that is provided along with the principal amount.

Q: IRDA Chairman has called for a reduction of GST rates on life insurance. What is your take on it?

A: Two things are there and they are GST and the stamp duty. People, generally, forget about stamp duty but if you have a look on the micro-insurance than you will find that a person is supposed to pay a stamp duty of Rs40 on the sum assured of Rs2 lakh. Something should be done on this stamp duty which turns up to be 10-15% of the premium amount. And the government has taken a good decision to keep micro-insurance scheme out of the purview of GST. But, something should be done on stamp duty on micro-insurance. Besides, there is an industry and chairman view on GST and we agree with it as we want to encourage protection.

Q: Update us on future plans of the company and the areas that will be targeted in recent future?

A: We will always focus on bank assurance. Apart from this, we will try to launch a vertical of the agency and expand ourselves in the micro-insurance segment. We also want to do something in the integrated insurance segment because buying insurance at every stage keeps you safe. We are investing a lot on it.

Q: Do you think that the merger of the banks will have an impact on your business, if yes, then what are the plans to deal with it? 

A: I don't think that it will have any negative impact on us. Talks with every bank are on and we expect that relationship will continue further. So, Andhra Bank after the merger will continue to be a part shareholder and distributor of the company. No regulatory restrictions are in place that says Andhra Bank can't be engaged in distribution after the merger.

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Q: Deadline for implementation of new product regulations for insurance products has been extended to January 31, 2020, from December 1, 2019. Tell us about your preparation about its implementation and were you prepared to implement the rules?

A: We were ready but were stuck at a very odd juncture in which overlapping was required for the products which were ending on November 30, 2019, but we wanted to continue with those. So, the extension is a beneficial one because it will provide an overlap period to launch new products and continue/issue the old ones. This overlap period is very good for us in terms of the succession of the business. In terms of product filing, most of our products have been filed. When it comes to the traditional plans then the new benefits are being provided to each existing policyholders and we are not revising it.