What Makes HDFC Life’s Vibha Padalkar Optimistic About Recovery
“I see a steady uptick in terms of growth and profitability among listed players,” says Vibha Padalkar of HDFC Life.
At a time India’s listed life insurers witnessed a contraction in new business premium in the first quarter on account of Covid-19 disruptions, HDFC Life Insurance Co. remains optimistic about recovery.
“I see a steady uptick in terms of growth and profitability among listed players. If GDP ends flattish rather than showing a decline, we should be able to get back to last year’s new business margins,” Vibha Padalkar, managing director and chief executive officer, told BloombergQuint in an interview. But claims related to the pandemic, which has so far infected close to 12 lakh Indians, including more than 28,000 deaths, need to be watch out for. “We have received 41 claims of Covid, of which 39 are valid.”
HDFC Life’s annual premium equivalent, a sum of first-year premium and single-premium policies, fell 30% year-on-year—the least among listed peers—to Rs 1,198 crore in the three months ended June. That’s because insurers couldn’t sell policies through agency and bancassurance, their biggest distribution channels, as all but essential activities remained shut in April and most of May before the government began to ease the lockdown curbs.
While the company’s profit rose 6% over the year earlier to Rs 451 crore in the first quarter, its value of new business and margin declined.
A rise in share of protection policies in individual annual premium equivalent helped the company. “What has worked for us is the focus on protection with its share in individual APE growing by 50%. We are ramping up the focus on protection,” Padalkar said. “We are able to catch a fair share of demand for protection”. This, she said, is because of a flight of customers toward bigger and trusted brands. “There has been a massive reset in the way of people’s thinking.”
HDFC Life’s share of protection policies in individual annual premium equivalent rose to 11% in the quarter ended June from 5% a year ago.
Padalkar also expects lesser one-offs and better risk management among listed players.
Watch the full interview here: