Max New York Life to focus on long-term savings plan

Max New York Life Insurance  holds the sixth position among the private players. The company is looking to hire 7,000 agents and 500 staff this fiscal in pursuit of its goal to become the most respected and admired company rather than reaching the number one position. Rajesh Sud, CEO and managing director, spoke with DNA on how the insurer tackled changes in the unit linked insurance policy guidelines by the Insurance Regulatory Authority of India and the way ahead. Excerpts from the interview:

Currently your market share is 7.5% among private players, how are you gearing up to reach the number one position?
Our USP is serving customer needs the right way. First of all, we haven’t set ourselves the goal of being among the top three, but instead our goal is to become the most admired life insurance company. Our vision is to be number one in consumers and stakeholders’ eyes. Being big in size doesn’t matter to us, because there are companies which may be big but they are not necessarily respected or admired. We have seen re-distribution of market share of late. So our game plan is to continue our focus on long-term savings plan, balance our multi-distribution channel and build on productivity. Therefore, we will focus on right things that the customers want.

Are you happy with your annual results?
Our revenues grew 20% over the last year, our costs are marginally down compared to last year and, of course, our profit is up 12 fold to `283 crore for the year ended March 31. The results are great because fundamentally we are a very strong company. While the broader market shrunk, we saw 9% growth in our new sales performance. Our conservation ratio is 82%, which is the highest by far in the industry. So maintaining that in a difficult year was quite an accomplishment. So combination of these two factors with good renewal income which is system and conservation driven with high sales growth is particularly what is driving our revenue growth.

There are talks that under the revised norms, the 4.5% guaranteed return portion in a pension scheme may no longer be mandatory. What are your views on it?
At this point in time it’s difficult to say what is going to be amended. But if you ask if we do believe in that part of business, then yes it has to be done. However, it should be responsible financially for all stakeholders and therefore we don’t want to create products (like 4.5% guaranteed products) where we couldn’t find a reasonable way in which we could make that promise and stand by it.

You have completed 10 years of operations. If you have to sum up the journey then what were the biggest challenges?
We have been through three phases already in a very short period of 10 years only. The first phase was a set-up phase where were absolutely new. Neither Max India nor New York Life had any presence in the consumer finance business. So the initial focus was on setting up an institution that would be built on some strong foundations. Hence, we chose from that day to follow the path of quality to find an alternate in a differentiated agency model.

We have had the smallest agency size, but so far the most productive one. So I think the initial 3-4 years were invested in establishing our basics like putting a team together, creating a culture of performance, at the same time a culture that was consumer-centric. Next phase from 2006-08 was a build-out phase of rapid growth, where we rolled out new infrastructure, offices and doubled our distribution reach. 2009 onwards our last phase of consolidation is going on where it’s time to go back to our basics and customers asking them their preferences.

The industry suffered heavy losses due to the new Ulip guidelines. What impact did it have on your company?
Yes, definitely our margins were squeezed with cut on costs. If this disruption cost is called as loss, then yes we did suffer loss from that angle. But not every product was turned down because they didn’t ask us to change anything that is already a contract, they asked us to change prospectively. So prospective products are now designed as per the new regulations. But today, our product mix for Ulip : traditional is 61:39.