News: SBI Life to foray into micro insurance

(ACERC 24/07/2006) Mumbai - SBI Life will enter the micro-insurance segment this year and infuse a capital of Rs 100 crore to increase its paid-up capital to more than Rs 500 crore.

SBI Life aim is to grow its aggregate premium collections 2.5 times to reach Rs 2,500 crore by March next year as against the Rs 1,000 crore collected last year. The company is in talks with few non-life insurance players to enter the micro-insurance market as per IRDA guidelines and is confident of starting the business in the next financial year.

SBI Life also plans to launch new ULIP-based pension schemes by September this year, besides new schemes for the Group Policy in the gratuity, pension and superannuation. The company also launched the 'Group Swadhan' scheme, wherein a policyholder can pay premium for a period of 5-10 years and if no claim has been made, the premium is returned. The scheme is mainly sold through SBI branches.

Currently, SBI sells 43 per cent of its products through its bancassurance network and expects this channel to contribute 50 per cent of its sales this year. The insurer also has covered around 36,000 lives through its tie-ups with around 3,300 self-help groups and collected Rs 209 lakh in premium. SBI witnessed a 22 per cent policy sale in rural areas as against the targeted 18 per cent.

SBI has been giving a return of more than 12 per cent on an average with the ULIP products playing a dominant role in its total sales. In the current month till July 21, the company had collected a premium of Rs 77 crore, out of which Rs 65 crore came from ULIP. SBI would also increase its agent strength from the current 8,000 to 20,000 this year and add another 2,000 employees to the present strength of 4,000 at SBI bank to sell its policies. Also the bank assurance channel would be further strengthened by bringing in an additional 1,500 branches to the existing 6,000.