With A Strong Growth Engine, SBI Life Now focusing on Quality

SBI constitutes to be one of the largest financial institutions in the country. In the third quarter of the year 2017-18, SBI Life Insurance Co. Ltd witnessed a substantial growth of around 41.9% in the new business premium. However, now that the growth engine is in full swing, SBI now needs to focus on the quality part. Scroll down to know more…

1. Propellants of the Growth Engine

SBI is also the largest insurance provider in India. As reported by SBI, this substantial growth in the premiums has been largely fostered by the retail individual business. Not just fresh premiums but renewal premiums have also contributed to the reported growth.

2. Growth in Assets under Management

Owing to the growth in premiums, SBI Life has also undergone an impressive growth in assets under management. The growth in assets under management was around 17.6% in 2016-17 until the end of nine months in December. However, in this financial year, by the end of December, the growth was reported to be 23%.

3. New Business Acquisitions

New business acquisitions refer to an increment in costs. Although marginal, SBI has shown an increment in the percentage corresponding to the new business premiums.  Earlier, the percentage was 12.3%, which has now gone up to 12.6%.

4. Persistence Ratios

Improvement in persistence ratios has been another vital aspect. It indicates that SBI Life continues to leverage on the incomparable reach of its parent distribution network. It also indicates that SBI Life products are not just sold in the market but also are held on to.  However, this is quite natural given that the sale of insurance products contributes to more than 65% of the entity’s business.

5. Featuring on the Stock Exchanges

Lately, insurance companies have started to feature on the stock exchange. According to investors, this calls for potential growth, and therefore investors look at these events in a positive manner. In the past five years, SBI life’s market share has grown from 13% to around 20%.  No wonder, analysts have given SBI Life Stock the ‘buy’ rating. Further, December figures indicate that the Profitability of SBI Life has increased.

6. Future Prospects of SBI Life

The current picture appears to be positive and promising. Similarly, future prospects also appear to be positive and secure. An improvement in the persistence ratios has been indicating the safety of the future prospects. Now, if you take a look at SBI Life’s persistence ratios, there have been a lot of changes. For instance, persistence ratio for the thirteenth month was at 79.81%. However, it increased to around 81.51% in the last year. Similarly, the persistence ratio, which was around 67.48%, increased to around 68.81% in the 37^th month.

But surprisingly, the ratio for the 61^st month considerably fell down to 59.48% from 69.59%.

7. Traditional Policy Options Still Continue to Lead the Race

Strong equity markets have in turn strengthened the sales of market-associated products for most of the insurance companies, including SBI. Despite this, it is the traditional policy options, especially the protection plans that earn long-term profits. It is not surprising that the traditional policy options offered by SBI still lead the product portfolio. This fact is supported by the 18% growth exhibited by SBI.

8. SBI Life Focusing on Quality

For any business entity, small or large, local or global, what matters the most is quality! With the growth patterns that have appeared last year, SBI appears to be on a growth spree. However, now that the growth wagon is running steadily, SBI should now focus on the quality of business, and that is the protection plans. As mentioned earlier, protection plans have been traditional, tried and tested profit tools for SBI. Hence, it is necessary for them to further strengthen this area quantitatively as well as qualitatively.

No doubt, SBI has struck the right chords when it comes to business profitability. SBI has shown substantial growth in almost all the areas. However, what lies ahead are more challenges, and therefore, it is imperative for the organization to concentrate on quality by focusing on its protection plans.

Refer our section to read about other Life Insurance Companies in India.

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