Bandhan Life Adopts New Norms and Strategies for Competitive Advantage
Bandhan Life Insurance is seizing the moment to revamp its strategy in light of new regulatory caps on management expenses and minimum surrender values. The company’s managing director and CEO, Satishwar B, highlighted that these regulations create a level playing field, prompting all insurers to reassess their product offerings. Bandhan Life is now focused on enhancing operational efficiency while expanding its reach, particularly in tier-2 and tier-3 cities, leveraging its affiliation with Bandhan Bank.
Strategic Repositioning and Product Offerings
Following its acquisition by Bandhan Financial Holdings, Bandhan Life Insurance has transformed into a comprehensive provider of various insurance products, including participating, non-participating, unit-linked, and pension plans. This strategic repositioning aims to cater to a broader customer base, especially in underserved regions. The company is particularly focused on expanding its presence in tier-2 and tier-3 cities, utilizing Bandhan Bank’s extensive rural network to reach potential clients. This move is part of a larger strategy to enhance the company’s market share and product diversity in a competitive landscape.
Innovative Digital Solutions for Self-Employed Customers
Bandhan Life has adopted a fully digital underwriting model, which streamlines the application process by pulling data directly from utility and service providers. This innovation significantly reduces paperwork, making it easier for self-employed individuals to access term insurance. Traditionally, this demographic has faced challenges in obtaining insurance due to a lack of documentation. Satishwar noted that approximately 50% of the company’s customers are now term insurance buyers, with a significant portion being self-employed. The company employs around 20 data points to evaluate an applicant’s financial status without the need for conventional documentation, thus broadening access to insurance products.
Multi-Channel Distribution Strategy
In a shift from its previous digital-only approach, Bandhan Life is now pursuing a multi-channel distribution strategy. While maintaining a strong partnership with Bandhan Bank, the company is actively engaging with other banks to expand its distribution network. This diversification is aimed at enhancing customer access to insurance products. Additionally, Satishwar expressed interest in entering the health insurance market, contingent upon regulatory approvals for composite licenses. This potential expansion reflects the company’s ambition to diversify its offerings and meet the evolving needs of its customers.
Future Growth Plans and Operational Efficiency
Bandhan Life has ambitious growth targets, aiming for a 100% annual increase over the next three years. The company plans to quadruple its assets under management from ₹5,000 crore to ₹20,000 crore within five years. Satishwar pointed out that the perception of high life insurance expenses is often due to the front-loaded nature of costs. He emphasized that when comparing premiums of traditionally sold policies with those sold digitally, the differences are minimal. Furthermore, the company intends to restate its balance sheet this year, as the full acquisition by Bandhan will affect its capital structure and tax implications. The anticipated Bima Sugam platform, a unified digital infrastructure for insurance services, is expected to further enhance operational efficiency, making it easier for insurers to integrate with payment gateways.
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