Insurance biggies play on HNI fear

ICICI Prudential, HDFC Standard Life, Max New York Life & Birla Sun Life Widen Portfolio, Launch New Products

 IT'S a classic case of cashing in on people's psyches. With High Networth Individuals (HNIs) in the country being fearful of the erosion of wealth during the slowdown, many large insurance companies and banks have used this period to draw the interest of this premier segment.
    This would explain why many of the insurance biggies such as ICICI Prudential, HDFC Standard Life, Max New York Life and Birla Sun Life have widened their HNI portfolio and launched a slew of ULIPs and guaranteed return products. With most of these having a minimum premium of least one lakh rupees, the impact on their annual premiums hasn't been small either.
    In fact, insurers say that like retail investors, HNIs too seem to be showing a penchant for ULIPs and guaranteed return products. The predominant reason is that many of them have been portrayed as capital protection plans. With HNIs having a low risk appetite post the slowdown, they have largely seen these insurance products as an opportunity to hedge their portfolios in equity.
    Birla Sun Life, for instance, launched a ULIP in March 08 called the Platinum Plus 1 which had a minimum premium of 1 lakh rupees per year, but assured guaranteed returns based on the highest NAV in the first 88 months or at the 120-month maturity, whichever was higher. According to Vikram Kotak, chief investment officer at Birla Sun Life Insurance, the product was conceived at a time when the markets were high and aimed at protecting the interest of high networth clients if the markets took a downward turn. The success of the endeavour soon led to the launch of a similar product in September 08 and a slightly modified product in May 09, to the extent that HNI policies contributed about 6% of their annual premium.
    Tarun Chugh, chief of alternate distribution at ICICI Prudential Life Insurance agrees that ULIPs seems to have become the flavour among HNIs this year. Many HNIs have shown renewed interest in their existing Premier Life Gold Policy, which had a minimum premium of Rs 1 lakh. "In fact, about 1/3rd of the total premium of Rs 15,356 crore at ICICI Prudential was from HNI policies," says Chugh.
    Keeping in tune with market dynamics, even the relatively new entrant Future Generali Life Insurance, launched a product called Future Freedom targeted at HNIs in December 2008 which contributed nearly 30% of their revenue in 2008-2009. The company has announced plans of launching more products targeted at the same segment in the near future.
    However, the latest product targeted at HNIs seems to be the Unit Linked Wealth Multiplier, which was launched by HDFC Standard Life on May 15, with a minimum premium of Rs 2.5 lakh. Speaking of the reasons behind this, Sanjay Tripathi, executive vice president and head of marketing at HDFC Standard Life says, "Our research has indicated that the HNIs segment exhibits tremendous growth potential. Keeping in tune with this segment of population's requirements, we have launched Unit Linked Wealth Multiplier, providing an opportunity to multiply their wealth in the long-term."
    Even banks have begun to take the HNI mantra seriously. ING Vysya Bank, for instance, launched a wealth management solution combining banking conveniences, online wealth management and personalized services for mass affluent customers about six months ago. This product has single-handedly contributed about 25% to their monthly volumes.
    However, while most insurers argue that they have not relied exclusively on the HNI segment during the slowdown, many agree that the tangible fear amongst HNIs has made a lot more open to taking exposure to insurance products. In fact, the interest in many of the products which were initially launched for HNIs are now driving companies to look at launching similar products for other segments. Sonalee Panda, head of products and marketing at ING Vysya Bank agrees that the need to meet the constantly evolving needs of the HNI segment drives many innovations in the financial services industry.
    lisa.thomson@timesgroup.com 

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