India is HSBC Life's 2nd largest market

MUMBAI: India has emerged the second-largest life insurance market for HSBC after Hong Kong in terms of new business premium. The group now expects India to soon become the largest life insurance market in the region.

Speaking to ET, Canara HSBC Life Insurance CEO Harpal Karlcut said: “HSBC has eight business in the Asia-Pacific that are either wholly-owned or joint ventures. India is the second-largest writer of new business after Hong Kong and is ahead of Taiwan, Korea, Malaysia, Singapore and China.”

He added that this is the reason why India is becoming a very important market for the group. “We see no reason why India should not become bigger than Hong Kong because it has got a much larger population,” said Mr Karlcut.

HSBC Canara Life is a three-way joint venture between Canara Bank, HSBC and Oriental Bank of Commerce. Canara Bank holds 51% stake while Oriental Bank of Commerce has 23% and HSBC Insurance (Asia Pacific) Holdings has the remaining 26%, which is the maximum permissible for foreign investors. Promoters of the company have already invested Rs 625 crore and have committed an additional Rs 300 crore for the current financial year.

For the financial year 2009-10, the company has generated annualised new business premium of Rs 644 crore, which it expects to grow by 50% during the current fiscal.

The life company has decided to focus on a niche market where it will sell only to customers of its shareholder banks. The three banks together have a customer base of 50 million, of which the company has sold policies worth 1.4 lakh.

“In a bancassurance partnership, one would expect insurance penetration to be in the range of 10-15% of the bank’s customers. Today, we are at a fraction of 1%,” said Mr Karlcut.

Mr Karlcut indicated banks that own HSBC are unlikely to distribute products of other insurers even if they were allowed to. “What makes a bancassurance partnership successful is that the bank staff deal with limited products. Banks do not deal with complexities very well. They can deal with complexities at the corporate level but not at the retail level.”

HSBC Canara Life sales come from a mix of Ulips and traditional plans in almost equal measure. The company has the highest average premium per policy of Rs 81,000 and has around Rs 1,400 crore of assets under management.