HNB Assurance to introduce a new investment

HNB Assurance Limited is gearing to introduce a combination of insurance and unit trust products to the market by early next year, backed by their strong performance in revenue this year.

“These type of products are called ‘unit link’ products and the Insurance Board of Sri Lanka (IBSL) and is in the process of formulating guidelines for such products, which will help us launch it- hopefully by early next year, “ Manjula de Silva, Managing Director, HNB Assurance told The Sunday Times FT.

Lasinee Seresinhe, Director General, IBSL confirmed that the guidelines are being looked at with regard to unit link products. “We will be issuing the directives by end of the year, because many companies want to start launching these products,” she said, adding that the regulator is receiving observations from the insurance firms at present.

De Silva said a unit link product is when an investment part of the life insurance product goes to a unit trust. “The customer will have the option of selecting where he wants the monies invested - such as the share market so that they can make a better return,” he explained.

He said that the company is targeting professionals such as doctors and lawyers for these products. “Presently this category of professionals is not tapped and there is a lot of potential here,” he said, adding that in India such products are picking up fast.

De Silva said that the company is looking at different distribution channels. “We want to build up a separate set of insurance agents who can canvass these types of products,” he explained, adding that the level of these promoters will be of a slightly higher academic background.

“Even stockbrokers may at times be able to sell these products or even the bank’s private banking era,” he said.

He also said that HNB Assurance is planning to launch a micro insurance product targeting lower income groups and introduce them to an affordable scheme. “We are talking to other players in the micro insurance sector such as non governmental organizations (NGOs).”

He added that the company pioneered a micro insurance product and already sold more than 450 policies in about four months- since its launch date. “We used the Hatton National Bank branch network to popularize this, but now we want to launch another product and formulate new strategies beyond our bank’s branch network,” he explained.

He said that the company’s achievement at surpassing the combined annual turnover of Rs.1 billion only in its fifth year of operation- thus becoming the fastest in the insurance industry in the country to do so was essentially backed by HNB.” Right from the inception we started on promoting the bancassurance concept by leveraging on HNB’s strength,” he said, adding that it gave them a competitive advantage.

“60 percent of the general business and 20 percent of the life insurance business comes from HNB,” he said. However he was quick to add that the business they have got from HNB has not come through a platter. “The client has a choice and before they decide on a company, they consider at least three options,” he explained.

He also said that the company retains (customer retention) 70 percent of the life business and 80 percent of the general business. “We have not sacrificed profitability for turnover. We are the only insurance company which has been profitable fro m its first year,” he said, adding that posting high turnover is relatively easy, but not achieving profits. “It is difficult to balance both top and bottom lines,” he added.