Insurance Demand Remains Resilient Amid Global Uncertainty

Insurance Demand Remains Resilient Amid Global Uncertainty

Amid global uncertainty and volatile markets, policyholders are increasingly opting for protection and guaranteed insurance products, according to Anuj Mathur, MD and CEO of Canara HSBC Life Insurance.

In an interview with Moneycontrol, Mathur discusses shifting customer preferences, expansion plans in tier-3 and tier-4 cities, opportunities in GIFT City products, and how initiatives like Bima Sugam could reshape the insurance industry.

A lot is happening globally right now, especially on the macroeconomic front. How are you reading the situation for the insurance industry?

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Many of these developments are unpredictable and have impacted economies globally. However, insurance as a sector has historically seen stronger demand during and after crises. We witnessed this during Covid as well, when insurance awareness and demand increased significantly.

Even now, amid geopolitical uncertainties, we believe insurance demand will remain resilient. There could be temporary reactions where people prefer liquidity, but the long-term outlook for insurance remains very strong. In uncertain times, people look for protection and financial security.

We are also seeing a noticeable shift towards protection and annuity products. Our protection business has doubled, albeit on a smaller base. Similarly, annuity products are seeing strong traction as people realise the importance of retirement planning and the need for lifelong financial security.

Insurance Demand Comparison - Year over Year

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Overall, while equity markets may remain volatile, we remain optimistic about long-term growth prospects for insurance.

Have you seen a rise in demand for protection and guaranteed products since geopolitical tensions escalated earlier this year?

Yes, we have seen increased demand for protection plans as well as guaranteed traditional products. Customers are increasingly looking for stability and certainty.

The current interest rate environment is favourable for guaranteed products because customers can lock in decent long-term returns. Insurance remains one of the few financial products that can provide guaranteed, tax-efficient returns over 15-20 years.

Starting from January, we saw very good uptake of our traditional products. Our traditional mix during this time was almost 80 percent basis individual APE.

This trend has continued into the new financial year as well. Customers are increasingly preferring debt-oriented and guaranteed products amid market volatility.

How has persistency behaved in the current environment?

Our 13-month persistency ratio improved, and the trend continues. 13-month persistency growth was 1.9% in FY26 vs FY25 (86.3% vs 84.4%). We have not seen any negative impact from market volatility. In fact, customers understand the importance of staying invested. Even in ULIPs, continued premium payments help investors benefit through rupee cost averaging during volatile markets. We expect persistency to improve further.

What is your outlook on dollar-denominated insurance products through GIFT City?

We entered GIFT City last year and already have approved products in the market. We have started selling these policies and see strong long-term potential.

These products are particularly attractive for NRIs because they help hedge against rupee depreciation while also offering exposure to India’s growth story and relatively higher interest rates.

Resident Indians can also invest under the Liberalised Remittance Scheme (LRS). These products can be useful for goals like overseas education, where future liabilities are dollar-denominated.

Currently, volumes are still small because the business is at an early stage, but we have aggressive expansion plans.

What are the key challenges for the insurance industry currently?

Geopolitical uncertainty remains a challenge for all sectors, including insurance. However, we also see it as an opportunity because uncertain times generally increase demand for insurance protection. We believe our diversified strategy, expansion into smaller cities, focus on traditional products and agency growth position us well to navigate short-term disruptions.

Until December, ULIPs accounted for nearly 60% of our product mix. However, demand for traditional products surged from December onwards, particularly during January-March.

By March-end, ULIP contribution had come down to 51%, and over the last four months, traditional products have accounted for nearly 80% of sales.

That said, ULIP demand continues among certain customer segments such as HNIs and NRIs.

What kind of traction are you seeing in the agency channel?

The agency channel is currently on a small base, but it is growing rapidly. Last year, the channel contributed business worth around Rs 14 crore.

We expect exponential growth over the next few years as we expand distribution and add more agents. We also plan to open additional branches to strengthen our agency footprint.

What is your view on Bima Sugam?

We see Bima Sugam as a positive initiative. It can increase transparency and improve access for customers.

Initially, the platform is expected to focus on relatively standardised protection products, which are easier for customers to compare digitally. While the broad product framework may be standardised, pricing will differ across insurers based on their individual cost structures and business models.

For companies like ours, which have competitive products and efficient cost structures, Bima Sugam could create additional growth opportunities.

Our bancassurance-led model gives us cost efficiencies, and we aim to pass those benefits to customers through competitive pricing.

What will be the growth drivers this year?

Our focus this year is on broad-basing the business by acquiring more customers and increasing policy volumes.

Protection and traditional products will remain key focus areas. We see a huge opportunity because penetration within our bancassurance network remains low.

We are also expanding deeper into tier-3 and tier-4 cities to reach first-time insurance buyers.

Another important growth driver will be our agency business, which we launched on October 1 last year. The channel has done well and we plan to scale it further this year.