HDFC Life banks on broader playbook to keep its lead—but margins remain a worry
In a Padalkar interview, Mint expands the distribution of the company by adding new branches and resources.
“We stand out as the only major insurance company that enlarged our branches in an aggressive way and added more than 200 new branches in the last 24 months.” “These strategic movements will provide a significant high -level growth in the coming times and ensure that we maintain our competitiveness.”
HDFC Life’s net profit increased by 15% La1,800 crore in 2024-25. Individual annual premium equivalent (APE) grew by 18% La13,620 CRORE AND RENEWAL PREMIUM With an increase of 13% La37.680 Crore.
In contrast, according to a note of Phillip Capital, individual monkey growth for indigenous private life insurers was 15%. “HDFC Life continuously delivered for years with its focus on a balanced product mixture and conservative business assumptions.” He said.
India’s life insurance sector has faced a series of disruptions in recent years. In FY22, the Union Government exceeded tax exemptions for unit -related insurance plans (ULIPs) LaIn 2.5 Lakh and FY24, for traditional savings products La5 Lakh.
In FY25, India’s insurance regulator brought more strict surrender guidelines for the insurers, which increase the costs, disrupt the distribution channels and restructured distributors.
Padalkar, the sector “lighter touch arrangements and not to change business models in favor of the sector, he said. “The changes in the business model have been a close correlation with the growth of the sector. As an industry and regulator, the need for the watch is to focus on expanding the pie.”
An expanding footprint and regulatory barriers
HDFC Life Insurance has more than 300 distribution partners, including small financial banks, non -bank financial companies and new ecosystem players. In the FY25, he added 40 Bancassurane partnerships, where joint banks distribute HDFC Life products to their customers.
Unlike other bank -supported insurance companies, HDFC Life operates an open architectural model, ie HDFC Bank Ltd sells insurance products of multiple insurance companies, including HDFC Life.
Despite the criticism of kidnapping through the bank insurance distribution model, Padalkar supports the channel 6-7 times higher than the life insurance industry, considering it. In higher commission hunting examples of such captivity, the Ministry of the Union called on the Ministry of Finance to prevent such events in November.
HDFC Life has a network of more than 650 branches and 240,000 agents. SBI life insurance is estimated to have more than 1000 branches. However, under a closed architectural model, that is, all branches of the supporter bank, the Indian State Bank operates as SBI life branches and sells only its products.
Macquarie Research, in a final note, considering that 65%of the HDFC bank is 65%of the sector, 65%of the industry, the government will be most impressed if the government has overhauled distribution or Bankassurance arrangements.
Padalkar, “Our focus point, not to restrict Bancassurance, not to strengthen the processes. We need more distribution contact point, not less.”
Behind the movement, there is a belief that financial services will remain a combination of physical and digital distribution channels, especially in terms of higher value and long-term policies.
“Customers need guidance to make 7-10 years of premium payments according to their unique conditions,” Padalkar said. He said.
A chase for new customer segments
As the HDFC Life distribute network grows, it expects Bancassurance to take into account a smaller percentage of its total job. Padalkar, “Therefore, we are investing in order to strengthen our distribution, which includes the addition of new branches and feet to the street,” Padalkar said.
The distribution expansion of the insurer involves entering the Tier-2 and Tier-3 towns and cities, where the presence of insurance companies continues to be limited, even when they seek more customer insurance products.
“There is enough demand. ‘How much do I need?’ Or my insurance cover is enough – all good questions, “said the general manager.
HDFC Life’s growth in terms of percentage was similar between 1st stage 1, 2 and 3 cities; The contribution of Tier-2 and Tier-3 markets in the monkey of the insurance company increased from 58% to 65% in FY21 of 21.
Another focal area for HDFC life is not built -in Indian. In 2016, the insurance company established a subsidiary in Dubai, which established a branch in Guet’s City, a global center for Gujarat’s financial and technology services. HDFC Life’s gift city presence has so far launched a product in eight dollars.
Padalkar, “Now we offer NRIS to use the option to benefit from multiple currency and health insurance products through this offer,” he said.
NRIS is currently about 8% of HDFC Life’s general portfolio.
A developing product mixture
HDFC Life measures a product that breaks a box office records at least at least as a product. La100 Crore Premium. Padalkar, “We evaluate whether our product idea is taken well by the market. Therefore, despite the volatility, our market share has steadily moved to the north,” he said.
The insurer’s market share increased from 10.4% to 11.1% in 24 financial. Among the private life insurers, the market share based on an individual weighted premiums is higher than 15.7% and 15.4% in 24 fiscal years, but less than 16.5% in 23 financial years.
The unit -connected plans included 39% of the HDFC Life’s individual monkey in FY25, then the savings products that were not recorded at 32%, the products that participated in 19%, and each 5% period and annual income policies. Protection work has contributed 27% to the general new business premiums in 25 financial years and retail protection monkeys increased by 25%.
Padalkar is waiting for the demand of the Ulıp to rise. However, the insurance company offers ULIPs with advanced protection through higher secure floors and additional riders. “Our aim is to keep the ulıp mixture a little less than one -third of our business.” He said.
Padalkar also hits the Indian Insurance Organization and Development Authority (IRDAI) to provide a composite license that it believes will be a “game -changer”, as it will allow insurance companies to produce and distribute all insurance products.
“This would make our proposal holistic-a single-hand shop that offers solutions for death, morbidity, long life and savings has been brought together. He said.
HDFC Life Insurance is overhauled by a initiative called ‘Project Inspire’ in order to improve customer experience and to develop ‘going to the market’ capabilities. Padalkar, “We are overhauled all customer journey to reduce friction forward,” he said.
Edition on margins and valuation
The value of the new job (VNB), which is expected to work by an insurance company, is expected to work by an insurance company La3,960 crore for HDFC life increases by 13% annually. However, the VNB margin in the FY25 fell from 26.3% to 25.6% in the previous year.
According to Macquarie Research, the fall was due to the changes caused by the increase in unit -related plans in HDFC Life’s product mixture and delivery value regulations.
In a note of Macquarie research, “Management is planning to expand its monkey at 17% CAGR for the next four years (not in linear orbit) in the next four years to maintain the range-related margin levels that we believe to be around 25-27%.
On the basis of the 5 -year CAGR (compound annual growth rate), the new business value of HDFC Life was 16%and the embedded value was 22%.
The embedded value is an indication of the institutional value of life insurers attributed to shareholders. ‘Corrected net value’ or accumulated profits and ‘value of power of difficulty’ or estimated as the sum of future profits.
Phillip Capital estimated the VNB margin of HDFC Life as 25.8-26.3% in 26-28 fiscal finance and increased the cost rate for higher commission costs. The insurer’s new business value is waiting for a CAGR basis in the financial year of 17%to 25-28.
“HDFC Life has historically made a premium trade with other private life peers, but it has been narrowed lately. This valuation gap that shows the healing metrics of special peers may be under pressure.” He said.
