Aegon Life drives on with 'Pure Digital 2.0' strategy; profitability still 5-6 years away: MD & CEO

New Delhi: Digitally-driven Aegon Life continues to focus on innovation and technology for business growth even as the profitability is 5-6 years away for the decade-and-a-half old life insurer.

As a strategy, the company promoters decided to become a digital-only life insurer even before the outbreak of Covid, which meant it would not have any physical touch-points, and all the branches were closed. It was a strategic call to go purely digital, said Satishwar Balakrishnan, Managing Director & Chief Executive Officer (MD&CEO), Aegon Life Insurance Company Ltd (Aegon Life).

"A call was taken by the management as everyone was going digital. Every other industry has actually seen it and financial services is also moving in that space. So this is where all the action came from. Now saying building a digital-only insurance company doesn't happen overnight, we started in 2008 so we had our own legacy systems," the official said.

This is as per company's 'Pure Digital 2.0' strategy and to stabilise the new structure and processes with continued drive of protection businesses through digital means.

If you understand the technological aspect, the company had something called the monolithic architecture, meaning there is one huge application and everything is dependent on that. The flexibility and even to talk to various other partners becomes very difficult. Whereas if you look at the whole fintech space, new age companies are all cloud native, the only way they interact is through the APIs.

"And that is where we decided that we should spend a good one-and-half to two years to build that. This year is given to us, by promoters, more from a learning perspective. This is a new strategy of the company...to that extent we are on an aggressive growth path, but losses will take its time (to be eroded). It will take anywhere between next 5-6 years," Balakrishnan told PTI in an interview.

Application Programming Interface or API is a type of software interface where two or more computer programmes can communicate with each other.

He said the company had clear directions from the board of directors that the focus was not on new business but to ready the whole technological infrastructure first.

"So the entire IT infrastructure, we have now built in. We are now a cloud native, we are purely API driven." Balakrishnan said the company has a three-pronged strategy of technology, analytics and partnership.

The data-driven analytics will do away with the need of lots of documentation in any process requirement, while on the partnership front, Aegon Life has been tying up with many tech-driven companies which are catering to customers directly such as Paytm, MobiKwik, PhonePe, Zopper, scripbox and DocOnline.

"We are making the proposition of reaching out to new customers. There are various areas, like can I reach new customers through someone's existing customer base. In such cases, underwriting is easy as there is no fraud element, there are some specific income levels and lifestyle, which I get to know through the company I am tying up with," the official said.

In such tie-ups, Aegon Life can sell insurance through them rather than the conventional aggregators.

"And this is where we are seeing a new customer base when we are saying we are moving away from (19 min) agency channels. Yes of course we are, but we are opening up this entire new partnership," Balakrishnan said.

Aegon Life is a joint venture between Aegon India Holding BV (Aegon) having a 49 per cent stake in the company, and Bennett, Coleman and Company Ltd (BCCL) with 46.09 per cent stake. The rest of 4.91 per cent is held by Aegon Life Insurance Employee Benefits Trust.

In fiscal year ended March 2022, Aegon Life registered a net loss of Rs 367.3 crore, which ballooned against Rs 163.5 crore in the preceding fiscal due to higher Covid related claims.

Company's premium income stood at Rs 416.46 crore during the year, down from Rs 526 crore in 2020-21. The total income was at Rs 679.50 crore, as against Rs 941.65 crore.

The accumulated losses of the company as of March 31, 2022 stood at Rs 2,118.7 crore, as per company's annual report 2021-22.

Talking about products offered by the company, the official said its earlier policies were largely sold to customers in tier I cities and state capitals.

"The product that we launched with Paytm offers instant issuance cover. One can apply, pay and get the insurance cover instantly. We see a lot of interest coming in from tier II and III cities also as Paytm has reached out to these cities and secondly the need for insurance is there," he said.

Balakrishnan said the demand for insurance is very much there in the market and it is more for the company to make available to customers the products which are easy to understand as well as to buy.

Aegon Life plans to offer two more products -- one by September and another by December.

"And that's where the entire inroad that digital has done in terms of smart phones, internet usage and the biggest usage is the way API is being used. I think now the foundation has been laid. We just need to build on this, the road is available for us to now drive on," he added.