MUMBAI: Axis Bank becoming a promoter of Max Life has reduced the pressure on the life insurance company to diversify its distribution channel. The private lender accounts for 55-60% of the insurer’s sales and this was creating pressure on Max Life to ensure certainty of relationship.
Speaking to TOI, Max Life MD & CEO Prashant Tripathy said that the transaction removed uncertainty over third-party distribution channel. Axis Bank as a promoter makes the private lender a permanent, stable distribution channel.
Axis Bank has been distributing Max Life’s products for almost a decade. Tripathy said that with this bancassurance partnership becoming a joint venture, there will be deeper tech integration and use of analytics-based technology.
“Those with deep domain expertise in investment, people & technology and solid track record of retail financial services are going to participate in our board,” he said.
Axis Bank became a co-promoter of Max Life following the private lender’s acquisition of a 13% stake in the life insurance company this week. Max Life’s board will be recast with three Axis Bank nominees. Further, Axis Bank entities will have the right to acquire another 7% in the private insurer.
In February 2020, the partners had announced that Axis Bank and its two subsidiaries — Axis Capital and Axis Securities — collectively own a 12.99% stake in Max Life. The life insurer will carry a tag line stating that it is a Max Financial and Axis Bank JV.
In the last five years, Max Life has been expanding 18-20% year-on-year and in the first 11 months of FY21, despite Covid, the company recorded 14% growth in individual new business. This, at a time when the private industry recorded negative growth. The company has been growing its share of premium from the sale of protection policy, which already accounts for 10% of the premium. A large chunk of the protection covers is sold online with 12% of the total premium coming from online sales and half from the company’s website.