Mr. Deepak M. Satwalekar has been with HDFC since 1979. He is currently the Managing Director of the country’s largest housing finance company. A graduate of the IIT Mumbai and an MBA from The American University, Washington DC, Mr. Satwalekar has been a consultant to the World Bank, the Asian Development Bank and has been actively involved in various committees of Bombay Chambers of Commerce and Industries as well as the Confederation of India Industries. He will soon be taking over as the Managing Director of HDFC Standard Life Insurance Company Ltd., the joint venture between HDFC and Standard Life of UK.

In an interview with personalfn.com Mr. Satwalekar spoke of HDFC’s strategies in the newly opened Life insurance segment.

PFN: How do you view the Indian insurance market, which has been recently opened up for private sector?

Mr.Satwalekar: The Indian insurance market is under insured, largely untapped and offers huge potential. The insurance market in India is still at a nascent stage. Until now, the penetration was just 22%. People do not view insurance products as a necessary thing and our strategy is to educate the people about life insurance and its need and not merely look at it as a tax savings product. We are bullish about the business prospects and are fully prepared to meet the challenges of the market. Our tie-up with Standard Life of the UK will ensure that we have the latest systems and international expertise to back our claims.

PFN: Although the nationalised insurance companies have been around for some time, do you think they have done enough to educate people on the concept of education? If not, how long will it take the private sector to achieve what the public sector could not do?

Mr.Satwalekar: It has taken some 20 years for the public sector to educate the people on insurance but will not take much time for the private sector. HDFC’s initial training (on an ongoing basis) will primarily focus on need based selling skills to the agents, who will now be called Consultants. We believe that after our training process, they will truly be able to impart financial advice. Our consultants will analyse the customer’s financial requirements, help them plan their goals and recommend the appropriate solutions and also provide support on an ongoing basis. Thus the company's consultants will have a far wider role to play than the conventional insurance agents.

PFN: Kindly throw some light on HDFC’s tie up with Standard Life of the UK for insurance joint venture. How much stake the company is likely to offer to the insurance partner?

Mr.Satwalekar: In our joint venture with Standard Life, HDFC will hold 82% and the balance 18% will be held by Standard Life of the UK. Founded in 1825, Standard Life has been at the forefront of the UK insurance industry for 175 years and is the largest Mutual Life Company in Europe. It has operations in UK, Ireland, Germany, Canada, Austria and Spain. It also has representative offices in China and Hong Kong. Standard Life is one of the few insurance companies in the world to have AAA rating from the two leading international credit rating agencies, Moody's and Standard & Poor's, and is rated as one of the strongest companies in the world. We are absolutely proud of their association with us. The quality and values Standard Life brings to this venture are immense. In terms of their expertise, they are holding nothing back and are transferring almost their entire international experience in this venture.

PFN: When does the company plan to launch its Insurance products? What kind of products is the company planning to offer?

Mr.Satwalekar: We are planning to soft launch our insurance products initially in Mumbai by December 2000 and then nation wide through our network by January 2001. Initially we will be offering the Endowment and Money back policies and later on, we will be moving on to the unit-linked products. We have a strong Market Research Department, which collects data of consumer preferences on an on going basis and we will offer all innovative products accordingly. We will also be launching a mortgage based policy, in which the customer will have to pay only the interest on the loan taken and the principle will be paid from the proceeds of the policy on its maturity. We feel this product will have a wide acceptance and demand with the customers.

PFN: Is the company planning to sell non-life products of other companies and what are the synergies associated with the HDFC group?

Mr.Satwalekar: Yes, we are planning to market non-life insurance products of other companies as and when the opportunity comes. Since we have a large distribution channel, we can effectively utilise the same. HDFC now offers all types of financial products under one roof right from housing loans to retail products like auto loans, consumer durable loans, loans against shares and personal loans and now life insurance as well. Our goal is to become a one stop financial shop at the retail level.

PFN: Kindly state the amount planned to be invested in this venture and also state the expected payback period from this venture.

Mr.Satwalekar: We are planning to invest around Rs 1.7 bn in the insurance venture and as you know the payback period is not less than 6-7 years for life insurance products and around 2 years in case of general insurance products. Although, one of the players who recently acquired a licence, has claimed to break even within one year for non-life insurance products.

PFN: What is going to be HDFC’s strategy to counter competition in the life insurance sector and what is the share of the market you expect?

Mr.Satwalekar: We are lucky to have a head start and our customer base of both HDFC and HDFC Bank are both large enough for us to cater. The brand value of HDFC is so very powerful and we are proud of it. Also the international expertise of Standard Life will make the company a leader in the years to come. As regards to market share, it is difficult to predict, as we have LIC which is years ahead of everybody and catching up with them or if not at least a small portion of their share is going to take us many years. We are expecting the overall market to expand and there is going to be business for all.

PFN: How effectively does HDFC plan to tap HDFC Bank’s network for its insurance products?

Mr.Satwalekar: We are planning to use all our channels efficiently for the distribution of insurance products. HDFC has 1.1 m borrowers and 0.8 m depositors. Also, HDFC Bank has 1.5 m customers. We are planning to open more branches both in the rural and urban areas (in the ratio of 1:3). HDFC has a good brand name and a wide distribution network of agents. So we do not see any major problem as far as the distribution of the insurance product is concerned.

PFN: What are the other financial products HDFC planning to launch during the year?

Mr.Satwalekar: Our major financial product is insurance, which we are planning to launch by the year-end.

PFN: Which are the 3 books which have influenced you the most?

Mr.Satwalekar: I like reading lot of fiction books. But I am a fan of P.G. Wodehouse.

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