Ladies and gentlemen, good day, and welcome to Q2 FY 2022 earnings conference call of Bajaj Finserv, hosted by JM Financial Institutional Securities. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Bhise from JM Financial. Thank you, and over to you, sir.
Thank you, Margaret. Good morning, everyone, and thank you for joining this second quarter FY 2022 earnings conference call of Bajaj Finserv. I would like to thank the management of Bajaj Finserv for giving this opportunity to us to host this call. From the management team, we have Mr. S. Sreenivasan, Chief Financial Officer, Bajaj Finserv; Mr. Tapan Singhel, CEO, Bajaj Allianz General Insurance; Mr. Ramandeep Singh Sahni, Chief Financial Officer, Bajaj Allianz General Insurance. From the life insurance business, Mr. Tarun Chugh, CEO, and Mr. Bharat Kalsi, CFO of Bajaj Allianz Life. Without much ado, I would want to transfer this call to Sreenivasan, sir. Over to you, sir, on the call. Thank you.
Thank you. Good morning, everybody. Let me welcome all of you to this conference call to discuss the consolidated results of Bajaj Finserv Limited for Q2 FY 2022 and the first half of the financial year FY 2021/2022. I hope all of you are safe and vaccinated. As before, in this call, we will largely be concentrating on the consolidated results as well as the results of our insurance operations through Bajaj Allianz General Insurance, Bajic, and Bajaj Allianz Life Insurance, Balic, and where material, the standalone results of our company, Bajaj, BFS, which is, our company. Bajaj Finance, BFL, which is another major subsidiary of ours, has already had its conference call. However, if there are any high-level questions on BFL, we would be glad to take that as well.
We will not be taking any questions on the status of Allianz's stake in our insurance company. The status has remained the same as at the end of the previous quarter, and there is no change there. Any statements that may look like forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance results. Remarks on Ind AS, as required by regulation, BFS has adopted Indian accounting standards from FY 2019. The insurance companies, however, are not covered under Ind AS. They have prepared Ind AS financials only for the purpose of consolidation. Accordingly, for BAGIC and BALIC, the standalone numbers reported below are based on non-Ind AS accounting standards or Indian GAAP as applicable to insurance companies. Our results, the press release accompanying the results, and our investor deck have been uploaded on our website on today's release.
At first, let me start with an update on the performance for Q2. After the disruption caused by the second wave of COVID-19 in first quarter of this year, recovery gathered momentum in Q2 on the back of reopening of the economy in most states, rapid vaccinations and continued policy support. Under these improved conditions, our businesses have shifted focus to growth while closely monitoring risk parameters. The company and its subsidiaries took the initiative in arranging vaccinations for employees and their families. Apart from ensuring well-being of our employees and their near and dear ones, this also ensures better preparedness for us and our businesses in the event of a third wave. I will now touch upon each of our major businesses. Let me start with Bajaj General. Overall, an excellent quarter for Bajaj General on growth and profitability.
Gross domestic premium income, or GDPI, grew 21% in Q2 FY 2022 versus the industry growth rate of 10.7% and a private sector growth rate of 13.7%. After excluding bulky tender-driven businesses like crop insurance and government health businesses, the GDPI grew by a healthy 14.4%. During H1 FY 2022, the growth rate was 16.8% versus the industry growth rate of 10.9% for the composite companies. Bajaj continues on its approach to calibrated growth, that is, seeking to grow in preferred segments, which are private cars, two-wheelers, commercial lines, and retail health, while remaining cautious yet opportunistic on group health, predominantly the employer-employee group health.
To give some more details, growth in quarter two was driven by motor, 7.6%; fire, 30%; marine, 52.9%; travel and government health schemes. During the quarter, despite the auto industry showing declining trend on account of shortage of semiconductor chips and tepid new sales of two-wheelers, Bajaj General has shown growth in the motor segment. It was heartening to see the commercial vehicle segment starting to recover growth, and we see it trending towards pre-pandemic levels in the coming few quarters. Overall, Bajaj General had an industry-beating motor growth both in Q2 FY 2022 and H1 at 7.6% and 7.4% respectively, which is about the industry growth was about 6.3% and 4.9%.
While it is expected that the auto industry will continue to face the supply-side constraints in the near term, the performance in Q3 will also depend on how the demand shapes up in the festive season and beyond. In commercial lines, with the aid of its strong bancassurance and agency channels, as well as underwriting and reinsurance capacity for covering large risks, Bajaj continued its strong performance across retail, commercial, and industrial risk categories. Fire and marine segments continued their growth momentum, while engineering, which is depending on new projects, saw some slowdown and liability growth was flat. Overall, commercial lines continued to do very well with Q2 FY 2022 and H1 FY 2022 growth of 20.9% and 16.8% respectively, against the industry growth rate of 17.4% and 12.9%.
Within health, retail health has seen a muted growth on account of higher base from Q2, which was boosted last year by strong demand for corona coverage policies. Overall, in H1 of this year, retail health growth of 8% is in line with the multi-line composite insurance growth of 8%. While Bajaj General continues to be cautious on group health, growth is driven at right pricing for each relationship. During the quarter, Bajaj General underwrote government health business of INR 753 crore for Gujarat government under the PM Jan Arogya Yojana scheme. Though recovery from the second wave of COVID-19 led to significant quarter-on-quarter reduction in COVID-19 claims and severity, there has been an increase in severity of non-COVID health claims. With the economy opening after lockdowns, motor-only claims frequency, own damage claims frequency and severity are almost back to pre-COVID levels.
Moreover, heavy rains in Maharashtra witnessed in this quarter had some negative impact on claims. These factors did impact results for the quarter, but notwithstanding these, the combined ratio increased only marginally to 98.5% as against 97.4% in Q2 of FY 2021, and it is well below 100% on account of lower expense ratios. In a market which is intensely price competitive, this result, we believe, is highly encouraging. Just to put this in perspective, last year when there were lower claim frequencies, we had indicated the need to strengthen reserving for potential interest on third party claims and higher expected ultimate losses for the health portfolio arising out of COVID-19.
We had also sounded caution on group health employer-employee businesses which seemed profitable in the short run at that time, but turned out to be a losing business when the second wave of COVID-19 commenced as more employed people got affected. The general insurance business is dynamic and volatile, and tactical decisions are as important as strategic initiatives in preserving the opportunity for long-term profitable growth. In short, Bajaj has had an excellent quarter with a 28% growth in profit after tax, which was also boosted by higher investment income and realized gains. The non-annualized ROE for the quarter at about 5.5% is in line with the 20%+ ROE on an annualized basis. Bajaj is cautiously optimistic on growth as it enters H2 of FY 2022. In summary, it has been a very positive, balanced quarter for Bajaj. Coming to life insurance next.
After the slowdown witnessed in May and June on account of strict lockdowns, the industry is now back on its month-on-month growth trajectory. Q2 was a good quarter for the life insurance industry as a whole, with individual rated new business growing by 21%, with private players growing by 35% on the back of lower base for the industry. Bajaj had a relatively high base given the industry-leading growth in every quarter of FY 2021. Nevertheless, Bajaj continued the strong performance of FY 2021 and delivered an individual rated new business growth of 52% in Q2 of this year. Bajaj was the second fastest growing life insurer among the top ten players in H1, with a growth of 51% in terms of individual rated premiums.
When compared to the pre-pandemic period by taking a 2-year CAGR for the quarter 2 individual rated new business, Bajaj has delivered a CAGR of 34%, which is the highest in the industry. The annuity product launched by Bajaj in Q4 of FY 2021 continues to be very well received in the market. During the quarter, as well as in H1, 12% of the individual rated NB was from the annuity segment. In line with the industry demand for retail protection continues to be sluggish and hence contributed only 3% and 5% of the product mix in Q2 and H1 respectively. Given the steady equity market, the risk appetite for the retail saver seems to be higher, as evidenced by the strong demand for units.
Bajaj unit contribution to product mix was 38% in the quarter versus 36% in Q2 FY 2021. Net inflows into AUM have been posting positive, offsetting an increase in surrenders. If you recall, in Q4 of last year after the budget, there was a little bit of uncertainty whether the new tax changes would affect units. In hindsight it seems to us that that is not the case. The demand continues to be strong and is more driven by demand for equity as an asset class. Guaranteed non-par savings had some slowdown with contribution to mix in IRNB terms or individual rated NB terms dropping to 25% versus 36% in Q2 FY 2021.
Last year the Q2 contribution was high given the low fixed deposit rates, uncertainty due to COVID-19 and volatile equity markets, and therefore, the customers' preference was for guaranteed products such as the non-par savings. While contribution to the mix has come down, in absolute terms, the non-par savings has grown by 5% during the quarter. Despite the steady equity market, which typically one would feel is not a very favorable one for the participating or the par segment, it continues to maintain contribution in the mix at 22% versus 23% last year.
In absolute terms, though, PAR segment has shown solid growth of 45% and 75% in Q2 and H1. Group protection business continued to display a strong growth of 46% QOQ, that is compared to Q1 of this year, which was INR 338 crore and INR 494 crore in the last year. Overall group new business grew by 62%, from INR 830 crore in Q2 of last year to INR 1,345 crore in Q2 of this year. You may recall that group business was muted in H1 of FY 2021 as lending by banks and NBFCs had slowed down considerably. During the quarter, growth was driven by all our main channels with agency, institutional business and BALIC Direct growing at 56%, 37% and 51% respectively.
Renewals registered a strong growth of 22% and on the back of strong new business growth and renewal growth, the GWP grew by 42% to INR 3,813 crores. One point I would like to highlight here is the strong year-on-year increase in persistency across vintages. 13-month persistency increased by 5% to 82%, while 61st-month persistency increased by 4% to 45%. The efforts of the management to increase contactability, enhance digital offerings and focus on customer value have been key to delivering this increase. On the claims front, during the quarter, BALIC in line with industry trends experienced deviation in expected mortality across the businesses on account of COVID-19. In the group protection and on the retail side, stress was observed with a surge of claims from May till August on account of some segments having some delayed reporting.
However, we witnessed gradual month-on-month improvement in claim experience during Q2. By September, the tail factor seems to have dropped off considerably. On the retail side, BALIC has settled around 2,800+ claims pertaining to COVID-19 amounting to INR 146 crores on a gross basis in Q2 alone. BALIC has reserved for probable future claims and the reserves for the same as at 30th September stand at INR 105 crores net of reinsurance. The total impact of COVID claims in Q2 on the shareholders PBT was INR 60 crores as against INR 288 crores in Q1 of FY 2022 and INR 15 crores in Q2 of FY 2021. Similar to the previous quarter, we have continued making quarterly disclosures of NBV.
In addition to the NBV for the quarter, we have also indicated the new business value for the 12 months ended 30th September 2021. Due to high variations in seasonality of business across quarters, I would advise investors to exercise caution while reading into Q2 NBV and margins. We had mentioned in our earlier call that quarterly NBVs and NBMs may not reflect the possible year-end results. Investors may be aware there is a significant portion of the life insurance business comes in the second half and especially in Q4. Therefore, most of the fixed costs borne during the year gets absorbed in the second half. Please note that NBV on a rolling 12-month basis, which we have indicated, does not indicate a forecast or expectation from us for FY 2022, as it is only intended to show what a 12-month trend with seasonal variations looks like.
New business value net of expense overruns, the key metric of profitability, increased by 82% from INR 75 crores in Q2 of last year to INR 136 crores in Q2 of this year. For the twelve months ended September 2021, the NBV was INR 461 crores as against INR 258 crores for the twelve months ended September 2020 and INR 361 crores for the whole of FY 2021. BALIC's profit after tax for Q2 FY 2022 at INR 104 crores was 6% higher than Q2 of FY 2021 of INR 98 crores, largely because of the additional cost of the COVID claims and the new business premiums offset by better than expected growth. In addition, as indicated in an earlier call, we continue to report embedded value for BALIC on a half yearly basis.
From this quarter, we have also started reporting the embedded value movement on a half-yearly basis, and you'll find these details in our investor deck uploaded on our website yesterday after our board meeting. The embedded value for BALIC as of 30th September 2021 was INR 16,616 crore, which is a 4.4% increase quarter-on-quarter over June 2021 and a 14% increase over September 2020. To summarize, overall, a very good quarter for BALIC. Finally, both the insurance companies are financially among the most solvent, BALIC with 626% solvency and BAGIC with 350% and hence are well poised to weather any external adversity.
All our businesses have further augmented their digital capability, which along with greater digital acceptance by customers should we hope, help overcome challenges and deliver a strong performance in the second half of this year. Both Bajaj General and Bajaj Life have seen an increase in the utilization of their digital properties by customers and intermediaries. Bajaj General has also started the initial phase of the implementation of their core policy administration system with the new Maximus platform being launched on retail health about towards the end of Q2. Further details regarding Bajaj General and Bajaj Life's digital capability are covered in the investor deck uploaded on the website. Let me move on lending businesses, BFL and BHFL, that is Bajaj Finance and Bajaj Housing Finance. BFL already had its investor call, and therefore, we'll only broadly touch upon the BFL results.
In the second quarter, we witnessed a sharp revival across growth, risk, debt management and financial metrics. After witnessing a slight drop in the number of new loans booked in Q1 on account of the second wave, the number of new loans booked have increased to 6.33 million in Q2. This is more than Q4 of FY 2021, but only marginally below the pre-COVID time. That is Q2 of FY 2020, and 75% increase from Q2 of FY 2021. The company's diversified business model has enabled it to record a strong AUM growth, as seen from the total AUM standing at INR 1,66,937 crore as of 30th September of this year, versus INR 1,37,090 crore as of 30th September of last year.
In absence of a third wave, BFL expects quarterly AUM growth rate for the second half of the year to be strong. To support its growth stance, BFL increased employee strength by over 2,000 during the quarter. While last year the approach to staffing was to strengthen collections, this year it is more into supporting growth and new capability building. In Q2, BFL made loan loss provisions of INR 1,300 crore as compared to INR 1,700 crore in the same quarter of last year. It has increased its management overlay provision by INR 349 crore to INR 832 crore as of 30th September as a protection from a potential third wave. During the quarter, the company saw strong improvement in debt management efficiencies across all products.
It expects that in absence of a third wave, loan losses and provision should normalize to pre-COVID levels by Q3 of FY 2022. BFL continues with its estimate of total credit cost for FY 2022 to be around INR 4,300 crores. Gross NPA and net NPA recognized as per RBI prudential norms and provision using the expected credit loss method prescribed under Ind AS as of 30 September 2021 stood at 2.45% and 1.10% respectively. For Bajaj Housing Finance, a 100% wholly owned subsidiary of BFL, it continues to do well. AUM grew by 33% to INR 44,429 crores as of 30 September 2021. The profit after tax grew by 100% to INR 166 crore in Q2 on account of higher net interest income.
The capital adequacy ratio for Bajaj Finance continues to be strong at 27.6% as against out of which the Tier I capital itself is 24.9%. BFSL also has a high capital adequacy ratio, including Tier II capital of 20.3%. In summary, we believe BFL is well-positioned to navigate any temporary stress, and I would request investors wanting to have more information to please go through the BFL's investor presentation uploaded on their website. A few other developments to mention herein. In Q2 FY 2022, BFL has received an in-principle approval from SEBI to set up an asset management company to enter the mutual fund business. In this regard, the Bajaj Finserv Asset Management Limited and the Bajaj Finserv Mutual Fund Trustee Limited have been incorporated for taking this forward.
Also, during H1 FY 2022, BFL incorporated a wholly owned subsidiary, Bajaj Finserv Ventures Limited, which will focus on alternative investments, including investments in startups and limited real estate. These are only the first stages of setting up these ventures, and it may well be 12-18 months or more before the first products are launched by the AMC and these step into operation. The consolidated results and the financial numbers are already indicated in our press release, and therefore, I would not dwell upon that. I will now conclude my opening remarks with some final comments. With the gradual reopening, post second wave of COVID-19, we are witnessing a return of growth and steady economic recovery. Even though risk of a third wave exists, the future outlook remains positive.
Under these circumstances, our businesses have shifted focus to regaining growth while continuing to manage risk. Backed by strong solvency, well above the required capital, supported by healthy liquidity, continued focus on risk and collections, digitized processes, and improved cost structures, we are confident that we are in a strong position to maneuver through these difficult times. I now open the floor for questions and answers. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Anyone who would like to ask a question, please press star followed by one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Yeah. Thanks for the opportunity. A couple of questions from my end. On the health side, we've seen an increase in GDPI. You mentioned about the government scheme from the Gujarat government. What, you know, excites us in this segment over the long run? Also on, you know, the retail side, what are we doing differently to scale this business? Obviously, post-COVID, the awareness has increased and there is room for penetration, but, you know, what are we trying to do differently to scale this business? Lastly, on life insurance, any major claims. In terms of backlog which is pending and are the reserves of INR 1.05 billion enough for any future claims?
I will just take the question on the reserves first. We have an extensive method of tracking the delays on claims and death claims, as you know, do not, there's not much of a gap between the date of death and the reporting. It only happens largely on some of the group side where the partners. There also we have a very robust system of tracking the claims closely with the partners. So as of now, based on those trends, this seems to be adequate for the second wave. But if there's a third wave, we do not know. It depends on what, as it evolves, we will keep reviewing that. The same applies to Bajaj as well. The question on government health and retail health and the retail business, I would pass on to Tapan, who will take it.
Thank you, Srinivasan. I think if you look at it as one of the large companies in the Indian market, we are present in all segments of business, you know. Government health also is a segment of business. You also know that we are not either overweight on any particular business or underweight in any particular business. That is what our philosophy has been. As per our overall market share, close to that in most lines of business, we would be either a bit above or a bit lower in what it is. That's how we grow the business holistically. It is not about getting excited. We want and we will do all businesses. We understand better over time and get better over the holistic picture.
Government health business is important part of business if you look at it. I think government's focus on government health business is pretty high, and it's good for the country also. Wherever it's a tender-based business, so wherever we get at a pricing, we are happy to do that. On the retail health also, if you watch, you know, I think it is predominant in terms of product offering that you'll watch at Bajaj. We've been all products and segments that you could think of. We also very exciting products like unlimited sum insured, you know, for our customers, again, unique to the country. We have a lot of exciting products from that perspective for all segments of customers, be it HNIs, be it, you know, at the middle rank or be it, you know, for below poverty line.
It would be having a huge spectrum. We would keep on focusing on growing our retail health business in a manner which is spread across the country into different geographies and different segments which is there. It's a very simple strategy. Insurance is a business of large numbers spread evenly across, and that's what we keep on doing, and we'll focus and do that as we progress further. We also have been aware of the approval from regulator in terms of wellness being part of the product. You look at one of our companies in Bajaj Finserv is EBH, you know. We also have a product now launched which has wellness as part of the product launch, be it for retail of our group.
From that perspective, look and scan our product portfolio, you'll find that at all segments and whatever approvals we have from regulation in terms of permissions is there, you'll find us in that space. In the sandbox, you'll find us that we are using, you know, trackers, devices in terms of, how do people live healthier. That is our strategy. It's holistic, it's all across, and that's what we'll continue doing forward.
Okay. On the retail health side, is there a room to, you know, upscale existing customers? Because, you know, post-COVID-19, the awareness seems to be very high for, you know, having a higher sum assured or, you know, higher policy or a family floater. Is that one area also which we are focusing on?
Yeah. Upscaling not only post-COVID. I think it's a philosophy which most companies would do because, see, a sum insured for health, let's say if I take you back 7, 8 years, maybe a INR 2 lakh sum insured would have been very, you know, reasonable for a normal person. Today, a INR 2 lakh doesn't make sense, no? You have an inflation in health which is about 14%-15% per year, you know, in terms of health treatment. If you are not upscaling your sum insured and we are not advising you, I don't think, you know, on both sides is the right thing to be done. That, that's a normal business philosophy which I think all good companies will be following.
Let me just add something on top to supplement what Tapan said. You know, while scale is important in retail health, there are also customer segments. The mass, or the lower end of mass segment as we call, is largely done through group business, through the government schemes or through other schemes. Really our products are mostly into our middle class and the mass affluent and above segments. In terms of servicing, that is something Bajaj is reputed in the market for and that is something we will not give up. If you take the way the claims are handled or the grievance ratios or any ratio by which you would want to measure this, I think Bajaj's reputation in the market is very strong.
We believe that in the long run, that is the better strategy to approach group health, not mindless top line. Secondly, a combination of employer-employee health, retail health and government health gives us payment volume to the hospitals. India as a market has still not reached a level where insurance companies have enough clout together to actually get reasonable rates from all the hospitals. Each company has to build its payment capability, and we believe that Bajaj Allianz General, along with our Bajaj Finserv Health, which is still in the nascent stage and is growing fast, we would be able to over the next few years become a strong payer in the market, which should enable us to control this, have a better handle on this business related to competition.
Understood. That is very clear. Thank you. I'll join back the queue if I have more questions and wish you a very happy Diwali and a prosperous new year. Thank you.
Thank you for the question and a very happy Diwali to you too.
Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Hasmukh Gala from Syndicate Advisors . Please go ahead.
Yeah. Good morning to everybody, and congratulations for really good set of numbers for both BAGIC as well as BALIC. Bajaj Finance, of course, we have already covered. With the formation of these new subsidiaries, like Bajaj Finserv Health Limited, et cetera, do you think that eventually the health related business will get transferred from, say, BAGIC or BALIC, wherever it is sitting into this particular subsidiary or future business? That is my first question.
Yeah. Is that it? Hello.
Yeah.
Yeah. No, Bajaj Finserv Health Limited is not an insurance company.
Mm-hmm.
They are predominantly in the healthcare space and the healthcare ecosystem, where they connect providers of healthcare, which includes hospitals, doctors, pharmacies, diagnostic centers, laboratories with the users of healthcare, which are the patients, through a digitized platform, and also provide financial solutions to those who need it. Today, insurance covers predominantly only hospitalization. There's a whole gamut of healthcare services that people use, including finding a doctor for their outpatient treatment, for their regular smaller types of accidents or illnesses. Through their products, they will eventually address a holistic solution for a customer that whether I want to find a doctor or whether I want a second opinion or do I want. I mean, if it's hospitalization, I need insurance, or if I'm uninsured, I need a loan, the entire thing will be provided under this platform.
That's a long-term goal. Today we have just started that business. I think it'll be at least another year or two before we start talking about it. Together with BAGIC, there we see a tremendous amount of synergy because the issue of healthcare supply-demand mismatch is very much there, that quality healthcare is in short supply in India, and access to quality healthcare is also not easy with cities growing bigger and the population increase.
Mm.
We believe it's a very good long-term bet, and that's why we have invested in that.
Okay. Okay, that's very clear. My second question is, you know, all the companies in the group have been taking a lot of digital initiatives, development of apps, et cetera. Can you just give us a brief overview of where exactly do we stand? You know, once these apps, et cetera, are launched, maybe you know the merchant app, what they told will be done in probably next year, et cetera, how much incremental business can we expect to get because of all these initiatives?
See, broadly I will say that I'll hand it over to Tapan and Tarun to talk about their companies. Each company has got its own business. I mean, the way lending business is done is not the way insurance business is done or the way the customers buy insurance even today or in the foreseeable future.
Uh.
Lending is a transactional business. You buy an asset and therefore you need to borrow money and therefore you go to a lender. If you're not buying any asset, you probably won't borrow money.
Mm.
Whereas insurance business is a journey. It is a lifelong journey that you cannot decide something I need today and say tomorrow I don't need it, a health insurance or a car insurance. The digital initiatives are different for each of these companies.
Mm-hmm.
The Bajaj Finance initiative is largely related to the lending business where they are giving customer multiple options in terms of do you want to now first take the loan and then go and buy the product or you want to go to the store, buy the product and then get the loan. Whichever way the customer wants to come, whether coming directly or through a store, I think it is across all channels you get the same holistic experience through a single app. The preferred customer segment, which for different segments of business, they will be able to buy any of the products, which is loans or any cross-sell product with three clicks. That is the goal which Bajaj Finance is looking to drive. Now I'll hand it over to Tapan to talk about BAGIC and then Tarun about BALIC.
Thank you, Srini. I think on a digital initiative, you look at insurance, you have to broadly look at three, four big parameters.
Mm.
First is how do you look at the core, you know? I think all insurance companies would have legacy systems in which, you know, the core is on-premise servers. At BAGIC, I think we are among the first, if not the first in the world in general insurance company which decided to shift the entire core and do a transformation, take it to the cloud, you know. We're happy to say that this journey is going very smooth and we have shifted quite a bit onto that. So why shift the core to the cloud, no? If you look at all innovations happening, all startups, you know, on a cloud-based applications coming through, and the volumes now shifting with, you know, when you have partners, big partners in e-commerce space.
Some days you have, you know, policies which run into millions and some days it may drop again. An on-premise server would not be, you know, serving that kind of solutioning and innovation capability which should be there. We have done that, and as I've mentioned that it's going good. That gives us a lot of capabilities for innovating faster, giving solutions faster, and also handling any amount of load irrespective of what the transition will be. We have very powerful partners, you know, who deliver that kind of load also. I think we would be first in industry to do so. The second, which comes through all the touch points, you know.
Insurance companies are distribution based, largely distribution based and very strong at that. The initiative at the distribution front in terms of the ease of, you know, being able to either issue a policy, or in COVID times do a touchless sale, you know, over a video call or in terms of claim settlement, touchless settlement on the spot, you know. We look at Bajaj has been the forefront of these innovations. For a motor claim, you can actually get down, click pictures, upload, get your claim, you know, on the spot. Or for health also we have CDC, or if you look at even something like mobile claims. Anything you think about on retail, I think most of our settlement would happen at the consumer end, completely touch-free and completely through.
This would be again what you're doing with some of it or most of it with the industry first that we have done. Coming from a consumer perspective, you know, he and she should always have the choice. We have modular products so that they can go to the web, decide what they want to buy. You know, what price range they're looking at in terms of what combination they can have. You have the fraud analytics which should happen because insurance companies are subject to a lot of frauds. We have strong usage of, you know, fraud analytics which we have set up. You would be doing, you know, character recognition. You would be using PS, you know. It's a huge plethora of initiatives.
It is not that, you know, there's a single point focus of one thing. A combination of all this is what gives a cutting-edge position to the company. As I mentioned that if you look at most of initiatives and go through detailing of it, you will see that most of it be either industry first in terms of what we are delivering, in terms of redefining the customer experience and even redefining how the customer should be, you know, getting his experience and his transparency, his simplicity, and as I said, completely touch-free as it can happen. Luckily the regulators allowed, you know, the dissolutions of policies and all that also is making it very convenient for us to be in that direction.
It would take a lot of time for me to explain the entire detail of it because there's huge plethora of initiative. To give you, some idea, at all touch points you would find we'll be innovating and redefining the customer experience in terms of using digital tools. Tarun, over to you.
Thanks, Tapan. I think Tapan touched on a few critical points and maybe I'll touch on them and add further. The way I look at technology and it's not just digital, it's digital and data. It becomes very critical in terms of our strategy, and that's what the BFS group has been known for, and that's exactly what the two insurance companies, including us, are really focusing on. Let me just split this up into 2-3 parts on the digital side and data side. The digital largely, Tapan touched upon the Bajaj core system and similarly in ourselves as well.
The policy admin system, which is the core. It's like equivalent to the core banking system. You can call it the core banking system for life insurance. It is a clunky legacy-based system present all across the industry. We took, I'd say, the initiatives of implementing an entirely fresh cloud-based Engine system. This doesn't exist anywhere in India, and I would also dare say, globally, fully implemented yet. We've tied up with Infosys and the system called Engine. It is a company that they had bought called McCamish in the U.S., which is working on this system. We have a launch of our unit link plans entirely through this cloud-based system, somewhere around the first quarter of next year.
That should be, you know, changing the entire way the policy admin systems work in the industry. Nobody else has done it. We've taken the call, but if your policy admin system remains a clunky system, that itself is usually a problem. Typically, a project like this would take 3-4 years to implement. We've undergone about 2 years of work already. On this sits a lot of, so this is like the core and this like I said, the process is already 50% underway, and this is a huge transformation. The second bit is on the mid-office layers, which is the CRM layer and which is the customer relationship management layer.
We had invested in CRMnext a few years back, and that is already becoming a lot already showing up in terms of our customer service. The other piece is on customer communication management. Today, we have lots of communication that goes to customers. That mid-office system which provides a backbone of how customers get serviced and could there be an element of omnichannel possible in that becomes a critical set. The CCM goes live somewhere early next year, and that is when, you know, we'll have the mid-office getting ready to be an agile life insurer, which I don't think yet exists in India. All of this has to eventually show up in the front end with the customer.
There are about three elements which become very critical, and I'll just broadly touch on them. One is the front end onboarding of the customer. Second is the use of data and being able to profile and upsell smoothly to existing and maybe get more data moats around the prospect database. Third is the digital culture of the organization, which usually, if you ask me, precedes or rather can in terms of importance the other two. Of course, without the first two you can't do the third. That is a process by itself. Turning a legacy company into an agile digital company is the way we are looking at things.
I'd say we are committed strongly like the rest of the BFSI bit and pretty much moving in that direction. I'll quickly touch on the 2 core bits on the front end. As the deck that Srini's sent forward in any case, you'll see the approach has been the front end. The approach has been more doing contextual innovation, which makes sense and touches lives of customers and solves clear problems. We're not doing digital for the heck of it. You'll see 3 initiatives that were clearly mentioned. WhatsApp, we've had a significant growth. This was launched February of 2020, and we've only just seen significant traction.
Now, this is today you don't need any other platform but WhatsApp to deal with, so we did not invent a new pipe, but we use existing WhatsApp pipe. The Smart Assist which has been an inverse co-browsing. It's been an innovation of its first kind in the world, I would say. That has gone quite well. I would, I know your question was around what percentage business and this and that. It becomes very difficult of course for us to say because these are incestuous, technology, process, culture are incestuous to each other. Having said that, I'd say I give a lot of credit to the way we've been able to perform during COVID.
As Srini said, on a CAGR 34% growth, I would give a lot of credit to the way we handle the front end innovation. The Smart Assist, for example, allowed us to get form filling done, whether we were sitting five meters or 500 meters or five miles or 5,000 miles away from a customer. The face-to-face challenge which was there and everybody was facing it, through this contextual innovation, and very unique by itself, we were able to handle it, quite well.
Right. Right.
You'll see a lot of these things. In terms of the data side, there's a lot of profiling, smooth and easy processes on onboarding, upselling. I can go on and on and as Tapan said, this is like a never-ending exercise and we just have to take slivers of the company and keep on transforming them, because all of us have been largely long-term legacy driven companies, so that transition is well underway.
Correct. I understood. Basically, you know, what we are trying to say that it will ease the transactions and, you know, improve the relationship with customers, et cetera. I hope that it helps, both Bajaj and BALIC to be more innovative in launching the new products which the market wants. At the end of the day, I think it should reduce in the expense ratio which we currently have. Do you think these two objectives also can be achieved because of all these initiatives?
Since I'm on both companies, I will take that. See, the objective of all these is to build a capability which is future ready to provide a platform in which customers can easily buy and own an insurance policy over a number of years and make a claim as well. See, the customer making a claim on a company is unique to the insurance business, and therefore we believe that creating these are very important and essential and we have to be ahead of the market in terms of innovation and both companies have demonstrated that as explained by Tapan and Tarun.
Yeah. Yeah.
In terms of new products, this is, in this industry, any product has a shelf life of less than three months before the competition catches on and launches a me-too product.
Mm-hmm.
What the real product means is your ability to settle claims in certain cases, the kind of reinsurance support available, the kind of tech platform you have, and of course the kind of distribution strategy you have to distribute that product to the particular segments for which the product appeals. I think in terms of products, neither of our companies are wanting in terms of products for any type of customer, any type of customer need. Many have been, I think, innovative as well in the market. If you look at Bajaj particularly for the first to launch a cyber crime product for individuals. Now they have a pet dog insurance program. There are many like that. Similarly, in the case of life, the return of mortality charges were the industry first.
I don't think either of our companies are in any way behind in terms of launching innovative products. The only thing is there has to be long-term sustainable visibility.
Mm-hmm.
of growth and profitability from that product.
Okay. Thank you very much.
Sure.
Thank you. The next question is from the line of Avinash Singh from Emkay Global Financial Services . Please go ahead.
Yeah, hi. A couple of questions. Firstly on, you know, Bajaj. On Bajaj, two questions. First, with this sort of a, you know, a new generation of, you know, players coming in with a different kind of objective and funding structure, where do you see competition in the motor segment heading? Secondly, one related to Bajaj only, in terms of, you know, the customer acquisition and owning the customer and your relationship building. Of course, I mean, you are omni-channel, but you have, you would have certain sort of a, you know, preference in your strategy around channel.
In that context, I mean, what sort of a strategy do you have towards the, you know, web aggregator class online broker platform where, I mean, it's a lot about being just a price taker? On post-Bajaj, on Bajaj my question is particularly what sort of a, you know, current situation or your experience is with your reinsurers on the term plans. I mean, you have been growing in terms of strongly in recent years only. I mean, so far, I mean, relatively you have not been that bigger in term space, but you have been growing quite well there. So what sort of a post, I mean, the recent news all around, what sort of a, you know, updates do you have on that pricing and your reinsurance arrangement part? Thanks.
Tapan, would you like to take that?
Yeah. Okay. Let's say when you talk of new players and, you know, what impact does it have, I think what we should think is two things. One, for a country like India, there's room for more players. It is not that, you know, it's limited because India before nationalization of insurance company in the year 1970 had over 100 insurance companies just in general insurance space, you know. If you look internationally also, like, you know, there'd be 500, 700 insurance company in a country and India still has about 30, 40 currently. I don't think that is a major issue. I think the more players the merrier, the better. I always have felt that the more players are there in the industry, the better is for customers because options increase, choices increase.
From that perspective, that is it. Now if you look at from a strategic perspective, one should look at what is it that the new players are doing which is different from what would be existing in Bajaj. You do a scan, you'd actually find that Bajaj would be cutting edge in everything, be it digital. I think our entire agency onboarding is 100% digital. Policy issuance would be, you know, over 90% completely straight through digital. Our claims settlement is completely digital. Simplification, the TAT grievance ratio is the least among the least in the industry if you look at it. It is all IRDAI figures, where claims settlement ratio is among the best.
Even if you scan the market and see that, do you find if new players have been able to, you know, do something differently from what a company like Bajaj is doing. As of now you'll find that Bajaj could, you know, be way ahead in terms of the delivery which it would be doing in terms of what is happening in the market. One, more players, very good for customers, good for the industry and India should have more players. Two, if I look at a company like Bajaj, which is, you know, always like we talk about digital initiatives, always pushing ourselves, you know, to the next level or use of data lake or data management or simplification or to the delivery to customer. That is reflected in NPS scores.
If you look at NPS scores is, you know, among the highest in the industry. If you look at our grievance ratio, lowest settlement ratio, the best that is there. When it comes to price point, that's the next question you asked. I ask this question to many people. If I ask-
I think we lost Tapan.
Ladies and gentlemen, we've lost Mr. Singh. I'll just connect him back. We have Mr. Singh back in the conference, so you may go ahead.
Yeah, sorry. Sorry I got dropped out. As I was saying, if I look at price point, and I ask this question to many people that who amongst us would say that whatever we wear, whatever we eat, wherever we go to is the cheapest in the market, no? My answer is not a single thing that we actually, you know, do is the cheapest in the market. I think somewhere the obsession of the cheapest is not right. The obsession of value that we give to the customers and value has a price point which the customer feels at this point, this is the best value that I'm getting.
That is why even the aggregators if you look at, you know, and we have partnered with them, and we don't want to be the cheapest in the market with the value that we give to the customer. In fact we don't want to be a company which offers the cheapest product and has the highest claim rejection ratio, no. I don't think that is an option. We are not delivering to the customer the promise that we have made that we stand by the customer when things go wrong. That is why we are on the aggregator space also, and we have a good market share there also. It is not that, no, I think when you ask the question that cheapest will also be there. It's not so. I think a company like ours also has a good market share in the aggregator space.
I said it early on, be it any lines of business, be it any geography, be it any channel, be it any distribution or be any LOB, you'll find Bajaj Allianz General Insurance Company to be one of the major players in that. The web aggregator space also we are major. We're not a price cutter, we are a value giver to the customer, and that we are very, very clear. I hope I've been able to answer your question.
Yes. I mean you answered it fully, I think. Somehow, I mean, as to the web aggregator platform is something that is considered to be, you know, that it's the race to the bottom. I mean, of course I got that, okay, you are not going to sort of cut your prices, just to get more. Yeah. That is why I particularly asked this question that okay, I mean your strategy-
No. That's why I say I said in the web aggregator space also a good market share. If you look at it, people prefer value. That's why in a platform in which you have a transparent price display also, people prefer to, you know, buy Bajaj Allianz General Insurance product with the value that we give the customer. The value is reflected, you know, in data and statistics, which is on the regulatory website. As I mentioned, if you look at the grievance ratio, you'll find Bajaj Allianz not lowest in one quarter, consistently over years, you know. You pick up a data of any quarter, any year, you'll find Bajaj Allianz has the least grievance ratio.
You look at the settlement ratio, we're one of the best which is there, which clearly demonstrates that the value we bring to the customer and the customer respects that. That's why in a platform on a web aggregator also we have a decent market share, you know, with our positioning there. I think when we look at different channels also, I think it's wrong to classify them as only a place where people would go for the least price, you know. I mean, the people value. That's why if all of us will look at, if I ask this question, who amongst us is wearing the cheapest shirt in the market right now? Who amongst us is going to the cheapest restaurant in the city for food, no? I've yet to meet a person who would say yes.
We don't take the cheapest. We always buy what we feel is valuable for the price that we feel is right and that is reflected in insurance also.
See, if I can just add to what Tapan said. In the risk business, especially where there is financial risk and long-term solvency is at risk, I am not aware of any company where
It has disrupted the market by discounting prices and taking losses consistently over the years. That may have happened in distribution businesses where some businesses online, they have disrupted the distribution, where distribution inefficiencies have been, you know, exploited. In the risk business, even in the insurance industry, where there is the people coming with disruptive models, we have found that discounting as a model has not really worked anywhere in the long run. Either they get taken over or they bring in some practices in terms of technology or cutting out, processes which are needless, which anyway the larger companies like us will adopt. If we see any good practice, we will adopt.
Discounting as a way to gain market share is clearly we do not think in the long term it, the insurance company can do that without seriously impairing their solvency.
Okay, got it.
Thank you.
My question on BALIC, I still have to
Yeah. I'll just come to that. Of course, the term business and the reinsurance situation is at loggerheads, I would say. We're just talking on the retail term market here. See, the reinsurers have been facing losses from various companies, and as a result, they've gotten stricter in underwriting. It's become like a changing goal post. Every month or two we do have new, you know, prescriptions coming in on underwriting, which is actually causing a lot of pain to the customer and to the distributor as well.
Since we've taken a little bit of a calibrated approach, you would have seen that our term plans have come down in terms of mix and I expect it to remain low. In a way that serves us well because we are trying to understand the market. We've been one of the late entrants, but we did shoot up in terms of our term percentage like everybody else last year. This year with the second wave and we're just being cautious till the end of the third wave, and then we will be coming out with a lot more, I'd say clarity in terms of how the prices are gonna stabilize.
Currently, we've been one of the lowest prices with the best one with tight underwriting among the bigger brands. That's the cohort we intend to belong in in the bigger brands. Will we increase prices? Yes, we will. I think we are very clear we will. We've had mixed remarks, mixed things coming from everybody else. We will be increasing prices because we have headroom and we are currently low price anyways. We do expect that the reinsurer, we've already got a letter, so there is going to be an increase in pricing from the reinsurer as well. For the short term, we remain cautious on term and underwriting shall remain strict. It's the mid and the long term that we are keen and confident.
I would say, COVID has brought, in addition to health, the term business right in the midst of the you know, reckoning of a customer's portfolio. We shall be appropriately responding to the market, but I'm not going to be overtly cheap, and I'm not going to be overtly risk averse. We'll have to take a calibrated approach. I think, more clarity on the future will come after the third wave, if there's any.
Okay. Yes. On this quick one, I mean, particularly on the medium ticket size retail term, I mean, there is a sort of a, you know, that when it comes to the medical, it's like there's a cost involved. Cost, time and all. But at the same time, you know that your risk understanding of risk becomes very different. I mean, what sort of a strategy you have been following and going forward? I mean, is it going to be a, you know, definitely medical underwriting or like tele-medical or like for some small ticket, a retail term, you can go without medical. But there is a sort of element of cost and term sort of remains very, very cost sensitive. What kind of underwriting, I mean, medical you have been following so far and any change on that?
Yeah. No, that's a very good question, but I'll respond to your last one first. See, I think Tapan also and Srini also kind of addressed it to some extent. I think this obsession of low price is, I think sometimes more in our mind than the customers. Yes, aggregators do play to customers who want, and there is a significant market there, I agree, who just want low price. I mean, who would you want to work with? Would you want to work with a large company which has a lot of surety and comfort from the brand? Or would you, or the other way around? I think that becomes a pretty critical part because you are not just, you know, doing retail term for it's a longer term. It's not like group term.
It's not like something that is going to be there with you for a year or two. This is going to be there for the next 30, 40 years with you. There it becomes a little bit of a high involvement product, if I can just use that jargon. That's one thing I'd like to bring in. At the same time, India is various Indias. There is an India which wants to go for low price. There is an India which wants to go for value and go for the right priced brand. That's my first response to your last point. See, the way we've been looking at it is we also believe from a risk perspective there are various endeavors. Our data analytics comes in very handy in this.
We have a lot of profiling that we've done based on which we've seen some good success, and then we've segmented into four segments. Where the first two segments we find that despite COVID, we've had a good response in terms of the risk buckets that we've taken on here. Then we feel fairly confident that for these buckets there is not going to be any medical. That's why we want to build up volume. Usually these are salaried employees and they are working in multinationals or large companies like ourselves and so on and so forth. The process has to be smooth, and here medicals is not important because the volume gain kicks in here.
For lives which are maybe requiring medicals, appropriate medicals have to be done, and that we are very clear of and we do not shy away because you are talking about, you know, a 30-40 year product. In terms of the cost of the medical, it is an element for sure, but we get the benefit of using bulk and that benefit is passed on to the customer. At the same time, usually, the NPV of a product like term for medical products, usually medical policies comes out far better than non-medical because experience is more important sometimes than the medical cost. That balancing act one has to get right. It's, I think, that's the way this is.
Sorry about that. Someone has placed a call on hold.
Sure. I think I'm probably done with the answer.
That's what I wanted to say.
Okay. Thank you. The next question is from the line of Nischint Chawathe from Kotak Securities. Please go ahead.
Hi. Couple of questions from my side. To begin with, in BAGIC, Srini, you mentioned in the opening comments that you know, you are cautiously optimistic on the business for the next six months. I was wondering, you know, what could be probably the reason for this. I know we discussed, you know, competition from new players at length, but you know, any other points that are there in your mind?
Hey, Nischint.
Yeah.
The real cautiously optimistic is because even after two years, I think we are only looking at businesses where things are trending towards pre-pandemic levels. There are certain segments where we are seeing solid growth like life insurance. Auto sales are being hit by this. There is some concern on inflation. More importantly, I think the risk of a third wave is still there. Like yesterday one was hearing that in Germany and Russia there has been a slight increase in cases and they are going to look at it seriously. In Singapore we are seeing that some restrictions have started again. The efficacy of the vaccinations and whether you need boosters is always there at the back of the mind. As the market evolves, we will look at it and therefore we have put the word cautiously optimistic. We are optimistic on growth.
If the economy grows, we will definitely participate in it. We see there is an underlying risk both on the macro side, as well as from the third wave, and that is why we have used cautiously optimistic.
Sure. Just, you know, this is actually a question for, you know, Bajaj Finance. Bajaj Auto in their call yesterday said that, you know, they're setting up a separate subsidiary for, you know, captive financing of two-wheelers. We were wondering whether, you know, how should we really think of it? I mean, is it something that both Bajaj Finance and their subsidiary will coexist, or is it kind of a sign for us to read that Bajaj Finance will gradually move out of financing Bajaj Auto vehicles?
No, I think they will coexist because Bajaj Finance historically has predominantly financed only Bajaj vehicles.
Mm-hmm.
now they will be free to finance other vehicles if they choose to, and Bajaj Auto will also use that to further their sales and their subsidiary. It is not that, you know, it will have both ways. It will both coexist.
Why do you need two companies in that case?
Bajaj Auto is an independent company, it's an auto manufacturer. We are a financial services company.
Mm-hmm.
We will have to look at it differently, right? Because we are purely a lender. We have only to see whether the loan will get repaid or not, whether we get adequate margins or not. Bajaj Auto will also have to look at the sales of two-wheelers. The two will have to look at it. Secondly, Bajaj Auto has got a lot of money with them, so they are looking to invest. I mean, that's the call of that company.
Sure. On BAGIC, you know, we saw the motors loss ratios in motor third party going down on a quarter-on-quarter and year-on-year basis. What is the outlook out here, you know, given the fact that we've not really seen a tariff hike for the last two years?
Raman, would you like to take that?
Let me take that, Srini.
All right. Okay. Yeah.
If you look at the third party when COVID hit us, and we had mentioned that in the call that we have strengthened the reserves, you know, because you're not sure how this is going to be from a third party perspective. The COVID hit was less use of car OD, yes, there was a significant drop then.
On third party, the courts were closed, summons were not coming. You were not sure in terms of what is lying, no, which is you're not aware about and how things are going. Uncertainty was very high, and it was a long time the courts are closed. Even now it's not fully, you know, open. The second thing which we also realized is that, there are a lot of judgments are coming through which is increasing the severity of even the existing cases also, no. You had court judgments, you know, which were redefining that.
We strengthened the provision and as time progressed, we are seeing that, you know, what is like as the court opens up, as the summons starts coming through, as you're seeing what the cases are going through, obviously that is getting calibrated. We added for spending our reserves for the new judgments which are there. We had also factored in uncertainty in the earlier level and that uncertainty is getting now more and more clarified. That's why you see the shift happening. Now, having said that, the other thing which is also happening good is if you look at on the highway and you must have read all the reports, the frequency is also coming down, you know, as it progresses. This is a reflection of that.
I think this should stabilize more as courts completely open and the judgment starts, you know, coming through. That is why you see this, you know, shift happening.
Sure. Perfect. Just one last housekeeping question. You know, this is on BALIC. If you could give us the number of, you know, gross and net COVID-19 claims for the first half.
Bharat, you could take that.
Yeah. Nischint, if you look at that, our total specifically for COVID claims, what we have taken in Q2, in the beginning of the quarter we were carrying INR 284 crore of reserves. What we have got an extra hit in Q2 is around INR 254 crore. But we have released only INR 194 crore from those reserves. We have taken a hit of INR 60 crore extra in the books in quarter two and we are still carrying a INR 90 crore number. These all numbers are without PAR because PAR is obviously, as you know, it's 90-10 and this is net of RI.
On a gross basis, this INR 90 crore is good enough for INR 115 crore and with PAR of INR 105 crore this is good enough for INR 131 crore kind of claims.
What was the gross and net claim quantum and number, if you could share?
In terms of gross claims overall, I'll just cover the complete numbers. In H1 we have taken a gross claim of INR 1,128 crore and net claims were INR 897 crore. In Q2 the number is INR 642 crore and INR 528 crore. This is the total claims. As the number earlier which I showed was only for the COVID impact.
Got it. Thanks. That's it from my side. Thank you very much and all the best.
Thank you, Nischint.
Thank you. We'll take one last question. Sorry, just give me a moment. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity. First, in the general insurance, there has been a decline in the expense ratio in this quarter versus our normal run rate in the previous quarter that we have been seeing. Is it a structural decline that we have seen our cost ratio or do we expect that to reverse in the future?
Ramandeep Singh Sahni, would you like to take that? Sorry, Ramandeep Singh Sahni?
Sure thing, yeah. Take it. I'll take it. Yeah. If you look at our low-cost ratios, I think over the last 6 quarters they have been going down. As we've mentioned in the past, there are some structural changes which we had made, you know, on manpower and infrastructure especially because that constitutes about 70% of our cost. We had taken a lot of initiatives especially last year, and you're seeing an annualized impact of that flowing through this year. As we had mentioned, you know, in the previous calls, there were a lot of curtailment on you know, manpower deployment, which we had done given the stress we were seeing on the bottom line. A result of that also is flowing through on an annualized basis this year.
However, you know, to answer your question whether it's structural and will it continue, I think what you'll have to understand is that, while we did a lot of curtailment in the last year and a half, I think if things start stabilizing now we will start investing a bit more on expenses because, like I mentioned earlier, we were curtailing costs to protect the bottom line. But if we see a turnaround in top line, we will now year on year start investing. That's where we stand.
Sure. Secondly, can you share a product for customer in Bajaj Life and Bajaj General? Because what I see that there is a significant cross-sell opportunity to the existing customers, but at least the experience from some of the other insurance companies doesn't indicate that companies have been able to successfully cross-sell a customer a same product to the customer, specifically in the life insurance side.
That's a number we do not disclose. In general, both companies have separate verticals driven by analytics and cross-sell, which focuses on two things. In general insurance business, renewal is very important because every renewal is a new business. We have separate initiatives for cross-sell and up-sell. It's a bit different in general insurance from life insurance. Life insurance has got far too many products. There are small sachet products right up to expensive products or, you know, full indemnity products. There are cash benefit products and the same customer may buy multiple products through multiple channels as well. It's a little bit more complex in general insurance. In life insurance, clearly it is more. There is clearly the opportunity for up-sell and cross-sell.
We are very much on top of that, and we have separate. I mean, that's why the BALIC Direct is a very good example. A channel which did not exist five years ago, today it is a very strong contributor to our top line. It's a proprietary channel, and almost all of their business is majority or large chunk of their business is cross-sell as well.
What percentage of business in the life insurance has came from Axis Bank, if you can share that, percentage this quarter?
Tarun, do you want to share that?
Yeah, I can. One second. Bharat, you have the number handy?
Yeah. Nidhesh, it is 19% for Q2.
Yeah.
Sure. Lastly, on the Bajaj Finserv Direct, the EMI store that we have on the Bajaj Finserv Direct is the same store that Bajaj Finance also has, and how the economics will work. For example, if we acquire a customer on our Bajaj Finserv Direct and he buys a product-
The EMI store for Bajaj Finserv Direct is evolving. As of now, they create the platform for EMI store for Bajaj Finance. In that sense, they are present in all the stores. They will also be selling new EMI cards to those customers. Over time, they will create their own alternate products which maybe Bajaj Finance is not offering today as well. The EMI store will evolve differently going forward for Bajaj Finance and Bajaj Finserv Direct. The platform and the technology and the capabilities will be provided by Bajaj Finserv Direct.
Sure. Lastly, one request that if you can share some customer data on Bajaj Finserv Direct and Bajaj Finserv-
For now we are not ready to share it because the business is still evolving and it has not reached a scale or a stability where we feel we can do that. As and when it reaches, we would be disclosing that. That's probably a year and a half away. You'll have to wait. We'll see. We keep monitoring that every quarter and discussing that before we decide to disclose that.
Sure, sir. That's it from my side.
Okay.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Anuj Narula for closing comments.
On behalf of JM Financial, I would like to thank Srini, sir, the top management of the insurance businesses, and all the participants for joining us on the call today. Thank you, and have a good day.
Thank you all, and happy Diwali to everyone. Thanks a lot.
Thank you.
Thanks.
Thank you.
Thank you.
Thank you.
Thank you. On behalf of JM Financial Institutional Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.