General insurance may not be as popular as life insurance, but the sector is looking up mainly due to the enhanced risks and complexities of modern day life.
Bajaj Allianz General Insurance is bullish on the future, as the number of policy-holders and policies is soon set to multiply. After the initial phase of establishment, the focus of the general insurance companies has now shifted to ensuring profitable growth.
On this front, Bajaj Allianz will now concentrate on retail business and rural India to enhance its base, said its Managing Director and Chief Executive Officer Tapan Singhel in an interview with The Hindu.
What has the company achieved so far?
We have been able to provide protection to over 4 crore customers’ assets and health. We have paid over Rs.11,000 crore as claims, with a settlement ratio of over 97 per cent. As a custodian of public money, we are happy that we have been able to be at our customer’s side when they needed the most.
Apart from this, we are profitable since year one and have six per cent market share, which is very good. To put in perspective big banks have two to three per cent market share.
How profitable are you, considering the overall loss-making scenario of the industry?
Balancing growth with profitability has been a challenge, considering the industry’s lack of underwriting discipline. The real purpose of free pricing is to follow ‘risk based’ pricing while underwriting risks and it is yet to be used effectively.
In the long run, it will affect customers either in terms of service or bearing the burden of higher premiums which will be detrimental to the industry.
What is the extent of the total losses facing the industry and how can it be brought down?
The combined loss ratio of the industry is between 120 and 130 per cent (of the premium collected).
The main reason for this is the lack of underwriting discipline pursued by some of insurers in businesses such as fire, engineering and group health insurance.
The other reason was the erstwhile motor pool, which thankfully, was dismantled in this financial year. We hope the impact of dismantling the motor pool would help in some way to minimize the losses. The behaviour of declined motor pool is also yet to be ascertained.
Fraud is a common phenomenon in the insurance industry. How can it be curbed?
Let us accept one fact. Fraud cannot be eliminated. It has caused lot of losses to the industry. But definitely it can be minimised.
At Bajaj Allianz, how you are planning to grow the automobile, health and house segments?
The foundation of this growth has been laid as early as 2004, when we had set up our in-house team for administration of health and travel claims.
With this in-house team, we have already lowered our turn-around time for our cashless settlement in network hospitals to less than hour. The industry norm is above 4 hours.
What new methods and practices you are adopting to stay ahead of competitors?
Recently we launched Eezee Tab — an application that is based on the Android platform.
It provides doorstep services to our customers for collecting premiums through credit or debit card. Initially distributed to the agents, this device and in-house developed app can be a major game changer.
What are the emerging areas in your sector?
Health insurance is the emerging line of business. It grows at a faster pace than any other line of business in the industry and would continue in the years to come. But some other lines such as liability insurance, project insurance, specialty insurance like film insurance, event insurance are where we see growth potential. As more companies are venturing out of India, liability is their main problem and this segment is set to grow.
Recently, ING exited its life insurance investment in India. Do you think more such ventures will close down or is the industry is heading for consolidation?
Life insurance industry is going through a tough phase. But whether consolidation will happen is too early to say and can be attributed to indecisiveness of FDI limit hike among other issues. As far as the general insurance industry is concerned, it has its own challenges.
There has been only one foreign insurer which sold its stake to its Indian partner. But 2-3 new players have entered the fray.
What are your expectations from the Budget?
I will not ask for any tax incentives to boost sales. For an industry, which is in the business of taking risk and providing protection to your assets and health, we feel that we have to demonstrate the need of insurance not through tax incentives but as a protection element.