Mr Ashok Kumar Roy, General Insurance Corporation’s new Chairman and Managing Director, wants his organisation to be among the top five companies in the world over the next decade.
The past year has not been very good for GIC, India’s sole re-insurer – in line with the rest of the insurance industry worldwide. Losses caused by exposures to various catastrophes and disasters worldwide have dented its financials.
The full picture is not yet available as the accounts are getting ready. Asked to give an estimate, Mr Roy said, It is not proper for me to give any final figures as accounts are not ready. Indications are that the company will close with a net loss.
Mr Roy did his bachelor’s degree in agricultural engineering from IIT-Kharagpur. He rates highly the diversity of experience gained in selling general insurance to both cattle owners and top corporates in the course of his job.
Mr Roy calls for introspection on the part of all professionals in the general insurance industry even as he expresses concern about the practices that have contributed to losses over many years.
Excerpts from the interview:
What are your plans for GIC this year? And in the medium term?
The immediate priority is to curtail our losses and focus on profitable business. In the medium term it is to consolidate our operations and spread our offices overseas. We need to strengthen our overseas presence.
What has been the impact of motor pool losses in GIC?
The third party motor pool was one of the factors that affected us last year. The dismantling of this pool has required us to make provisions upfront.
What we might have paid over 8-9 years, we are now required to do quickly. The impact will be deferred for two years from now. Right now we have paid for 2007-08 and 2008-09. The impact of that has been Rs 750 crore.
For the remaining years from 2009 onwards, the overall impact on GIC may be around Rs 3,500 crore.
Will the new system that has come in place of motor pool (a declined pool) make any difference? Will prices of cover go up?
Yes. This is a superior arrangement because it will be self-balancing. The results will be decided on an actuarial basis every year. That will decide the price of the cover. Prices will get corrected and rates will go up. It will be done on a no loss no profit’ basis.
What trends do you see in the health business?
By and large, it is still a major loss contributor. The claims are at a high level for a number of companies. The premiums received are not adequate to cover the losses. And this business is also growing at a fast rate.
We must do something on this account quickly, else the losses will mount. Urgent solutions are needed so that we make the necessary corrections. The industry needs to tackle this not only from the price rise angle (hiking premiums) but look into deficiency in claims experience.
Is GIC providing cover or reinsurance for Indian ships bringing crude from Iran?
There have been queries from the industry. It is our responsibility to explore and find out if a solution is possible. Discussions are on and we are still struggling to find a mutually acceptable solution. It will be premature to say anything else now.
What is happening now on the terror pool?
The terror pool limits have been raised. They are now at Rs 1,000 crore (per event in one location) as against Rs 750 crore earlier.
All members of the pool felt that the time had come to increase the limits and this has been done with effect from the current financial year.
N. S. Vageesh
http://www.thehindubusinessline.com/industry-and-economy/banking/article3443023.ece?ref=wl_industry-and-economy
