Mr Srinivasan enjoys the distinction of becoming Chairman Cum Managing Director of United India Insurance Co. Ltd, one of India’s leading PSU Insurance Company at a relatively young age in the year 2007. Prior to that also, he was Managing Director of The New India Assurance Co. (Trinidad & Tobago) Ltd., in the Caribbean island. Since 2012, he has been at the helm of affairs of The New India Assurance Co. Ltd., India’s largest non-life insurance company and has taken the company to an all time new height (high) during his eventful stint.
Mr. G. Srinivasan spoke to Dr. Rakesh Agarwal, Editor The Insurance Times on various issues pertaining to Insurance Industry and growth plans of NewIndia Assurance.
Q. How do you view the merger of 3 PSU general Insurance companies and the possible impact on the Insurance industry?
A. The merger of 3 PSU companies will create a mega general insurance company. The merger will help the new entity to raise more capital and subsequently get listed. The merger will provide them increased capacity to underwrite and achieve operational efficiency by reorganizing their existing infrastructure.
Q. The Ayushman Bharat Scheme is slated to be the biggest health insurance scheme in the world. How the scheme is going to impact the health insurance sector in terms of increase in business, low premium, profitability, servicing?
A. The Ayushman Bharat – National Health protection mission launched by the central government is a great social scheme. The scheme will be one of the biggest health care schemes in the world which will provide health insurance coverage to around 40 crore people. The scheme has a high sum insured of Rs.5 lakhs per family. The health insurance premium shall be fixed by tendering process and the treatment cost will be on a predefined package rate. The scheme will help to expand the health insurance industry in a big way and insurers in India have requisite experience to run the scheme.
Q. How are the new technologies like Artificial Intelligence and Block chain going to disrupt the insurance industry and do you have any plans of adopting this technology?
A. Technology is going to be a major disruptor in the Insurance Industry. New India is moving ahead aggressively to adopt the new technology. We are already selling Insurance products and collecting premium online through website and Mobile application. Around 25% of our Agents use the online portal. The new technology like artificial intelligence and blockchain will help in Claim automation and will make the whole process of claim settlement hassle free. However this technology is still evolving and will take some time to reap its full advantage.
Q. What is the current scenario of Crop Insurance in India? Do you think there is a possibility of excessive claims in this segment? It is feared that once claims start pouring in your bottom line may be affected.
A. India primarily being an agriculture based country Crop Insurance is of utmost importance. Crop Insurance is one of the major lines of business of our company. Under the new crop insurance scheme around 30% farmers have been covered and slowly this coverage will increase. The scheme has been managed fairly well in India. However more technology is required to increase the reach of the scheme. The crop insurance scheme is adequately covered by Reinsurance, we do not have fear of claims affecting the bottom-line.
Q. Amidst the price war do you think Risk Management has faded in oblivion? Is there any alternative to better risk management practices?
A. Risk Management is an integral part of the Insurance Industry. Infact Insurers are managing the risk of policyholders. The pricing in the Indian market has been very competitive and huge discounts are being offered but it is a process of evolution. The market will self correct itself. For example, the Group health insurance portfolio was having huge losses. The pricing was not adequate. However now we have been able to restructure pricing and contain loss ratio. Similarly the portfolio of property insurance has improved. Good Risk Management practices cannot be ignored at any cost. Insurance Surveyors can play an important role in Risk Management. While assessing a loss they can recommend best risk management practices which the insured can adopt to reduce the severity of risk and thereby reducing the cost of insurance.
Q. How has been your IPO journey?
A. The IPO journey had been very exciting. The Public issue helped us to understand the perception of investors/shareholders. We got a lot of insights to improve performance and to focus on the bottom line. There was a new urge to increase the market share and to perform better and the message was percolated across the organization to reinvent ourselves.
Q. How has been your performance in the last financial year?
A. In the last fiscal ended on 31st March 2018 our company posted a 19% year-on-year growth in premium income to Rs.26554 crore. The Profit before tax being Rs.2725 crore and Profit after tax Rs.2201 crore. The Investments of our company at Market value was Rs.64819 crore. Our company has a strong asset base of Rs.76904 crore. Our solvency ratio is 2.58 which is quite good among the peers.
Q. What growth prospects do you foresee in coming years?
A. Our company is quite upbeat about the growth prospects. The overall market will continue to grow. We are planning to recruit 10,000 agents this year. We have around 1500 Micro offices and we shall add 250 more micro offices this year to increase the penetration. We are also working to develop a digital footprint to expand our customer base. We have operations in 28 countries and we are in the process of strengthening the operations in order to increase the growth in business.
Q. What is your business forecast for the current financial year?
We are expecting a growth of 18% this year. The Retail segment would be the growth driver. We expect to reduce the combined claims ratio by 6% this year. Health insurance has been a bleeding portfolio and we have been able to reduce the claims ratio from 114% to 103% in 2017- 18. In the current year we have further plans to reduce it from 103% to 95%. This will be possible through better claims management. We also plan to reduce claims ratio in Motor own damage to increase profitability of the portfolio.
