A multi-product, multi-channel focus has helped us: Bhargav Dasgupta

Interview with MD & CEO, ICICI Lombard General Insurance

ICICI Lombard General Insurance has maintained its position as the top entity among private general insurers. This year, the company is betting big on government contracts. In an interview with M Saraswathy, Managing Director and Chief Executive Officer Bhargav Dasgupta talks about the company’s strategies. Edited excerpts:

Apart from a higher claims ratio, what are the other factors that have contributed to business growth?
To ensure a good claims experience, we have in-housed the health and motor claims processes. We are the largest claims entity in the industry, both on the life, as well as the general insurance fronts. We have also focused on niche product areas where we think new opportunities are evolving. These include innovation in weather insurance and service/process innovations.

In terms of products, would you focus on niche areas and the miscellaneous segment?
Our strategy to have a multi-product and a multi-channel focus has helped. Otherwise, you cannot be a very large player in the market. Our product mix is more or less similar to industry standards, though we have a higher share of health and miscellaneous products such as those in the weather, aviation and liability segments.

Even after the third-party pool in the motor segment was done away with, why hasn’t the portfolio become profitable for you?
The motor portfolio was split into ‘own damage’ and ‘third party’. The ‘own damage’ segment was always profitable. The real problem was third-party liability. The losses in the last two years weren’t for those years alone; provisioning for the previous five years was also included. So, the losses were accentuated. We still need some price increases. We should record profits in this segment by the end of next year.

Would it be right to say you are not satisfied with the hardening of rates?
This year, segments such as fire, group health and commercial vehicles have seen some hardening in rates. Though we need some more price increases, there is a movement in the right direction.

You have been one of the largest entities in the Rashtriya Swasthya Bima Yojana. Would the thrust on government contracts continue?
As and when these schemes come up, we would always be there, provided the pricing is right. As these are tender-based, sometimes we win and sometimes, we don’t.

In health insurance, there is huge under-penetration. In areas such as home and catastrophic insurance, penetration is very low in India, compared to the West. We are working with policymakers to help develop these areas.

Have your niche products such as the weather-based crop insurance scheme seen good traction among farmers?
For weather-based insurance, the process is scientific, with actual rainfall data being verified by weather stations. This is trigger-based. Hence, the cash flow is must faster than for crop insurance. As this is the most crucial need of farmers, it is seeing more traction than crop insurance. To modify the agricultural insurance scheme, the government is trying to integrate the benefits of the weather-based scheme with the all-risk nature of the crop-based scheme.

What are your concerns on the obligatory cessions to GIC Re? As an insurer, do you want this to be done away with?
That is being discussed. As long as companies are adequately compensated for the obligatory cessions, we are fine with it. The real issue is companies spend a lot in sourcing a business. Also, companies that provide better-quality business to GIC Re, with a lower loss ratio, are not differentially compensated. There is a sense of natural justice. If you are giving a better quality portfolio, you should get some reward for it. Otherwise, we do not have any problem with the obligatory cessions.