The Oriental Insurance Company is planning to introduce some value-added motor insurance products to take advantage of the detariffed regime. | |
| M Ramadoss, chairman-cum-managing director, said, in the current regime insurers could go in for risk-based pricing system. This gives a lot of headroom to offer frills to the customers and charge higher price for the product, he added. |
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| Currently, the premium of the insurance product constitutes three per cent of the risk covered. However, in other countries premiums charged can go up to 8 to 10 per cent of the risk covered. |
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| In the new detariffed regime, Indian insurance companies can also offer ancilliary services for higher price. |
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| Ramadoss said ancilliary services might include offering a replacement car at the doorstep of the customer in case of an accident. The replacement car will be taken back once the affected car is ready. For this Oriental will talk to motor companies or service providors for a tie-up. |
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| At present, motor insurance accounts for 50 per cent of Oriental's portfolio. The insurance company is planning to introduce 5-6 specially designed motor insurance products. |
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| Oriental expects the premium income growth in 2007-08 to be in the region of 15 per cent against 11 per cent in -2006-07. |
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| Ramadoss, who was speaking on the sidelines of "Insurance Conclave", organised by Ficci, said the general insurance companies would need more funds to expand. "There will be capital raising activity in future This will be necessitated as insurers focus on retail and personal insurances and design new policies before April 2008. |
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| Iinsurance companies will also need to invest more in data quality, IT systems and efficient pricing, Ramadoss said. |
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| If allowed by the government, Oriental Insurance is open to raising funds from the market. Oriental's current net worth is Rs 1600-1700 crore. Ramadoss said even if a public holding of 5 per cent was allowed, the value of shares would be high if the current portfolio was considered and real estate was left aside. |
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| Ramadoss expects the impact of rate reduction to be offset by volume growth as more companies take up extended product coverage. |
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| As per January to March 2007 figures, the engineering, motor own damage and motor third party recorded 101.98 per cent, 10.25 per cent and 51.49 per cent growth respectively. |
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| Only the fire insurance segment recorded some negative growth of 2.95 per cent mainly because of the de-growth posted by the public sector companies. |
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