'We are looking to expand non-motor business'

Q&A with Yogesh Lohiya, MD & CEO of IFFCO Tokio General Insurance

Private general insurer IFFCO Tokio General Insurance is looking to expand its non-motor business, as 60% of its present business is in the motor segment. In an interview with M Saraswathy, Yogesh Lohiya, MD & CEO of IFFCO Tokio General Insurance talks about this strategy and outlook for 2013. Excerpts:

IFFCO Tokio has been known for its exposure to niche segments like aviation. Will you be continue to focus on such segments?

We will not be going for too much of niche and specialised business. The company will emphasise, primarily on Tier 2 and Tier 3 regions, since IFFCO is a strong platform with 40,000 cooperatives as its members. So this is a focus area. Further, we are working on the retail segments like travel, health insurance and small ticket premium business and corporate business.

Motor has been your largest area of business. Will the thrust of this segment continue?

Motor business, as of March 31, 2012, is 60% of our portfolio. This is because Tokio Marine is our partner, which has led to good relationships with Japanese auto manufacturers. But, now we are looking at expanding our non-motor business.
Motor has been a growth area, since losses have come down after dismantling of the pool. This also helped us book profits. We are more concentrated on retail business as we do not want to have policies with low premium and not even meeting burning cost of risk.

Also, we will continue to offer products in areas of crop insurance and the Below Poverty Line (BPL) segment. In fact, crop insurance contributed Rs 209 crore to our premium collection during fiscal 2012-13. We have already covered 41 districts in 10 states in crop insurance, through the weather based and yield based insurance.

Some of the industry players are of the view that micro-insurance is not viable at current cost, would you have a different experience with IFFCO as a partner?

Micro-insurance is a segment with low ticket premium, which may not be sufficient to deliver in terms of policy documents, making people understand and for claim settlement.  The distribution channel should be economical.

We are at an advantage since IFFCO has centres even in small villages. We have Bima Kendras in these offices. Bima Kendra is a small centre wherein people who buy fertilizers, get an insurance policy. There is no separate office and our one-man representative sits at the IFFCO centers,  selling small ticker policies.

You do not have tie-ups with public sector banks for bancassurance. What are your plans on this front for this fiscal?

We have already tied-up with several cooperative banks to distribute our policies. Our emphasis is on these cooperative banks. However, since we do not  have a tie-up with public sector banks till now, this year we plan to tie-up with a one of them.

With life insurers increasing their health product portfolio, do you see increased competition from them?

Health insurance policies of general insurers are a yearly policy and we have tie-ups with 800 hospitals for this. Also, health insurance servicing is more predominant in non-life industry. This is a segment today where people are buying it, rather than being sold. I do not see big competition from life insurers.

While you are already present in the Rashtriya Swasthya Bima Yojana (RSBY) segment, will you be tendering for more states?

At present, 16% of business comes from rural business. We have captured 35 districts in 6 states under the RSBY scheme and are putting more pressure on this line of business. This is a good area for business,  where we can control losses. This is because it has a positive claims experience and is an area which can grow better. Though delivery may be difficult, we will be able to improve it based on our available reach.

The company has booked profits for FY13. What is your outlook for FY14?

We do have hopes of booking profits this year too. But, we are worried about the Uttarakhand situation. We have to find out the losses in that area, which could be in the segments of property, life and vehicles. Further, hydropower plants have also been affected badly.

Hence, we are waiting and keeping our fingers crosses. If there is a big loss, then the industry will be affected. But, we have a Rs 3,000 crore plus premium target for this fiscal.