We want abolition of mandatory cess to GIC: Amarnath Ananthanarayanan

Interview with MD & CEO, Bharti AXA General Insurance

Bharti AXA General Insurance has reached the figure of ~1,000 crore annual gross written premium in four years. Amarnath Ananthanarayanan, managing director and chief executive officer, talks about the way ahead in an interview with M Saraswathy & Yogini Joglekar. Edited excerpts:

What are the taxation areas you want modified in next year's Union budget?
The deductions under Section 80D of the Income Tax Act should be increased to Rs 1 lakh and there should be a provision to cover home insurance. Further, we would like some service tax exemptions for policies and to reduce the burden on customers.

Another thing is reinsurance. There is withholding tax being charged for anything reinsured to foreign insurers. Adherence to the double taxation agreement is not there, which should be implemented. We also want abolition of mandatory cess to the General Insurance Corporation of India (GIC Re). At present, 10 per cent of our premiums go to GIC Re. There is a general consensus for this proposal.

The Insurance Regulatory and Development Authority (Irda) had set up a committee to move the sector to a risk-based solvency model. How will the consumer benefit from this?
It will benefit the customer and ensure all companies are adequately capitalised. So, it is a good move. For companies following risk-based pricing, there would not be any incremental capital requirement, while others might have to bring in additional capital.

Are there any systemic risks involved with offering covers for HIV patients?
There is no issue in offering this cover. But it comes at a price. We cannot give HIV cover at the same price as other critical illnesses. As long as people are fine paying the price, there would be no problem in offering it.

Further, the problem is that if a HIV cover is made mandatory, overall pricing for everyone would go up, by at least five per cent. It shouldn't be made a mandatory part of the cover of an insurance company. Another problem is that the cost of treatment of HIV is still unknown. So, people with HIV would be given a subsidised cover at the cost of others.

How do you plan to reduce your third party claim outgo?
We are doing out-of-court settlements and checking on frauds. We have put a legal team in place, as a lot of frauds are happening. Prices are also increasing. A strong legal team and out-of-court settlements will bring down the cost.

There is a debate on whether insurance companies can start sharing negative information about any organisation. Just the way credit rating agencies do, we are debating on whether this can happen for insurance companies. If there is information sharing, frauds would reduce.

Bharti AXA has seen a 48 per cent growth in premiums till the end of September. What is your expectation from the next year?
We expect a 30 per cent growth in business next year and aim to reach about Rs 1,300 crore. We are looking to break even by 2014.

What will be your focus in the next few quarters, in terms of products?
We would be focusing on the commercial lines of business, including jewellers all-risk, cellular network and civil engineering projects. Segments like garage risk are also being looked into. Further, we have filed our unemployment insurance product with Irda, to help individuals during jobless periods.