Youth focus can improve claim ratio: K G Krishnamoorthy Rao

Interview with MD & CEO, Future Generali

While the general insurance sector is abuzz with exotic product structures and offerings, Future Generali wants to focus on basic products. In an interview with M Saraswathy, Future Generali’s Managing Director and Chief Executive Officer K G Krishnamoorthy Rao discusses the reasons for this strategy. Edited excerpts:

Since you had a better claim ratio last year, do you expect to make money out of the third party motor segment this year?
This year, about 50 per cent of products are from motor segment. As of now, motor is giving us the best combined ratio. Last year, we had a better claim ratio. If we can continue that trend this year, we can make some money out of this portfolio.

Unlimited third party cover has affected the books. How do you propose to deal with it?
There are very few nations where unlimited third party cover is given. For an insurer, it is difficult to price a product if the cover is unlimited. We do not know what the liability will be. Only in road accidents is there an unlimited cover. So, if some limit can help, it will help the insurers price the product accordingly.

A limit of Rs 10 lakh has been proposed, and I feel it is reasonable.

Since you are a new entrant, would you be looking at offering niche products like cover for alternative medication (in retail) and HIV patients, which seem to be the flavour of the market?
People availing of alternative medication are very less in number; a majority of them still go for allopathic treatment. Hospitals offering such treatments are limited.

Some of these procedures are not recognised and, hence cannot be reimbursed. Though we have some covers for alternative medication on the group front, we have none in the retail segment. We are having discussions with some ayurvedic practitioners to see if we can standardise some of those things and offer a cover.

In terms of HIV cover, we feel that we have taken up with Insurance Regulatory and Development Authority (Irda) that insurers should be left to the companies to decide whether to offer cover or not, instead of forcing them to do so. As of now, we are not looking at bringing out a product like this.

We are still a new company and looking at our basic products to sell.

Unless we have sufficient numbers in our basic product, if we start something exotic, the portfolio will go for a toss.

With the new bancassurance guidelines on the anvil, are you in talks to tie-up with banks, since you entered the market a little later than others?
If the new bancassurance guidelines are implemented, it would open up new opportunities for this segment. For us, by the time we came in, most companies had already tied up with insurance companies. So, the new draft regulations might open up opportunities for us. We are open to new tie-ups.

The claim ratio for the health segment has been high. How are you handling this scenario?
Most of the people preferring to take health insurance are above the age of 45 years, which is the target group for illness. So, the claim ratio for insurance will also increase. The only way to reduce the ratio is by making health insurance attractive for the youth. Enticing the younger population to take health insurance ensures that the premium costs reduces and also claim ratio.

Further, we have requested the finance ministry to have some regulations in the healthcare sector itself. This includes having a grading system for hospitals or having a standard rate for treatments. If this is done, there will be a curb on healthcare cost inflation, that will reduce our losses.

The market is abuzz with reports of a possible deal to sell stake.
These are only market rumours. I am not aware of any such development.