Bharti AXA General Insurance looks to focus on commercial lines

The company plans to reduce dependence on motor insurance; plans new top-ups for retail motor and health insurance

Private general insurer Bharti AXA General Insurance will gradually reduce its dependence on motor insurance segment and will focus on commercial lines and increase its share in the total business from the current 13 per cent to up to 20 per cent next financial year. The company which is yet to post profits, hopes to do so in the financial year 2014-15, said Amarnath Ananthanarayanan, CEO and MD. He was speaking on the sidelines of the company's Annual Group Press Conclave.

"We will focus more on commercial and health insurance segments going ahead to increase their share in overall business. This will help us to reduce dependence on motor segment," said Ananthanarayanan.

During April-December period of current financial year, while motor insurance contributed around 73 per cent of the overall business, health and personal accident contributed 13 per cent and commercial lines at 11 per cent. In general insurance industry, motor insurance segment contributes around 45 per cent of the total business. The general insurer's total loss ratio in 2013-14 is around 74-75 per cent, but could be lower at around 70 per cent next year.

The group health insurance portfolio continues to be loss making for Bharti AXA General Insurer, with a loss ratio of 85-90 per cent. As against this in retail health, the loss ratio stood at 60-65 per cent. The company now wants to focus less on plain vanilla hospital reimbursement policies on the group health side and instead wil focus on top-up plans in group health.

"The advantage of the top-up plan in group health is that even if the employee leaves the company or retires, this benefit continues. It can be used along with the base policy of another insurance company or without a base policy as well. This is employer agnostic and insruance provider agnostic,'' Ananthanarayanan said. If an employee plans wants to be covered under such a top-up, he/she will have to pay for it on his/her own. Interestingly, Bharti AXA General Insurer is seeing a demand for such covers among employees.

The company has not been able to increase rates of group health plans due to the stiff competition, but it is withdrawing away from throw away pricing, Ananthanarayanan said.

On the motor business side, the company has taken a stance to focus less on commercial vehicles, after the dismantling of the combined pool, but was seeing good growth in the two-wheeler segment. "In commercial vehicle we are in loss because of the declined motor pool. Either the pricing needs to go up, or we need de-regualted pricing or laws need to be introduced about the number of years the insurance can be claimed or the amount that can be claimed,'' Ananthanarayanan said.

About free pricing for motor insurance, he said that it will be good for customers who have fewer claims, but not for bad customers who have too many claims.

Travel insurance and new motor insurance add-ons are some of the other products Bharti AXA will be looking to offer next year. Some of these could be key replacement cover, engine & gear box protection cover, towing charges cover. Some other like creditor cover, residual value cover and extended warranty cover will protect to individuals for their loans, re-sale of vehicle and an extension of manufacturer warranty.

He also said that the company would expand its footprint in the country with opening of 29 branches in 2014. It has a premium collection of Rs 1,183.55 crore during April-January period of this fiscal.