Private general insurer Reliance General, which has been a retail heavy player is now shifting focus to commercial segments, to broad-base their portfolio. In an interview with M Saraswathy, Rakesh Jain, CEO of Reliance General Insurance explains the rationale behind this strategy and the way forward. Excerpts:
Since your product mix has been skewed towards retail business, will you now take a conscious effort to shift to commercial lines?
Our product mix is 60% motor insurance, 20% health insurance and balance is commercial lines. India offers significant opportunity across customer segments. Within personal lines, there are segments where you can grow. Motor is a good product, but profitability has come under stress due to the third party segment. Hence, it has been an endeavour to broadbase our products within the retail segment. We stepped in significantly with health. It has grown almost 50% plus this year, given our focus on it.
Commercial lines have been partially impacted by the economic scenario, with projects getting delayed. Incremental premium from corporates is slightly less. The need for commercial lines diversification is linked to overall well being of corporates.
A lot of stress is being put on risk management. From a standard product offering, we are now working with corporates to assess the risk, discuss the risk and check the mitigation plans and see the contingency for which the insurance cover would be sufficient. This approach is better in creating sustainable relationship with them. We are now stressing on risk-based pricing approach to corporates. In the past, it was price-led, when the industry had a commoditised approach.
The deadline for health product refiling under new norms are approaching. How have you progressed on this front?
I think that a lot of refiling relates to modification of terms. The insurance regulator has permitted that for simple modifications companies can get it done and file compliance with them. We are in the process of doing this. It is not an issue for us, barring few clarifications that we have sought. One of our new product Reliance HealthGain is almost complaint with new norms. Hence the need for modification has come down significantly.
You have entered the rural segment with your agriculture insurance product. What are the other products being planned on the weather-based insurance front?
Agricultural insurance is acquiring a big dimension, especially with bottom of pyramid farmers. It is a defined product and is statistically analysed with data from sources like Indian Meteorological Department. The entire process of managing the policy during claims is simple and is also easy to understand. There is a huge effort taken to popularise weather based insurance schemes. We are coming out with packaged policies which cover farmers' dwelling, agricultural tools and provides personal accident for families in as little as Rs 350-450 for a year.
Weather not only impacts farmers, but also people in metropolitan cities. We wanted to have a product where we could use simple natural catastrophe scenario to compensate small entrepreneurs whose daily livelihood is critical for them to sustain. We have filed a product with the regulator, where in certain cases of extreme weather vagaries we are able to compensate them. This can enable small businessmen to be back on their feet in no time.
Compared to a loss posted in first quarter last fiscal, Reliance General has posted profits in Q1 of this fiscal . What are the factors that have led to it?
We have improved on our expenses, ratios and claims ratios. The efficiency is derived from IT based approach. Further, we have significantly automated our process, delivery and channel engagement. Due to this, the company has been able to book profits by optimistising costs and better customer delivery.
Banks have been allowed to become brokers by the insurance regulator. Does the company stand to benefit out of this?
We are creating workforce across channels. Insurance requires a multi-channel approach. Banks are necessary for augmenting distribution channel. We are suggesting that the architecture be open, so that banks can distribute products of multiple companies. Customers can be the biggest beneficiaries. We are actively looking forward to it. At the end, the customer should get the choice and this is how the 'pull' will come from.
Reliance General has been looking for a partner in the general insurance business. Have any discussions begun on this front?
Though Reliance Capital (the promoter) is more appropriate to answer this, our stated intent is to have a good partner who brings value to our businesses. The businesses is inherently profitable, so the credibility of the partner should augment or help the business.