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Insure your way forward
Among the flagship programmes of the general insurance giant, New India Assurance Co Ltd, is the health insurance cover the company has recently introduced in Rajasthan.

Paying a premium of around Rs 1200 crore for the year, the state government has covered around one crore families or roughly some four crore of the state’s population. Chairman cum Managing Director G Srinivasan (GS) mentioned that the policy covers provide up to Rs 3 lakh of the expenses incurred on major surgeries.

I recall such a policy implemented by Srinivasan for the Tamil Nadu government when he headed the Chennai headquartered United India Insurance Co. This product has been beneficial to thousands of poor people. It enables them to access service from not just government hospitals but also flourishing private hospitals.

Low penetration of GI…

There has been concern over the low penetration of general insurance. Such innovative schemes for health care are expected to be extended to the agriculture sector. GS pointed to a modest premium that assures relief up to Rs 30,000. He said that the government plans to increase this to a lakh of rupees. The Pradhan Mantri Fasal Bima Yojana introduced last year has covered 25 per cent of the farmers. It is planned to increase this to 40 per cent next year. 

With such schemes, the general insurance penetration rate will record a 25 per cent increase, from the present 0.8 per cent of GDP to 1.05 per cent of GDP. Srinivasan estimated health insurance, presently covering around 30 per cent of the population in some form or the other. 

 

Performance highlights

GS has reasons to feel happy over the performance of NIA marching towards its centenary in 2019. This pioneer took general insurance across the globe. As at the end of March 2017, NIA had a presence in 28 countries and issued during the year ended March 2017 more than 28 million policies; it had a gross premium income of Rs 22,279 crore on which it earned a profit after tax of Rs 1008 crore. The market leader had a market share of nearly a sixth. It had a strong network of 2457 offices served by around 18,000 employees.

In November the company made the Initial Public Offer (IPO). The Government of India and the General Insurance Corporation together offered 1.72 crore equity shares in the price range of Rs 770-800 per share. The offer was comfortably subscribed to raise Rs 9600 crore.  

With a global growth of around 16 per cent, GS expects the premium income for the current year to reach around Rs 26,000 crore. The Indian business is growing at a higher rate of around 18 per cent. For the six months ended 30 September, the NIA made an after-tax profit of around Rs 1260 crore.

Srinivasan sees a lot of potential for growth in retail insurance in which NIA is the market leader. Most general insurance companies have been consistently losing on motor and health insurances. The strong measures taken have been contributing to progressively reducing the claims ratio. In the health sector, it has come down from 111 per cent in 2015-16 to 102 per cent in 2016-17. The CMD pointed to the focus on costs: “operating expenses were down by four per cent last year. Cumulatively, there was a reduction of the combined loss ratio to 111.76 per cent against 119.81 per cent in the previous year.”

To increase insurance penetration, the NIA has been recruiting around 10,000 agents a year. With a focus on technology, NIA has been growing business through digital portals: “14 per cent of our market comes through digital means. 70,000 agents using digital portals issue policies anytime, anywhere.

“The company has been expanding its imprint overseas. It plans to open shortly a full-fledged office in Myanmar. Likewise, the Dubai office will be fully operational in three months. Our international businesses are quite profitable,” said GS. 

 

Expand awareness

With a decade plus of experience as chief executive of general insurance companies, GS points to the need to focus on increasing awareness on general insurance. The message of relief provided in times of calamity and on the benefits of insurance need to spread rapidly. GS pointed to the extensive damages suffered by Chennai through unprecedented rains and floods in 

December 2015.  “While hundreds of industrial units suffered extensive damages and losses, sadly, few lessons seemed to have been learnt. It had become life as usual again,” pointed out GS.

I agree. Industrial Estate, Guindy was among the worst affected by the floods in December 2015. Most of the industrial and business units concentrated in the area near the banks of the Adyar river were poorly insured. As a consequence, their plight was miserable. Combined with the sluggish economic conditions, quite a few of them continue to struggle for survival. Enquiries reveal little effort to go for insurance in a big way even now.

The second area of concern is the 18 per cent GST levy on health insurance. GS tended to agree that this requires reconsideration.

To my query on the increasing costs of medical care, GS pointed to the government succeeding in substantially reducing the costs of stents and implants. However, the benefit of this is not passed on to the patients. Even while the hospitals ostensibly complied with the mandate and showed a reduction in the prices of these, they had increased the doctors’ fees and other charges. GS felt that there should be some regulation on the charges made by hospitals and for greater transparency: “there is a legal vacuum. We are trying to fix modest rates for hospital packages,” said GS.  – SV

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