NIA earned a record global premium income of Rs 18,000 crore for 2015-16, registering an increase over the previous year, Rs 16,000 crore. NIA maintained its growth record in the general insurance business, which reached Rs 96,000 crore for the industry as a whole registering a growth of 13.5 per cent.
In an interview to IE, NIA’s Chairman cum Managing Director, G Srinivasan (GS), referred to several major landmark initiatives taken during last year. These promise widening the coverage and take general insurance to much larger numbers of the population. GS listed the major initiatives:
• The Jan Suraksha scheme: As part of this a life insurance cover, a personal accident insurance cover and a pension product have been offered. The personal accident product, relevant to general insurance, provides a cover of Rs 2 lakh for a modest premium amount of just Rs 18. GS referred to almost 10 crore people availing this within a short time of introduction of the scheme.
• A personal accident cover of Rs 1 lakh for RuPay card holders as part of Jan Dhan Yojana extends the benefit to around 20 crore individuals.
• The new health insurance scheme widens the existing Rashtriya Swasthya Bima Yojana (RSBY). This provides health cover up to Rs 1 lakh with an additional Rs 30,000 for senior citizens.
• The Pradhan Mantri Fasal Bima Yojana is intended to expand crop insurance in a big way. The premium has been fixed low at just 2 per cent of the crop sum insured with the government funding the major portion. GS pointed out: so far even when a farmer takes a loan for his crop, he doesn’t take any insurance cover. The present scheme with a low premium is expected to provide a huge impetus for crop insurance. He anticipates insurance premium income on this count alone in the region of Rs 10,000 crore.
Health insurance expands…
As the chief executive of United India Insurance earlier, GS took the initiative to handle the TN Chief Minister’s Comprehensive Health Insurance Scheme sharing the business with the other public sector general insurance companies. This provides free medical and surgical treatment in government and private hospitals to the members of any family whose annual family income is less than Rs.72,000.
Under the scheme, the sum assured for each family would be Rs.1 lakh every year for a total period of four years and for a total value of Rs. 4 lakh. In the case of certain procedures, the ceiling would be raised to Rs.1.5 lakh per annum. No fewer than 250 hospitals were empanelled under the scheme. At least six hospitals in each district are to be covered. The scheme would cover 1016 procedures, 113 follow up procedures and 23 diagnostic procedures. The cost of tests required for treatment would also be part of the insurance cover. Over 100,000 sugeries have already been performed.
This has been a hugely beneficial and popular health insurance scheme benefiting over 4 crore of the state’s population.
NIA endeavours to extend this highly beneficial scheme to other states and has implemented this in Maharashtra, Bihar and Rajasthan. GS pointed to the Rajasthan government providing the cover to around 4 crore people, at Rs 3 lakh each – among the biggest such schemes in the country. In Maharashtra, with larger population, the coverage is for 8 crore people with a total premium of Rs 600 crore and the coverage is for Rs 1.5 lakh. Other states like Goa, Jharkhand and Uttar Pradesh are in the process of implementing this. Since the Central government had announced the RSBY, states plan to tailor their schemes to the benefits announced by the Centre.
GS pointed to the companies still not making margins on their insurance premium. Despite regular increase in the premium for third party insurance cover for motor vehicles, insurers continue to suffer losses. The stipulation of increasing the insurance cover for three years for two-wheelers has been a help. However, still a very large number of two-wheelers and nearly a fourth of the four-wheelers on road, ply without the mandatory third party insurance. GS pointed to the pilot scheme in Secunderabad through the Insurance Information Bureau coordinating work with the RTOs. He felt the new Motor Vehicles Act and the Road Safety Act would address the issue and implement the law more effectively.
GS said that the share of the public sector would stabilise at the present level of around 53 per cent. The financially strong public sector players have a wide reach and several inherent advantages. In the private sector the increase in FDI limit from 26 to 49 per cent has resulted in attracting more international re-insurers. Four of these have been given the first stage licence. When these schemes are put in place the industry will change a lot more, said GS.
GS referred to the number of new products introduced in health, motor and miscellaneous sectors. All these have resulted from competition; there is also greater use of technology that has resulted in quicker and better services, said GS.
In regard to rural penetration, GS pointed to his company NIA having 1300 one-man offices across the country: “these offices are doing very well. We plan to open another 300 such offices.” Recently IRDA has delegated the power to appoint agents to the insurance companies dispensing with the earlier licensing arrangement. This will pave the way for expanding the number of agents, said GS. NIA presently has around 60,000 agents.
Insurance companies also plan to tie up with bank correspondents that number around two lakh: “ we plan to rope them in as micro insurance agents to sell our products. The idea is to make the bank correspondent sell both banking and insurance products,” said GS.
While expressing satisfaction over their several schemes intended to expand general insurance, GS expressed concern over the low level of penetration. He listed his concerns as under- penetration, low or poor margins due to low premium rates and frauds, especially in regard to motor third party and health.