The Hindu Business Line : United India thrust on strengthening agency force

Our objective is to reach underwriting break-even in 3 years. We have brought down the underwriting losses by Rs 300 crore in 2008-09 — Mr G. Srinivasan, CMD

L.N. Revathy

Coimbatore, June 21 The year 2008-09 was a satisfactory one for United India Insurance, according to its Chairman and Managing Director, Mr G. Srinivasan. The public sector insurer registered a growth of 14.8 per cent compared with the earlier fiscal; completed a premium of Rs 4,278 crore and accretion of Rs 570 crore.

Hailing the overall performance, Mr Srinivasan said the company had, for the first time since liberalisation and after the entry of private general insurance players, managed to ‘increase its market share from 13.3 per cent to 13.98 per cent.’

“These private companies have been eating into our market share since the opening up of the economy. They were putting up a strong fight and definitely it was not easy for the public sector insurance companies to regain market share. But we’ve managed by focusing on the retail segment such as health and motor. The rates are under pressure in the corporate segment,” he added. Excerpts from the interview:

What was your business strategy?

We engaged the Boston Consultancy Group about 18 months ago to do a study. Since then, we have initiated various measures, revamped our structure and started to focus on different segments of insurance business.

We have created specialised offices and verticals to focus on different business segments, created large corporate offices in five major cities, including the four metros, and an office in Bangalore, established specialised offices in 30 centres to deal with bancassurance business and specialised offices to deal with motor insurance business.

We have strengthened our focus on agency business by training and mentoring our agents. Out of the 15,000 active agents, 9,000 have already been trained and we will complete this exercise soon. We have initiated a major agents recruitment thrust. Our plan is to have one lakh agents in 3 years.

In a bid to increase our reach to all pockets, we have established 300 micro offices (one man office) at various locations and these micro offices are doing exceedingly well. Last year alone, our premium income from such micro offices was Rs 150 crore. We are aiming to double it to Rs 300 crore this fiscal and take the number of offices to 500. We have identified places and people and the model is being rolled out gradually.

What has been your experience on motor insurance business?

Our own damage loss ratio is less than 50 per cent, but the difficult part is the commercial vehicles. The establishment of the Motor Insurance Pool (set up as an arrangement for sharing commercial vehicles’ third party liability) under General Insurance Corporation about 2 years ago has to a large extent helped us cope with the loss ratio. We are focusing on conciliation in third party claims.

What about health insurance?

We have initiated measures on the underwriting side. Our loss ratio came down to 104 per cent last year from 112 per cent the earlier fiscal. I must admit that while it has come down, it continues to remain high.

We found the group mediclaim policies gave higher losses.

We are now monitoring the performance of third party administrators by way of surprise inspection, doing audit of claim failures and so on.

We have created a specialised vertical for health and our vision for 2011 is to bring the loss ratio to 85 per cent. We are aiming to reduce it by 10 per cent during the current fiscal to 95 per cent.

What is happening on the rate front? Is there a rate war?

I wouldn’t call it a rate war. When detariffing takes place, such jerks cannot be ruled out before issues are sorted out, stabilised. The market is getting corrected.

In my view, people are charging appropriate rates. It could take another two years for the rates to, sort of, settle.

Your vision/roadmap for the company.

Our objective is to reach underwriting break-even in 3 years. We have brought down the underwriting losses by Rs 300 crore in 2008-09 and our core operations have been profitable.

We roll out newer products from time to time. Product innovation is the key to focus on. We are pioneers in film insurance and have done relatively well in this space.

There are a lot of corporate investments going into making of a film and they insist on a risk cover. Earlier, the film industry did not look at insurance.

Isn’t it risky?

Yes, but there is sufficient reinsurance.

What about the awareness for each of your products?

It is definitely a challenge. Each product has its own take-off level. Policies at the corporate level take-off well, but for individuals, it takes a bit of time.

We ensure that our agents understand the product well before they market the same.

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