K.G. Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance, expects significant growth in motor insurance, retail health and personal accident portfolio in 2015-16
Future Generali India Insurance recorded a 50% jump in profits at Rs60.29 crore on a gross premium income of Rs1480 crore in 2014-15. This is the second consecutive year that the company reported a profit since it started operations in 2007. As much as 28% of the total business for the company comes from Mumbai. The company also grew by 15% in H1 FY16 in this market and is well positioned to scale up its portfolio in the second half of FY16.
K.G. Krishnamoorthy Rao, MD and CEO of the company says the company is looking at a growth rate of around 15% for the current financial year, which will mostly come from its retail channels. Motor, health and rural business are expected to contribute significantly to this growth.
The company has recently launched a new health policy, ‘Health Total’, which it says covers all the medical issues one might face. The product is unique because of its distinguished features like no entry age restrictions, longer policy term with installment payment options, shorter waiting period for maternity cover, treatments taken abroad, etc.
Says Rao: “The response to this product has been really positive as there is a huge demand in the market. Though the health insurance sector has been growing at 20% over the last few years, we see a potential for much larger growth. We expect the health business to contribute 20% of our total business by FY 2017. We bring in innovation in the way we service our customers. Our meticulous process driven approach laced with ample measure of customer empathy has ensured us one of the best benchmarks in the industry in terms of claims settlement ratio, average life span of claims and customer satisfaction.”
RURAL POLICIES
Future Generali has issued 1.21 lakh policies in rural India, which is about 20% of its total policies sold as of September 2015 in the current financial year. It had quantum jump of 150% in growth in the number of policies sold in rural India during the same period. The company customizes its products offerings and process suitable to various groups so as to ensure maximum enrolments of people from rural areas.
Says Rao: “Majority of this growth came through motor insurance, personal accident and health insurance products. We are already having significant share of business from rural areas and we hope to keep this momentum going in the next two quarters as well. We are tying up with various institutions like MFIs, NGOs, cooperative banks, primary agriculture cooperative societies, etc for reaching out to rural masses through a dedicated team. We are effectively using the common service centers, set up under national e-governance program by the government of India for distribution of our products.”
DIFFERENTIATORS
Future Generali does not want to compete on price since it is essential that a general insurance product should be priced based on the expected claims experience. Rao says the company believes in charging a price which is fairly competitive, but not necessarily the cheapest. However, it ensures that it provides best quality service to the customers especially when one is faced with the unfortunate event of a claim.
The general insurance sector in the country is cluttered with 28 companies and being a second generation entrant, Future Generali faces a tough challenge to gain significant market share. However, it is ramping up its distribution channels. It is also firming up its bancassurance channel. Rao says: “We plan to add 2000 new agents by the end of this fiscal to boost the existing agency network of 6000 agents. We are in talks with more private and public sector banks to push our products. Especially the licensing of new payment banks and small finance banks gives us a huge opportunity to make the most of this channel. Also, we are looking forward to an open architecture model in bancassurance, which will help us in creating more partnerships with banks. We believe that by increasing the size of the market through deeper penetration, every player can garner more insurance premium.”
DISTRIBUTION
For companies like Future Generali, the bancassurance distribution channel is almost non-existent since most of the banks are already tied-up with existing insurers. Hence these companies have to build other channels like agency which takes time. Rao hopes that the recent regulations of IRDA on bancassurance will give the company opportunities to look for some fresh tie-ups with banks.
TARGETS
Future Generali is looking at 20% growth this year with a focus on retail channel. The growth is expected from diverse segments, especially motor insurance, retail health and personal accident portfolio. Rao believes retail will account for nearly 70% of the company’s business from the current 65%. By 2020, the company wants to see itself as a top retail player in the general insurance sector.
Product wise, its focus will be to grow profitable segments of business in order to ensure the equilibrium of its bottom-line. These would include marine cargo, liability insurance, individual health and personal accident policy. Another major thrust this year will be on the rural insurance portfolio. Says Rao: “With the rapidly changing landscape of the rural economy along with heightened awareness about financial inclusion owing to the current government’s schemes, this is an area that we would like to tap. We plan to drive the sale of our policies ranging from micro-insurance products to standard personal line products.”
CAPITAL
Raising the limit for FDI has definitely been a boon for the industry. This could help bring in fresh foreign investments, which are needed to take the insurance industry to the next level. However, Rao is categorical: “Specifically in our company, we do not plan for any capital infusion at this moment.”
