New India Assurance, the country’s largest non-life insurer, is planning to come out with householder insurance products in anticipation that the government might come out with some kind of tax breaks.
“We are coming out with simple, easy to understand policies for households as we expect that there could be some tax breaks in the budget,” said G Srinivasan, chairman, New India Assurance. In a recent meeting with the finance minister, non-life insurers had sought tax breaks for householders insurance to increase the penetration of non-life in the country. Insurers said that despite opening of the industry and the presence of nearly two dozen insurance companies, the penetration of health insurance continued to be only around 0.7 per cent of the gross domestic product.
According to Srinivasan, there was no reason why individuals should not be purchasing cover for household assets considering the low cost of cover. He also denied that claims process is cumbersome and requires documents to prove ownership. “Nobody maintains bills for several years after purchase. If insured household items are stolen, all that we will be requiring is a police complaint,” he said.
Having put in place a core insurance solution, New India has opened 500 micro-insurance offices which can be manned by only one employee who can use systems to issue all policies. The increased investment in branches comes at a time when the company has turned around and reported a net profit of Rs 517 crore as against a loss of Rs 177 crore in the corresponding quarter last year. The company recorded a rise in profit following a hardening of premium rates.
Premium income grew by 18.18 per cent to around Rs 8,500 crore in the first nine months of this fiscal. “We plan to reach premium target of Rs 12,000 crore by the end of this fiscal with Rs 10,000 crore coming from domestic operations and rest from overseas,” Srinivasan told reporters here. On the focus areas, Srinivasan said that the company would focus on all lines of business with special emphasis on retail, SME and personal line of business. “We are going to launch our online services soon,” Srinivasan said adding that the company is also increasing its agent strength to enhance its penetration
Srinivasan also said the company, which had reported a loss ratio of 97 per cent in the health insurance sector, aims to reduce it to 92-93 per cent by March, 2013. The company has sought an increase in rates in health insurance for which clearance is awaited.
“The incurred claims has been brought down to 88.81 per cent by the end of December against 93.29 per cent reported in the same period last fiscal along with lowering of management expenses,” Srinivasan said. The company witnessed a sizeable increase in its investment income in the reporting period, which grew by more than Rs 300 crore to Rs 2,055 crore against Rs 1709.14 crore reported in the same period last fiscal.
“We have seen sound increase in the investment income during this period owing to the improved market conditions. We hope this trend to continue in the fourth quarter of this fiscal,” Srinivasan said. The company, which had an underwriting loss of around Rs 1,400 crore in the first nine months of this fiscal, said it had come down from last year’s level and will come down further going ahead. On the third-party motor premium, he said it had done an additional provision of Rs 500 crore as per regulatory guidelines in the recent past.