Royal Sundaram general insurance counts on retail health segment for growth in FY13

Royal Sundaram General Insurance, which was one of the very few general insurance companies to clock profits in 2011-12, is banking on the retail health insurance portfolio for growth in 2012-13.

Health insurance constituted 15 per cent of the company’s gross written premium of Rs 1,479 crore in 2011-12, and the company is keen on growing the business further.

“Our health portfolio is consistently increasing and contributes above 15 per cent of our business. Going forward, we will focus on further developing our retail business, with greater emphasis on retail health insurance with a comprehensive product suite and excellent service,” the company’s managing director, Ajay Bimbhet said.

For most general insurers, motor insurance forms a significant part of the portfolio, followed by health. With high loss ratios in motor insurance and increasing claims in group health insurance schemes, many companies are now focusing on improving the retail health insurance business, where claims ratios are as low as 55-60 per cent.

Third-party motor pool provisioning, particularly, wiped off the profits for most general insurers in 2011-12, and the provisioning will have to continue for the next two years, according to Insurance Regulatory and Development Authority (Irda) guidelines. Royal Sundaram, for instance, was required to make a provision of Rs 117 crore for 2011-12. But the company provided for a higher amount of Rs 222 crore, so that, the losses to be absorbed in the next two years were reduced.

After dismantling of the third-party motor pool, the new declined pool, which has come into force from April 1, is expected to minimise losses in the motor insurance portfolio.

The declined pool requires companies to issue policies to those who meet their underwriting criteria and divert the risky ones to a ‘declined pool’ where the losses will be shared by the companies based on their market share of motor business.

“Motor third-party pool was formulated with an objective to provide a fair playing field to all insurers and manage the claims in a structured manner. However, industry witnessed imbalances, that the regulator has tried to dispel by forming the decline pool. We are hopeful that the new structure will not only mitigate losses, but also improve efficiency in claims management. It may subsequently improve health of the sector,” Bimbhet says.

By R Srividhya

http://www.mydigitalfc.com/insurance/royal-sundaram-counts-retail-health-segment-growth-fy13-183