Private sector general insurer HDFC ERGO which plans to better industry growth this fiscal says retail health premium revision should be automatic. In an interview with M Saraswathy, Ritesh Kumar, MD & CEO of HDFC ERGO General Insurance discusses his priorities. Excerpts:
There have been some representations made to the regulator for increase in health premiums. Do you also feel the need for the rise in prices?
The health insurance premiums are growing 30% year-on-year. Given the kind of low penetration, 30% increase should continue in the near future.
The representations made to the regulator are on the retail side, since it is regulated. The increase in premiums should be commensurate with rise in health inflation. So periodically, companies have to go and ask for a correction in prices. We have also suggested that there should be an inflation linked increase allowed on an automatic basis.
Since the health insurance industry has seen a transformation in terms of the service provided, has the concept of health insurance portability become popular among people?
It is a flexibility that the regulator wanted to give to the consumers; if they were dissatisfied with the existing insurer, they can change the insurer. The fact that portability has not gained momentum means a large number of customers were not dissatisfied with the insurance companies.
All our (non-life companies’) products are yearly products. Also, the general insurance industry is claim intensive. The annual nature of the policy ensures that the insurers are adequately taking care of the service aspect.
How is your weather-based crop insurance scheme performing?
We have implemented the pilot in about 11 states. This is a product based on data and is transparent. Payouts can be quicker. Given the criticality of what a crop failure means to a farmer, going forward the products need to be scientific and actuarially placed.
But, isn’t it a very risky product, given the poor performance of monsoons this year?
This product is actuarially determined. If insurance would mean that you would never take a hit, then that wouldn’t be insurance. In some districts, yes, we would have to pay more than the premium while in some you would have to pay lesser. While monsoon was slow to come in, it gradually settled in. So these will vary from state to state.
HDFC ERGO has already begun to have its in-house third party administrators (TPAs). Would you be looking to move to wholly in-house based TPA?
Our move to have our own third party administrators is guided by the fact that we should be able to have more control over the clam settlement process. When a health claim happens and the person is in distress, the servicing capability needs to be of a very high order.
Now, we are able to respond on a 24/7 basis. The PSU insurers have been talking of it for some time now. There are a few players who have their in-house TPA. So, if the PSUs set up their in-house TPA, there would be a significant volume catered by captive TPAs.
Another thing is that there are some group policies, where clients do not want cashless. So you should be able to service them.
What kind of premium growth you see in the current financial year? Would there be an additional capital infusion?
I think for the entire year, our growth will be higher than the industry. We may not be able to sustain a 40% growth, but we would see a growth upwards of 30% on an overall basis.
On the issue of capital infusion, we have infused adequate capital over the last three years. We infused about Rs 212 crore in 2010-11 and Rs 142 crore in 2011-12. As of now, we haven’t infused any capital in the current year. We do not foresee any significant capital infusion. Even if there is one, it would be marginal.