Focus is to increase health book faster: ICICI Lombard Gen Insurance CEO

Bhargav Dasgupta spoke about the company's plan in the health, motor and surety bonds business

Being a predominantly motor insurance-driven company, ICICI Lombard is now looking to grow its health business to capitalise on the opportunity provided by the pandemic. Bhargav Dasgupta, managing director & chief executive officer, ICICI Lombard General Insurance, in an interview with Subrata Panda, spoke about the company’s plan in the health, motor and surety bonds business. Edited excerpts:

What has been the impact of Covid on the health business in the last two years?

The industry paid over Rs 25,000 crore in Covid-related health claims in FY21 and FY22. It earned profits of roughly Rs 4,000 crore in FY21 while in the first nine months of FY22, it posted a loss of Rs 500 crore because of Covid claims. Covid has had a very large impact on the industry when it comes to profitability. On the flip side, the pandemic has created a greater level of awareness about the importance of health and health insurance. We believe there is a change in the consumer mindset in terms of consumption of healthcare itself. One of the things that we have observed is that people are now willing to take video consultation much more than what we had seen in pre-Covid times. Also, home-based care has picked up post the pandemic.

Combined ratio of the company moved up in Q4 and underwriting losses widened. Any specific reason behind this?

Traditionally, our combined ratio has been around 100, on a standalone basis. Last quarter, our combined ratio was 103.2 per cent. Last year, we integrated the Bharti Axa’s general insurance business and the combined ratio was 120 per cent. We had mentioned then that when we integrate the business, mathematically, the combined ratio will be a bit higher. And, as we integrate the two organisations and get the synergy benefits, the combined ratio will come down in line with what our numbers were. The other thing is, clearly we are seeing opportunity in the retail health indemnity and digital sides. So, we are investing a lot in these areas.

How much are you looking to invest in the health business?

In the indemnity heath business, you hire agency managers, who then hire agents. So, we have hired 750 agency managers and another 250 are on the cards. The incremental investment on digital and distribution channels that we have planned is around Rs 100-150 crore.

Are you looking to grow the share of the health mix in your business?

For us, motor insurance has traditionally had a share of above 50 per cent in the portfolio. We generally have a larger share of the new motor policies. But last year was very difficult because new vehicle sales were low. We expect two-wheeler sales to pick up this year and also hope that the supply constraint on the motor side will go away. If these things happen, the motor insurance segment should grow. Clearly, our focus is to increase the health book faster. We think the proportion of health businesses in portfolio will increase.

Is it a conscious policy to not pass on the Covid impact to consumers by increasing health premiums?

We have looked at the Covid losses and looked at whether it’s a structural increase in the losses or a one-off event. We are assuming that loss in the second wave is a one-off. Hence, we are not passing on the loss to customers as yet. If it becomes a sustainable problem, we have to do something. But as of now, we are not revising prices because of Covid losses. But there is some inflation in the non-Covid claims as well. We think some of that may tone down.

Do you think the health insurance demand will continue?

There has been some elevation of the base. We will have to see if the growth rate is maintained. There is clearly an underlying market demand and awareness, which has lifted the overall demand for health insurance. So, even if growth becomes a bit muted on a larger base, we believe the overall market size will increase. It has become the biggest segment in the industry portfolio and our sense is that this trajectory will continue.

Will you be interested in the surety bonds business?

We will look at it very selectively, depending upon the quality of the contract. It opens up a new avenue for the industry — and to that extent — it is positive. But insurance does not get classified under Insolvency and Bankruptcy Code (IBC) and so the recovery issue is a challenge for the insurers. 

Are you looking to expand your presence in the commercial vehicles (CV) segment?

If you look at the motor portfolio, for the industry, CVs are almost 50 per cent of the mix. For us, private cars are about 50 per cent of the mix, two-wheelers are 25-30 per cent, and CV is 15-20 per cent. Now, we are seeing selective opportunities in the CV segment hence we want to increase our CV share a little bit. However, we don’t aspire to increase the CV mix to the industry level.

Are you open to further opportunities to grow inorganically?

As a company, we have always been open to inorganic opportunities for growth. Only thing is that it has to make sense for our shareholders, in terms of the businesses that come in.