There has to be a time limit for motor insurance claims: Bhargav Dasgupta

Private sector insurer ICICI Lombard General Insurance has seen almost 39% growth in top-line as per their results for the first six months. In an interview with M Saraswathy, Bhargav Dasgupta, MD & CEO, ICICI Lombard talks about the segments that contributed to the growth and their strategy for the year ahead. Here are the excerpts: 

The company has seen a healthy growth of the topline. Which were the segments that contributed to the growth?

This will be one of the very big years for the general insurance industry. We expect the industry to grow between 25-30% in this year. In the first six months, we have been growing at 39%. Even in terms of underwriting, we have had an improved combined ratio for the first six months. Overall, if there are no catastrophic events this year, we will see a further improvement in the overall combined ratio.

There are a lot of drivers. One of the main drivers of growth is the crop insurance scheme. Even otherwise, private cars have seen decent volume growth, health continues to do well. The retail segment which is consumption driven, we have seen growth. However, the wholesale segment will see some more time for growth to pick up, though it is showing early signs of positivity.

Crop insurance was a surprise element in the growth chapter of the industry. What is your view?

By the end of this year, crop insurance will be third biggest category after motor insurance and health insurance in the non-life space. This is a remarkable transformation for the industry. Even in the Kharif season, weather has been benign. However, crop insurance has to be seen over a cycle of two to three years. This is a segment which has high exposures and the industry has also seen huge losses in this space in recent years.

Have losses in motor third party insurance come down?

Third party motor insurance continues to remain a big drain. What we worry about is not about genuine accident claims. The third party liability challenge in India is that there is no time limit for submission of claims. If you see the industry data, the number of claims that get intimated to court after 3-5 years is huge. Why should a normal injury claim come after five years? This is our big worry since there seems to be abuse of a social insurance scheme.

While there has been a price increase every year, but due to the rising claims the industry is still bleeding. Because of some fraud claims, honest customers are impacted.

Similar is the situation in group health space. Has the practice of heavy discounts decreased?

What we are seeing in group health insurance are the early signs that the levels of discounts decreasing. However, this is still a loss making business is still not adequately priced. Large-ticket deals are not yet viable. For ICICI Lombard, loss-ratios are under control since we took a call about two years ago to reduce our exposure to group health.

Private sector has also been gaining market share from public sector. What would you attribute this to?

If you look at the overall industry, industry is moving from largely commercial line industry to more personal line, retail industry. We as a company also have a significantly higher proportion of retail business than wholesale. In that segment, you need to build a lot of capabilities. In service as also distribution side and technology architecture to deliver these services is where some private sector companies are doing relatively better. However, at the end of the day, public sector companies are very strong and entrenched distribution into smaller markets and have larger capabilities and capacities.

Since the government is coming up with a renewed scheme for universal health insurance coverage, would you be looking to participate in it?

It is still work in progress. We will see how the contours are finalised. But we think that there will be lot of flexibilities built into the scheme. If there is any opportunity for insurance companies, we will be willing to participate.

Underwriting profitability continues to be an area of worry for the industry, especially PSU insurers who may get listed. Do you see any improvement there?

Currently, there are early signs of people wanting to improve the quality of underwriting. The combined ratio for the industry stood at 118 and it is very difficult to move it to 100 in one year. We are seeing an improvement in segments like group health and some discipline in other parts of business is also seen.

The other area where lot of work is needed in industry is the quality of reserving. What we did was that we actually published our reserves even though we are not listed. This kind if transparency is important if you want to list and want quality investors. That does not mean companies cannot list. If investors see you are directionally moving towards underwriting profit, that will give them comfort.

Is the focus moving gradually from mere insurance to holistic services?

We are seeing that to work with them not just on risk transfer but the whole effort is on risk management and risk mitigation. We are seeing healthy progress in this area. It is a new approach and we are looking to build this further. Even in health, we are saying why should we be involved in merely providing a sickness insurance; instead we work with you across the life-cycle. This is across all lines.