 "Company will emphasise on Tier 2 and Tier 3 regions: Yogesh Lohiya")
Private general insurer IFFCO Tokio General Insurance has reached across rural markets in India, through its partner IFFCO. In an interview with M Saraswathy, Yogesh Lohiya, MD & CEO of IFFCO Tokio General Insurance talks about this strategy and outlook for 2013. Edited excerpts:-
IFFCO Tokio has been known for its exposure to niche segments like aviation. What will be the strategy for this year?
We will not be going for too much of niche and specialised business. The company will emphasise, primarily on Tier 2 and Tier 3 regions, since IFFCO is a strong platform with 40,000 cooperatives as its members. We have taken stand to tap these rural areas and poor people. So this is a focus area. Further, we are working on the retail segments like travel, health insurance and small ticket premium business and corporate business.
Motor has been your largest area of business. Will this strategy continue?
Motor has been a growth area, since losses have come down after dismantling of the pool. This also helped us book profits. We are more concentrated on retail business as we do not want to have policies with low premium and not even meeting burning cost of risk. Our strategy is to have the right premium on commercial business segment and offering add-on services to people, minimising the risk in this process.
Also, we will continue to offer products in areas of crop insurance and the Below Poverty Line (BPL) segment. In fact, crop insurance contributed Rs 209 crore to our premium collection during fiscal 2012-13. We have already covered 41 districts in 10 states in crop insurance, through the weather based and yield based insurance.
While you are already present in the Rashtriya Swasthya Bima Yojana (RSBY) segment, will you be tendering for more states?
At present, 16% of business comes from rural business. We have captured 35 districts in 6 states under the RSBY scheme and are putting more pressure on this line of business. This is a good area for business, where we can control losses. This is because it has a positive claims experience and is an area which can grow better. Though delivery may be difficult, we will be able to improve it based on our available reach.
Though your peers opine that micro-insurance is not viable at current cost, would you have a different experience with IFFCO as a partner?
Micro-insurance is a segment with low ticket premium, which may not be sufficient to deliver in terms of policy documents, making people understand and for claim settlement. The distribution channel should be economical.
At IFFCO Tokio, we are at an advantage since IFFCO has centres even in small villages. We have Bima Kendras in these offices. Bima Kendra is a small centre wherein people who buy fertilizers, get an insurance policy. There is no separate office and our one-man representative sits at the IFFCO centers, selling small ticker policies.
Further, we have the personal accident cover--Sankat Haran policy (PA policy), where one gets one policy with each bag of fertilizer. The premium for this is paid by IFFCO. We have 246 Bima Kendras across the country and are yet to fully tap this market. So, we are pushing it more rigorously.
You do not have tie-ups with public sector banks under bancassurance. What are your plans on this front for this fiscal?
We have already tied-up with several cooperative banks to distribute our policies. Our emphasis is on these cooperative banks. However, since we do not have a tie-up with public sector banks till now, this year we plan to tie-up with a PSU bank.
With life insurers increasing their health product portfolio, do you see increased competition from them?
Health insurance policies of general insurers is a yearly policy and we have tie-ups with 800 hospitals for this. Also, health insurance servicing is more predominant in non-life industry. This is a segment today where people are buying it, rather than being sold. Hence, I do not see big competition from life insurers.
The company has booked profits for FY13. What is your outlook for FY14?
We do have hopes of booking profits this year too. But, we are worried about the Uttarakhand situation. We have to find out the losses in that area, which could be in the segments of property, life and vehicles. Further, hydropower plants have also been affected badly.
Hence, we are waiting and keeping our fingers crosses. If there is a big loss, then the industry will be affected. But, we have a Rs 3000 crore plus premium target for this fiscal.
IFFCO Tokio has been known for its exposure to niche segments like aviation. What will be the strategy for this year?
We will not be going for too much of niche and specialised business. The company will emphasise, primarily on Tier 2 and Tier 3 regions, since IFFCO is a strong platform with 40,000 cooperatives as its members. We have taken stand to tap these rural areas and poor people. So this is a focus area. Further, we are working on the retail segments like travel, health insurance and small ticket premium business and corporate business.
Motor has been your largest area of business. Will this strategy continue?
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Motor business, as of March 31, 2012, is 60% of our portfolio. This is because Tokio Marine is our partner, which has led to good relationships with Japanese auto manufacturers. But, now we are looking at expanding our non-motor business.
Motor has been a growth area, since losses have come down after dismantling of the pool. This also helped us book profits. We are more concentrated on retail business as we do not want to have policies with low premium and not even meeting burning cost of risk. Our strategy is to have the right premium on commercial business segment and offering add-on services to people, minimising the risk in this process.
Also, we will continue to offer products in areas of crop insurance and the Below Poverty Line (BPL) segment. In fact, crop insurance contributed Rs 209 crore to our premium collection during fiscal 2012-13. We have already covered 41 districts in 10 states in crop insurance, through the weather based and yield based insurance.
While you are already present in the Rashtriya Swasthya Bima Yojana (RSBY) segment, will you be tendering for more states?
At present, 16% of business comes from rural business. We have captured 35 districts in 6 states under the RSBY scheme and are putting more pressure on this line of business. This is a good area for business, where we can control losses. This is because it has a positive claims experience and is an area which can grow better. Though delivery may be difficult, we will be able to improve it based on our available reach.
Though your peers opine that micro-insurance is not viable at current cost, would you have a different experience with IFFCO as a partner?
Micro-insurance is a segment with low ticket premium, which may not be sufficient to deliver in terms of policy documents, making people understand and for claim settlement. The distribution channel should be economical.
At IFFCO Tokio, we are at an advantage since IFFCO has centres even in small villages. We have Bima Kendras in these offices. Bima Kendra is a small centre wherein people who buy fertilizers, get an insurance policy. There is no separate office and our one-man representative sits at the IFFCO centers, selling small ticker policies.
Further, we have the personal accident cover--Sankat Haran policy (PA policy), where one gets one policy with each bag of fertilizer. The premium for this is paid by IFFCO. We have 246 Bima Kendras across the country and are yet to fully tap this market. So, we are pushing it more rigorously.
You do not have tie-ups with public sector banks under bancassurance. What are your plans on this front for this fiscal?
We have already tied-up with several cooperative banks to distribute our policies. Our emphasis is on these cooperative banks. However, since we do not have a tie-up with public sector banks till now, this year we plan to tie-up with a PSU bank.
With life insurers increasing their health product portfolio, do you see increased competition from them?
Health insurance policies of general insurers is a yearly policy and we have tie-ups with 800 hospitals for this. Also, health insurance servicing is more predominant in non-life industry. This is a segment today where people are buying it, rather than being sold. Hence, I do not see big competition from life insurers.
The company has booked profits for FY13. What is your outlook for FY14?
We do have hopes of booking profits this year too. But, we are worried about the Uttarakhand situation. We have to find out the losses in that area, which could be in the segments of property, life and vehicles. Further, hydropower plants have also been affected badly.
Hence, we are waiting and keeping our fingers crosses. If there is a big loss, then the industry will be affected. But, we have a Rs 3000 crore plus premium target for this fiscal.