Pvt general insurers eye more biz in smaller towns

Aim to increase presence in health & agricultural insurance

At a time when general insurance penetration is below one per cent of gross domestic product, private general insurers are looking at tapping the market in Tier-II and III towns to increase their presence across the country, especially in the areas of health and agricultural insurance. Companies such as ICICI Lombard, HDFC Ergo, L&T General Insurance and Tata AIG General Insurance are putting in efforts to generate premiums from smaller towns.

“The financial year will see a renewed approach from players in tapping the hitherto untapped potential of Tier-II and III towns and cities. For example, we have recently won the bid for implementing Rashtriya Swasthya Bima Yojana (RSBY) programme in eight districts of Rajasthan,” said Joydeep Roy, chief executive officer and wholetime director, L&T General Insurance. The objective of RSBY is to provide protection to below poverty line households from financial liabilities arising out of health shocks. Beneficiaries under RSBY are entitled to a hospitalisation coverage of up to Rs 30,000.

HDFC ERGO General Insurance, on the other hand, was recently allowed by the Maharashtra government to implement the pilot weather-based crop insurance scheme (WBCIS) for loanee and non-loanee farmers for the 2012-13 rabi season. Various crops would be covered in districts such as Sangli, Akola, Satara, Kolhapur and Beed under the scheme.

Non-loanee farmers are those who have not taken any loan from financial institutions. Those who had taken such loans are automatically insured by state-run Agriculture Insurance Co of India. HDFC ERGO has implemented this pilot scheme in 11 states, according to Ritesh Kumar, managing director (MD) and chief executive officer (CEO) of the company.

ICICI Lombard is one of the largest players in the RSBY segment. ICICI Lombard MD & CEO Bhargav Dasgupta told Business Standard the government’s social spending, especially on health, had increased.

“Over the past five years, we have been a very active player. We are the largest player in the RSBY segment. So, as and when these schemes come up, we are always there, provided the pricing is right. As these are tender-based, certain cases we win and sometimes we don’t. In health insurance, there is huge under-penetration. So, there is a lot of scope for growth for us.”

Other companies such as Tata AIG General Insurance are also active in the RSBY segment. Its CEO K K Mishra said that if there was a competitive bidding process in that scheme, the company would be a part of it.

Bajaj Allianz General Insurance, too, is evaluating this segment. “At the moment, we are not participating in RSBY schemes of state governments. We are still evaluating it and exploring options to have a smooth and hassle-free administration of such schemes,” said Tapan Singhel, MD & CEO, Bajaj Allianz.

The company also offers animal insurance (cattle insurance) in rural areas and rural health insurance products.

Industry experts, however, caution players against too much emphasis on these products. “Increasing penetration is necessary. However, companies should also keep the cost-factor in mind and look at bulk volume generating areas for these policies. Otherwise, it does not make business sense,” said an insurance sector consultant, requesting anonymity.