 "We're aiming to improve our health portfolio: Andrew Farlow")
Andrew Farlow, Deputy Chief Executive Officer at SBI General Insurance, spoke to M Saraswathy on the company’s strong performance in the June quarter and its strategy going ahead. Edited excerpts:
The company has posted a profit for the June quarter, after a loss in the earlier one. What steps did you take?
A number of things have changed. Our business has matured. In the initial years, being a start-up company, we had a lot of upfront investment that we needed to make. So, we had not budgeted for a profit. Now, we have a good balanced portfolio, a volume of business that allows us to make decisions on where to grow the book. So, this is the first time a quarterly profit has been reported.
We are seeing 25-30 per cent growth and are comfortable with that level — it is well above the growth in the industry as a whole. We’ve done reviews of all major portfolios — the analysis helps us to identify areas where we’re doing well and, not as well as we would want. We then look at remediation strategies. We’ve done a lot of work over the past 12 months.
You have a large motor insurance portfolio. Are you looking to expand into other segments?
Motor is our largest segment and this is true for the sector as well. For us, it represents 36-37 per cent of our book. We’re now aiming to focus on the health portfolio. With the middle class’ rise in India, people are building their assets and what will drive insurance growth is their desire to insure those assets. Health is about nine per cent of our product portfolio and we want to improve that.
Non-life insurers had seen a slowing down in premium growth. Is the growth coming back?
The sector is now growing at 17 per cent (annually) but SBI General is growing at 25-30 per cent.
Will bancassurance continue to be the largest generator of business? Will there be a shift towards the digital channel?
Our bancassurance model with State Bank of India (SBI) will remain our model, but we also want to ensure that all opportunities in the market are explored. We have already done some deals with a few regional rural banks. We want to build a sustainable base to operate in any environment in the future. While bank distribution will remain our key, we will also let customers choose their channels, agents or brokers. Presently, we have around 24,000 branches of distribution networks, including SBI, its associate banks and regional rural banks.
Insurance has gone down the digital path globally and India is inevitably going to catch up on that. We need to be mindful that we are not ahead of our customers, and leave them behind. However, the new regulations are allowing us to do more in the digital space, and we want to take advantage of that. Be it making a claim or asking for a service, we want to make it as simple as possible for the customers.
The limit on management expenses had been a bone of contention between the sector and the regulator. Now that the final norms are out, do you see it as a challenge?
For the past six to eight months, our focus has been on the expense base and making sure we have sustainable expense growth. When we are growing at 25-30 per cent, it is inevitable that our expenses will grow. But, we have been able to maintain our expense growth at a much lower rate than our top-line growth.
The company has posted a profit for the June quarter, after a loss in the earlier one. What steps did you take?
A number of things have changed. Our business has matured. In the initial years, being a start-up company, we had a lot of upfront investment that we needed to make. So, we had not budgeted for a profit. Now, we have a good balanced portfolio, a volume of business that allows us to make decisions on where to grow the book. So, this is the first time a quarterly profit has been reported.
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What is your growth expectation for this year? Will underwriting of profit also be a focus?
We are seeing 25-30 per cent growth and are comfortable with that level — it is well above the growth in the industry as a whole. We’ve done reviews of all major portfolios — the analysis helps us to identify areas where we’re doing well and, not as well as we would want. We then look at remediation strategies. We’ve done a lot of work over the past 12 months.
You have a large motor insurance portfolio. Are you looking to expand into other segments?
Motor is our largest segment and this is true for the sector as well. For us, it represents 36-37 per cent of our book. We’re now aiming to focus on the health portfolio. With the middle class’ rise in India, people are building their assets and what will drive insurance growth is their desire to insure those assets. Health is about nine per cent of our product portfolio and we want to improve that.
Non-life insurers had seen a slowing down in premium growth. Is the growth coming back?
The sector is now growing at 17 per cent (annually) but SBI General is growing at 25-30 per cent.
Will bancassurance continue to be the largest generator of business? Will there be a shift towards the digital channel?
Our bancassurance model with State Bank of India (SBI) will remain our model, but we also want to ensure that all opportunities in the market are explored. We have already done some deals with a few regional rural banks. We want to build a sustainable base to operate in any environment in the future. While bank distribution will remain our key, we will also let customers choose their channels, agents or brokers. Presently, we have around 24,000 branches of distribution networks, including SBI, its associate banks and regional rural banks.
Insurance has gone down the digital path globally and India is inevitably going to catch up on that. We need to be mindful that we are not ahead of our customers, and leave them behind. However, the new regulations are allowing us to do more in the digital space, and we want to take advantage of that. Be it making a claim or asking for a service, we want to make it as simple as possible for the customers.
The limit on management expenses had been a bone of contention between the sector and the regulator. Now that the final norms are out, do you see it as a challenge?
For the past six to eight months, our focus has been on the expense base and making sure we have sustainable expense growth. When we are growing at 25-30 per cent, it is inevitable that our expenses will grow. But, we have been able to maintain our expense growth at a much lower rate than our top-line growth.