 "We'll reach break-even by 2017-18: G C Rangan")
L&T General Insurance, subsidiary of engineering ginant Larsen & Toubro, has completed four years and says it is now actively moving towards profitable growth. G C Rangan, director and chief executive officer, who took charge some months earlier, talks with M Saraswathy on business strategy and plans. Edited excerpts:
Your losses have come down on a year-on-year basis. What is your strategy for break-even?
We will break-even in financial year 2017-18. We expect our gross written premium to be close to Rs 1,000 crore by then. Our journey to profitable growth is based on a three-pronged approach — continue to grow the motor segment, build and reach a critical size in the retail health segment, and continue a disciplined underwriting approach in the commercial segment.
Geographic expansion is a key enabler for such growth. By the end of this financial year, we plan to be present in 80 locations across India (currently 40) and have 40 branches (currently 15). In addition, we would continue to leverage the 200 branches of our group company, L&T Finance, for deeper reach.
Hasn't irrational pricing in several segments of general insurance been a dampener?
You're aware the Insurance Regulatory and Development Authority of India has issued a circular that insurers not solicit policies at rates lower than their cost of business. While this is a welcome step, competitive pressures continue to drive high discounts in the market — heavy discounts continue to be offered in certain commercial lines.
We believe in profitable growth. Thus, while we have our plans to scale up, we would not compromise on profitability only to achieve growth. We have stayed away from cases where we found the discounts too steep. We urge sectoral players to practice the recommendations of this 'burning cost' circular, so that the premia offered are in line with the risk being underwritten.
Are you looking at diversifying into newer segments?
While we continue to grow primarily through our existing segments, diversification is a key component of our business plan, as it helps de-risk our portfolio. This year, we would be readying to build the small and medium enterprises segment in the coming years.
There has been a good growth in your direct business as well. Any plans to additionally build this?
A service edge is the mantra. Our direct channel is important, as our customer experiences this service directly and we get valuable feedback to improve ourselves. This year, on the online front, we plan to continue to make the customer experience more seamless and smooth. We'd also undertake campaigns across media to draw a larger customer base directly to us.
Bancassurance has been a major channel-boosting business growth for the sector. Your plans on this?
It is a channel we are keen to build. Bancassurance is a key part of our FY16 plan, as it would enable access to a wider customer base and improve our channel mix. We believe the impending corporate agency guidelines are a step in the right direction for the sector, and should bolster our plan for banca tie-ups. We have adopted a two-pronged approach to build this channel, by leveraging existing bank relationships for group policies and pursue tie-up opportunities with co-operative banks.
Your losses have come down on a year-on-year basis. What is your strategy for break-even?
We will break-even in financial year 2017-18. We expect our gross written premium to be close to Rs 1,000 crore by then. Our journey to profitable growth is based on a three-pronged approach — continue to grow the motor segment, build and reach a critical size in the retail health segment, and continue a disciplined underwriting approach in the commercial segment.
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Will expanding regionally be essential for this?
Geographic expansion is a key enabler for such growth. By the end of this financial year, we plan to be present in 80 locations across India (currently 40) and have 40 branches (currently 15). In addition, we would continue to leverage the 200 branches of our group company, L&T Finance, for deeper reach.
Hasn't irrational pricing in several segments of general insurance been a dampener?
You're aware the Insurance Regulatory and Development Authority of India has issued a circular that insurers not solicit policies at rates lower than their cost of business. While this is a welcome step, competitive pressures continue to drive high discounts in the market — heavy discounts continue to be offered in certain commercial lines.
We believe in profitable growth. Thus, while we have our plans to scale up, we would not compromise on profitability only to achieve growth. We have stayed away from cases where we found the discounts too steep. We urge sectoral players to practice the recommendations of this 'burning cost' circular, so that the premia offered are in line with the risk being underwritten.
Are you looking at diversifying into newer segments?
While we continue to grow primarily through our existing segments, diversification is a key component of our business plan, as it helps de-risk our portfolio. This year, we would be readying to build the small and medium enterprises segment in the coming years.
There has been a good growth in your direct business as well. Any plans to additionally build this?
A service edge is the mantra. Our direct channel is important, as our customer experiences this service directly and we get valuable feedback to improve ourselves. This year, on the online front, we plan to continue to make the customer experience more seamless and smooth. We'd also undertake campaigns across media to draw a larger customer base directly to us.
Bancassurance has been a major channel-boosting business growth for the sector. Your plans on this?
It is a channel we are keen to build. Bancassurance is a key part of our FY16 plan, as it would enable access to a wider customer base and improve our channel mix. We believe the impending corporate agency guidelines are a step in the right direction for the sector, and should bolster our plan for banca tie-ups. We have adopted a two-pronged approach to build this channel, by leveraging existing bank relationships for group policies and pursue tie-up opportunities with co-operative banks.