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We Expect To Generate Rs 225-Cr Premium This Year: RR Belle, SBI General Insurance | Royal Sundaram

02 January, 2012

We Expect To Generate Rs 225-Cr Premium This Year: RR Belle, SBI General Insurance 
SBI General Insurance, a joint venture between the country's largest lender State Bank of India and global insurance firm Insurance Australia Group, plans to break even in 2016. The company, which has access to the huge distribution network of SBI, is focusing on pricing risks at appropriate rate, says MD & CEO RR Belle. In an interview with Shilpy Sinha, Belle talks about his plans and strategies, going ahead. Excerpts:
Given the vast distribution network that you have in the form of SBI bank branches, do you think you have done a good job so far?
It takes time to establish a company. SBI Life took life and SBI Cards is not yet established. If you look at banking, life insurance, general insurance, credit cards - each of these is a different business and takes time to expand. SBI bank branches are available for us upfront, but they are not distributing all products.
We have opened 20 branches and plan to open another 30. State Bank of India, now, has credit processing centres and each centre processes 200 branches. We are spread across all these centres. This year, we expect to do Rs 225-crore premium collection. Our expectation is to increase penetration level. People are competing for the same space. We have the ability to offer products in tier 2 and tier 3 areas. We have now launched tractor insurance.
Will you look to bundle products, say with home or tractor loans?
We don't bundle products. Customers have the choice. They think it is easier to get claim from the subsidiary of the same company, unless you have designed a product. We might do some combo product with SBI Life.
Are you lucky to have entered the market now and not earlier? 
Yes. Had we entered the market 6-7 years ago, we would have had a legacy system that we would have found difficult to address. There are some international studies which say the Indian general insuranceindustry will grow at a fairly high rate because penetration is low. We think the current slump in the market is an opportunity. All these uncertainties are going to force the market to harden.
We started after de-tarification. We knew it will take time for rates to harden. We have taken the decision to price risk adequately and both the partners have agreed to it.
What are your capital infusion plans?
We are well capitalised. Our initial capital wasRs 652 crore. Our solvency ratio is 11.6%. We have committed Rs 200 crore towards IT. We are also looking to invest in infrastructure and opening branches. We are looking to have a combined ratio of less than 100% by 2016.
What has been your strategy so far?
We started with corporate. In November, last year, we entered retail, home loan insurance, motor and SME insurance. We have been doing better than what we expected.
There was no rate war after you entered the market as the industry had expected. How?
We had decided we will assess risk and price it accordingly and not look to match the general insurance industry. SBI General has a strong actuarial and underwriting team backed by IAG. In these tumultuous times here, companies with good underwriting practices will survive.
Which segments are you bullish on?
Retail and SME will grow. Post de-tarification, most price cutting has happened in corporate. We are watching. Corporates are very aggressive and consider price to be very crucial. Retail will be more profitable.
How was your claim experience?
We expected low claims. It is because most of our customers are through bancassurance. Banks do fair amount of due diligence and chances of fraudulent claims are lower. World over, it is seen that adverse selection gets minimised and claims experience is lower.
What is your breakeven plan?
We plan to breakeven in 2016. This is because we are investing a lot in IT, which will sustain us for 10-15 years. That is a conscious call taken by both partners. Profitability is a concern. Our promoter IAG is operating in an uncertain market, thanks to floods and other things. But in the past year, the insurance margin has improved.
How do you justify breaking even in six years and not earlier since you are better placed than your competitors?
It will be in the fifth year. We are looking to invest in the first six years. We should have 140-150 branches by then. We are investing in staff and training.