We plan to achieve 15% growth - Business Standard

Chennai-based general insurer Royal Sundaram Alliance Insurnace Company has set a growth target of 15 per cent for the current financial year. In 2008-09, the insurer's gross written premium was Rs 805 crore. In an interview with TE Narasimhan, Managing Director Ajay Bimbhet said that the company would rely more on its strengthened distribution network to achieve planned growth and would add 1,200 agents during the year

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Post-liberalisation, the life insurance industry has contributed more than four per cent to the country's gross domestic product (GDP), whereas non-life's contribution is stuck at 0.6 per cent for the last nine years? What is the reason and what needs to be done (including regulatory actions) to increase the contribution of non-life insurers?

The growth of the insurance industry is dependent on increased awareness as well some regulatory changes. Industry should come out with a basket of innovative products based on customer needs. There is also a necessity to change the mindset of people, the middle class in particular, about the importance of treating insurance not as an investment but as a necessity in the context of the current economic environment.
How long do you think it will take to reach the 1 per cent figure as GDP contribution from the current 0.6 per cent?

With increased awareness and deeper penetration of retail products, the industry should witness incremental growth in future. Taking into account the current GDP projection of 6.5 per cent, a slower projected growth rate and considering the current weak global economic conditions, it will be a while before we reach such levels.
How profitable is the Indian general insurance business and has your company made underwriting profit? Do you depend on investment income for making profit?

The onset of detarrification along with the entry of new players has led to the erosion of underwriting profits across all segments and players in the industry. In this scenario, all the insurers do depend on investment income for their profits.
How do you see the role of four public sector non-life players in pushing the growth of the industry?

The four public sector non-life players have been around a long time and have the advantage of a combined market share of nearly 60 per cent. Considering this fact, we expect them to play a significant role in the years to come. However, it is increased awareness which is critical to the growth of the industry.
What has been the focus of your company?
We have been and will be focusing on growth across all potential segments, though we have placed extra emphasis on retail over the last two years considering the increased potential for growth in this segment. We are developing our capabilities in priority segments and enhancing our pan-India distribution network.

Do you think there is too much competition for corporate business and other portfolios are getting ignored?
Corporate business has been witnessing as much competition as other segments due to the entry of so many players in the market. However, all insurers are increasingly looking at the retail segment for further growth.
What strategies you have adopted to tide over the recession? Do you think the corporate sector is cutting down on their insurance expenses, including group health insurance?
We have been revamping our retail business through a targeted segment approach with value-added propositions, prudent risk selection with appropriate pricing. Our key strategy for growth is to evaluate risks and aggressively pursue new opportunities while taking care to fulfill our responsibilities towards policyholders.
What are your plans (premium, branch expansion and manpower) for 2009-10?

We have over 54 branches across 45 locations and we may add around 20 branches this year. We have about 3,500 agents and plan to add 1,200 more this year. We plan to leverage our distribution network of agents and the FOS (feet on street) team to achieve our growth target. This is in line with strategy to expand our business while taking care to cut costs and achieve economies of scale. We are aggressively expanding our pan-India footprint using various avenues, such as the direct retail channel through the FOS team, direct access to customer through telecalls and the internet channel, a high potential medium. For our rural growth, we will continue to depend on our traditional relationships with non-governmental organisations and micro-finance institutions.
What is your target for 2009-10?
In 2008-09, the company's gross written premium was Rs 805 crore and our target is to grow by around 15 per cent in 2009-10.
What is the current capital position of the company? Any plans to infuse additional capital for expansion?
Our current capital position stands at Rs 210 crore. We are adequately capitalised to take care of our immediate short and medium-term growth aspirations.