Royal Sundaram eyes 30% rise in premium in FY08
Business Standard, 22 May, 2007
The first year of detariffing does not seem to be a great concern for Antony Jacob, Managing Director, Royal Sundaram Alliance Insurance Company Ltd. For, during the fiscal 2008 too, the company is targeting a 30 per cent increase in premium income at Rs 775 crore, as against Rs 601 crore during 2006-07.
"We will maintain the growth rate of 30 per cent during the 2007-08 period too. Having stepped into the first year of detarrifing, we have seen around 40 per cent reduction in premium rates in fire and engineering segment and around 20 per cent reduction in the private motor own damage (OD) segment. Though we can expect growth in volumes in terms of number of policies and also, in sectors like health, travel, personal accident and home insurance, it will not necessarily compensate for the loss," Jacob said.
Detariffing will definitely see a slowdown in the general insurance industry for the next 12-24 months but will pick up after that, he said. "The growth rate of the industry is around 23 per cent and fiscal 2008 might see a growth rate of around 15 per cent. Considering the drastic reduction in premium rates in many segments in 2007-08, we feel it is a good growth rate," he added.
Around 50 per cent of the company's business is generated from the bancassurance channel and it aims to maintain the ratio in the current fiscal too. The company will enter into more tie-ups by mid 2007-08 to distribute its products. It is also planning to set up 15 additional branches in B and C group towns, taking its total number of branches to 56.
The company may also look at capital infusion during the second half of the year. "As of now, we are in a comfortable position and depending on the growth in business by the second half of the year, we might look at enhancing our capital during September-October," Jacob explained.
Royal Sundaram is also planning to file a range of products across almost all sectors with the Insurance Development and Regulatory Authority (IRDA) in January 2008, ahead of April 2008, after which, the general insurance companies can vary the terms and conditions of the products.