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Pricing on group health has become tough: Ritesh Kumar

Private general insurer HDFC ERGO has grown at a faster pace than the non-life segment average. Ritesh Kumar, managing director and chief executive officer, HDFC ERGO General Insurance, on the segments that led to this growth and the way forward, in a talk with M Saraswathy & Neha Pandey Deoras. Edited excerpts:

The non-life segment has seen a slower rate of premium growth, compared to previous years. How have you been able to ensure higher growth?

The segment was growing at more than 22 per cent (annually) two years earlier, came down to 18 per cent last year and now is further down to 12.7 per cent; we grew at 19.5 per cent for the year. The growth in the past three quarters has been low and has tapered. But it is not surprising because we insure existing assets and incremental assets. For an industry which does that, if the rate of economic growth comes down, it has a direct bearing on us. If GDP (gross domestic product) growth slows, it will have ramifications for us.  If incremental assets dry up, fresh assets are not getting created.

Which segments added to the growth?

Motor (insurance) is 33.5 per cent of the total portfolio and has grown 25 per cent. We have seen growth across product segments. Health, property and weather insurance has seen growth.

With modifications in the weather insurance space, do you see an increase in market share here?

Since the Modified National Agricultural Insurance Scheme and National Agricultural Insurance Scheme got merged, the kitty available increases significantly. The size of the pie doubles and we have 12 per cent share of the weather piece.

In (the making of) the previous (government) budget, there was talk of the general insurance segment wanting tax benefits for home and personal accident covers. Will that help push sales of these two products and will this proposal still be relevant?

Most houses aren’t insured in India. Personal accident is slightly better covered but is still in single digits out of total portfolio. Given the criticality of these products, it is more relevant than life products.  

Will group health be a segment where you will launch new products? It has already earned a bad name due to the heavy discounts being given.

Group health follows a cycle. We are de-growing (declining) in this space. We have never been aggressive. No product is good or bad; it is the pricing that makes it so. Pricing in group health has become tough. We are in a free market regime and customer service should not suffer. We will see more and more people walk out of it if the situation does not change.

How do things look on the Rashtriya Swasthya Bima Yojana space, with respect to pricing?

Pricing has become much more competitive. It is not only about going out and getting the business. The emphasis should be on serving customers in an efficient manner.

Irda (the sector regulator) has set up a working group for product filing, which is looking into simpler products. Do you see over the counter (OTC) products coming into the market?

For increasing insurance penetration, you need simpler, templated OTC products. Products that can be sold in one go. Fancy products might sound very exciting but that is not where the premiums come from. Such products are good to have in the bouquets. For instance, basic hospitalisation will continue to be the base. Then we can add top-up covers, critical illness cover and so on. So, I hope the committee comes out with products which can be offered in the market with ease and are sold faster.

The other and larger issue is how to review the file-and-use norms so that new product approval can happen faster.


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