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Mix of strategies to tackle stiff competition from private sector

GEARING FOR DETARIFFING: Mr M. Ramadoss (left), CMD, Oriental Insurance Company, and Mr V. Ramasaamy, CMD, National Insurance Company, at the `Insurance Conclave 2006', organised by the FICCI Eastern Region in Kolkata on Tuesday. - A. Roy Chowdhury

Kolkata , June 6

The public-sector general insurance industry, made up of the four companies formerly associated with re-insurer GIC, is looking at a growth of 10-12 per cent this fiscal.

The general insurance sector hopes to achieve this target through a mix of strategies, aimed at consolidating and advancing its business in the face of stiff competition from private-sector competitors.

Balance sheet sizes, indicated CMDs of three of the four PSU insurers, are set to advance this year quite in line with expectations, especially in the context of de-tariffing. The industry will have its first brush with de-tariffing soon. The PSU chiefs were addressing newspersons on Tuesday.

Mr M. Ramadoss, CMD of Oriental Insurance Co Ltd, indicated that the company is looking at 10-12 per cent incremental growth on a year-on-basis, courtesy mainly its Indian operations, which yielded about Rs 3,500 crore last year. Oriental has its footprint in Nepal and a couple of other foreign countries.

The company is also working on revamping its medical insurance business - an area that it feels will soon assume greater significance in the insurance space.

Mr B. Chakrabarti, CMD of New India Assurance Co Ltd, felt that the company's balance sheet will get better with the onset of the de-tariffed regime. The company, which hopes the market will realise the potential of the growth drivers, also attributes the trend to several key factors.

Growth in the sector is likely to stem from steady economic development that has been taking place in recent years, the strategies followed by the insurance regulator and the increasing use of technology. Customer servicing standards, however, need to improve as a result of these trends, Mr Chakraborti stated.

According to Mr V. Ramasaamy, CMD of National Insurance Co Ltd, health insurance will partially spur growth in the coming days. The industry, however, will have to ascertain whether initiatives taken on this front in the past have actually led to desired results.

Advancement in rural infrastructure will also bring about an improvement in agri/rural insurance. This nevertheless will require surmounting of major difficulties, especially those related to distribution.

Delivery of insurance products to the rural population in a systematic, cost-efficient manner will be an important consideration for insurers, it is pointed out. Meeting distribution costs is a challenge that insurance companies must overcome, Mr Ramasaamy said.

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