Magma HDI General Insurance expects health segment to drive growth

Shobha Roy Kolkata | Updated on July 05, 2020

Magma HDI General Insurance Company Ltd is expecting the share of health insurance to its total business to almost double by the end of this fiscal. Health insurance, which accounts for around four per cent of its business, is expected to grow to six-to-eight per cent, primarily backed by a demand from semi-urban and rural areas in the wake of the Covid-19 pandemic.

The company had posted 26 per cent growth in its gross written premium at ₹1,294 crore for the year ended March 31, 2020, as against ₹1,026 crore in FY-19.

According to Rajive Kumaraswami, MD & CEO, Magma HDI, the company’s flagship health product has witnessed close to 750 per cent growth in the number of policies issued during the first quarter of this fiscal, as compared to same period last year.

“The health insurance business is likely to witness a growth while motor is likely to take a beating. While the share of health to our total business is expected to grow to 8 per cent by the end of this fiscal, motor, which currently accounts for around 80 per cent of our total business is expected to come down by around 3-4 percentage points by the end of this fiscal,” Kumaraswami told BusinessLine.

Nearly 77 per cent of the policies sold in Q1 FY-21 were non-floater and close to 68 per cent were in the low sum insured category (approximately ₹2 lakh per individual). A majority of the people who have taken the cover are coming into the insurance fold for the first time.

In its retail business, the company has been able to tap small business owners and tractor owners, predominantly in the semi urban and rural areas. The contribution of the corporate agency channel to the business in Tier-III and Tier-IV towns was close to 20 per cent and 63 per cent respectively, while bancasurance and OEM’s contribution was 17 per cent and 3 per cent and that of the agency channel was 31 per cent and 11 per cent respectively to these towns.

There has been a rise in insurance penetration in the semi urban and rural areas in the wake of the recent pandemic. The reverse migration of workers from urban areas to their villages has also contributed to a rising awareness of the need for health insurance among the rural population. Moving forward, an improvement in healthcare infrastructure and standardisation in the sector would help improve penetration of health insurance in rural areas, he said.

Magma HDI has tied up with 14 TPAs each having a network of over 4,500 hospitals to service its customers. While retail health would be its key focus area, it is also looking to grow its group health business primarily catering to the SME customers. In the urban space, the company’s corporate business has grown by 26 per cent in Q1FY21, supported by marquee clients on the back of high service standards including claims, and risk management services. Ramping up distribution Magma HDI, Kumaraswami said, has been leveraging technology extensively to issue policies and settle claims.

Usage of survey pre-inspection app has increased from 27 per cent in Q4, FY20 to 41 per cent in Q1 of FY21. Similarly, touchless claim settlement cases increased from 13 per cent in Q4 FY20 to 49 per cent in Q1 FY21. More than 3,000 intermediaries worked with the company in Q1, all through work from home mode, which clearly highlights its digital capabilities.

The company is also looking to strengthen its distribution network by ramping up its bancassurance channel. “Bancassurance tends to be a very good platform for retail health companies. The open architecture model has clearly opened up a huge avenue for the insurance industry,” he said.

Published on July 05, 2020

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