A bottomline-driven approach to product underwriting is how Kotak Mahindra General Insurance Company, one of the newest entrants into the industry, hopes to distinguish itself, Mahesh Balasubramanian, MD and CEO, said.

There are two dozen players in the general insurance industry which has traditionally been topline-driven. Very few make money in underwriting, and more often survive on their investment income. He doesn’t think Kotak General Insurance (KGI) is late in entering what seems like a crowded field.

The ₹1.27 lakh crore industry is set to double in the next four years, he says, and whips out a Rajnikanthism, “Even if I am late, I am the latest!”, to counter the argument that they may have waited too long to enter.

Mahesh says that the performance has been satisfactory in the six operating quarters that have elapsed since the full-fledged commencement of the company’s operations.

Last fiscal (2016-17) was the first full year of operations and KGI generated ₹82 crore of business. This year, in the first half, the company has already done business worth about ₹72 crore. He expects KGI to close the year with a turnover of ₹180-200 crore. About 60 per cent of the business has come from Kotak Bank customers.

Combined ratio

Pointing out that the general insurance business was more about ‘claims settlement’ rather than ‘premium gathering’, Mahesh said that the KGI would aim at keeping the combined ratio (a performance metric that includes claims, acquisition cost and operating costs) under control and bringing it to below 100 per cent at the earliest.

In the first year, with start-up costs being high, the combined ratio was 145 per cent. It has already been brought down to 131 per cent by the end of the first quarter of the current fiscal, he said.

Focus areas

Mahesh says the focus will be predominantly on motor and health, the two main lines of business in the general insurance industry which are growing at their fastest pace. The emphasis is on having a simple suite of products that are easy to understand and facilitate ease of business, he said.

He was categorical that the company would avoid crop insurance, a segment that saw the maximum growth during the past year. It remains unclear whether the claims experience bears out the viability of the portfolio for the industry. KGI would, therefore, wait a bit more, he said.

There has been a capital infusion of ₹40 crore in the first quarter of this fiscal taking the capital base of the company to ₹175 crore and this should cover the requirements for the immediate future, he said.

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