National Insurance eyeing 15-16% growth in premium this fiscal

State-run National Insurance Company (NIC) is looking to reduce its exposure to loss-making group health and motor businesses.

According to K Sanath Kumar, Chairman and Managing Director, NIC, plans are afoot to grow its premium income by 15-16 per cent during the current fiscal primarily by scaling up its retail business and increasing its footprint in the corporate segment.

This apart, the company also plans to tap the ever growing pie of government business under schemes such as Pradhan Mantri Fasal Bima Yojana (crop insurance) and Pradhan Mantri Suraksha Bima Yojana by “appropriately pricing” products in these categories.

Health and motor currently accounts for 78 per cent of NIC’s ₹14,000 crore premium income.

“We need to increase the non-health and non-motor component of our business as these are basically more loss-making. We are looking at investment-driven growth rather than consumption-driven growth this fiscal,” Sanath Kumar told BusinessLine.

NIC is aiming at a premium income collection of ₹16,000 crore compared with ₹14,000 crore last fiscal.

While the non-life industry is growing at over 20 per cent, NIC is looking to grow by 15-16 per cent this fiscal.

“We are looking at a carefully measured and calibrated growth so that we are not too much in the loss-making areas,” he said.

The company reported a profit before tax of ₹100 crore in the first quarter of this fiscal.

The company is looking to come out with a simple home cover for its retail customers. “Today people perceive home cover as a very complex sort of thing — we are working on simple schemes. These are meant for any calamities affecting home,” he said.

NIC is also looking to tap young customers for growing its health insurance portfolio.

Talking about the government business, Kumar said, government is the single biggest contributor in the insurance market.

In 2016-17, close to ₹21,000 crore premium came into the insurance industry through the Fasal Bima Yojana.

NIC, Kumar said, was the largest player in the government’s flagship Suraksha Bima Yojana under which ₹2 lakh cover is provided to every savings bank account holder.

NIC’s solvency margin — an indicator of the company’s financial health — which had plunged to as low as 1.26 per cent in 2016-17, against the regulatory mandate of 1.5 per cent, improved to 1.97 per cent as on March 2017.

“We had presented our strategy to the regulator (IRDAI) and the government, giving them a roadmap for shoring up our financials. We are glad we could adhere to those strategies,” he said.

As a strategy, NIC minimised its exposure to the corporate health segment and worked towards increasing its pricing for State government-run schemes, particularly in sectors where it was bleeding, he said.

NIC also tapped the market with a non-convertible debenture issue in March 2017, through which it raised ₹875 crore and, thereby, shoring up its networth. “These apart, we also did some churning in the market to increase the book value of some of our assets,” he said.

With an improved business, the company hopes to tap the capital market with an initial public offer by the end of FY18, he added.

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