Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, might have had an alternative career in the armed forces but for an eyesight deficiency. Putting aside that disappointment, he quickly adapted to new opportunities and embarked on a career in general insurance. Starting out with a public sector insurer in the early nineties, he moved to the private sector when the insurance sector opened up and looks back with gratitude at the huge transformation that has taken place across his life, his career and his industry.

He has steered Bajaj Allianz General Insurance through the last five and half years as MD& CEO, taking it to the position of the third largest company in a 27 player industry and also its most profitable one. Very few companies in the industry make underwriting profits ( profits from general insurance operations without taking into account investment income), and fewer do that consistently year after year. This company has done it. Ask him the secret and he disclaims any magic wand, saying only that it involves sticking to the basics – assessing risks properly, pricing them correctly and keeping the customer focus right through. That may sound like the rhetoric one hears often from every other player, except that the he has the results to show that he has walked the talk.

Whether at industry forums or in conversations with the media, he loses no opportunity to evangelise general insurance and urges customers to protect themselves with appropriate policies. When he compares the cost of a policy with the dinner expenses at a restaurant or a movie ticket at a multiplex, his persuasive skills come to the fore. He sums up his philosophy simply: “I get paid to do good.” Excerpts from a recent interaction:

How much can bancassurance contribute to a general insurance company? (Bajaj Allianz General Insurance signed a deal with Union Bank 10 days ago) We see tie-ups more in the life insurance space than general insurance?

Across the world, life insurance companies and banks have a good partnership. From banks’ perspective, they understand returns and life insurance industry is also about that. There is a natural synergy of understanding – over the long term. General insurance is typically a short term product, a pure risk cover. That’s why the question is relevant.

Now, banks give a lot of loans. They can benefit from a tie-up with general insurance company. I’ll give you an example from our own experience with our partner J&K Bank. Take the Srinagar floods of 2014, when there was 24 feet of water inside the city. We had a 50 per cent market share in Srinagar city because of our tie up with J&K Bank. When the floods happened J&K Bank faced the prospect of huge NPAs. After all, if the asset is wiped away, the customer just can’t pay the loan back. As a small businessman, he is not worried about insurance. From a bank’s perspective, the loan was exposed. But because of us being there, we settled over Rs 1,000 crore claims – in a matter of just three months. The bank did not suffer any NPAs on this account. For a bank to have general insurance company as a partner is very critical. Remember insurance penetration is very low. General insurance is mostly there only in the top 3,000 towns whereas we have about 9,000 towns. They must go where the assets are. Banks give us a distribution network because they are there in all these places. That is why from a pure business perspective, on both sides, general insurance is a very strong partnership for both sides. When things go wrong, as they often will, how will they get their money back from SMEs, shopkeepers, traders etc? For a general insurance company, if you look at pure revenues from bancassurance, it may not look attractive. But in terms of service delivery, in terms of creating awareness, in terms of banks’ asset protection, it all combines together to bring a strong partnership. That’s why we do it. We have done bancassurance since 2002. We have over 240 banks – public , private, cooperative banks, regional rural banks etc. We are the largest partner in bancassurance.

How do you motivate the field staff in banks to sell general insurance when they have other priorities?

Let me go back to our experience with J& K bank. Over 90 per cent of the assets are insured with us. Once, you realise, as a bank branch manager, that your assets are insured, you serve the customer well. As a branch manager you do a credit assessment and then give the loan. But we have the competence to assess other risks – say a flood or a fire. Both of us have to combine and then we serve the customer well. We complement and supplement each other. It will protect his business. Once he sees this, the branch manager will himself be keen. It is not about the fee income that he is going to earn. You have to have obsession about the customer and about balance sheet protection - that is the key. Fee comes later - it is the cream – it is good to have, but after everything else.

What proportion of your income comes from bancassurance?

It is about 15%.

Isn’t that relatively low?

If you look at most general insurance policies – the premium is not very high. For a house cover, of say Rs 1 crore, we give coverage for something less than a Rs 1,000 premium. Only after you start protecting all assets, that will go up. We are into all channels. The quantum is substantial, but the percentage is distributed.

Insurance is about spreading the risk - because you have no clue who will run into problems. If you are running a good insurance company, you should spread your distribution, your geography, your products all across. You should never get obsessed with one product or one geography or one channel. Because that means you are going against the principle of the business you are in.

Have you faced the impact of a slowdown in the broader economy?

As an industry we will always be growing. It doesn’t matter how the economy moves. Last year, the growth for the industry was 30 per cent. The need for protection is there. The concept has existed from civilisation started. If you look at how traders used to export their goods centuries ago, they would load their goods across say 10 ships – that was an early form of insurance – so that if anything happens to one ship, the loss would only be 10 per cent.

Last year, crop insurance helped the industry grow fast. But even if you remove crop insurance, the growth is at least 16%. If de-tariffing had not happened (when prices of fire/ marine policies have come down by 60 to 70 per cent), then the growth would have been higher. I see traffic on roads increasing. I see flats mushrooming. The landscape is changing. People have money. Go to a hotel and you will see it full. This hotel will not have a ready room to rent out now. From a layman’s perspective, this is what I see. So, there is growth for the industry.

What about the need for price control and market discipline in segments of the general insurance industry?

When I wear the hat of MD and CEO of Bajaj Allianz, I am happy if others continue like this. Because we have a combined ratio of less than 100. Our solvency ratio is 261 per cent as against the regulatory minimum of 150 per cent. Others are burning capital.

But when I wear the hat of an insurance professional, it is sad. When companies don’t make profits, their service is bad, their claims settlement is delayed, and expenses are high. At its core, insurance is a business where we take money from many to pay to a few. Companies which make losses compromise on claims. That is why price discipline has to come. Companies have to make profits so that they are able to pay claims very fast and there is no pressure on them. I see that from the customer perspective. Quite a few of the big companies have solvency issues. Pricing discipline is not there and it has to come or the industry will get a bad name.

We need a viable business model. We are in a noble profession. We are not selling luxury items or anything fancy. We actually come to your rescue when things go wrong. If you buy health insurance, it is less than the cost of a dinner at this hotel. A personal accident (PA) policy is less than the cost of a tea. If you lose the contents of your home, you are devastated. You can’t get everything back. A PA policy is very necessary. A PA claim gets paid in three or four days. If people see the struggle to get things back, they will take cover. I want more competition to come in, it is good for my company and people.

When more players come, doesn’t market discipline go for a toss?

I have never lost money irrespective of the number of players in the market. I have made underwriting profit.

How did you achieve this?

I have got this profit without sacrificing growth. I have a 7% market share. I am not a small player. I have growth over the market, I still make profits. I value service. I don’t undercut price to get customers. I provide service and they value that. If the only differentiator is a price cut, then you must think of what business you want to be in. There are enough people who value service and willing to pay for that.

Why is it difficult for other players to do this?

You have to ask them. If you are there for customers, it is not difficult. Serve your customers well; be disciplined; don’t lie. In fact in this industry, you become a good human being. It is not rocket science. Just do business with a good heart. When you enter a business like insurance, you have to think of being there for a 100 years. It is a promise. It is a culture. The DNA is clear. When you build this together, it will last a long time. Buy insurance from any company but buy it. Every thing else is transient but this will help you when you are in trouble.

What is next on cards for you?

I want to be in this country and contribute here. I have two ambitions. One is to help generate employment and the other is empowering women. Our demography is our strength. But only if it is used and employed well. So if you are able to serve your country and create employment, then we are doing good. Insurance is a great employment generator. Say if I open 10,000 offices, and have 200 agents in each of them, I can create 2 million jobs in 5 to 6 years. Which industry can do that consistently? We have underestimated the power of insurance to provide employment.

The second ambition is to provide opportunities for women. If half of your population is talented and can contribute to the economy and we are not using it or they are dropping out, then we are not doing justice. We must get them back. Give them opportunity, if necessary, on a variable time basis. Then we are setting up a good infrastructure base to take the country to the next level. Those are my obsessions. As an insurer, I get paid to do good.

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