SBI General’s IPO plans ‘will get more clarity in couple of months’

With three years of net profits and two years of underwriting profits, Pushan Mahapatra, Managing Director and CEO, SBI General Insurance, says the private sector insurer is focussed both on topline and bottomline growth. In an interview with BusinessLine , he says that there will be more clarity soon on an IPO and State Bank of India will take a call. He also outlined the insurer’s plans on online sales and various partnerships in the space. Excerpts:

We are in the risk business, so it does require a lot of capital. The Insurance Regulatory and Development Authority of India (IRDAI) has been talking about companies going in for IPOs after they have stabilised their operations. There are other positives as well such as better governance, better transparency, and therefore, better discipline on business.

Today, in line with listing guidelines, we will be able to hit the market — with three years of net profits and two years of underwriting positive results as well as bright future prospects. It will be discussed and finalised and will get some clarity over the next couple of months. Since State Bank of India is the major promoter, they will have to take a call.

In the case of cyclone Fani, we have got more than 1,000 claims. Total losses, as of now, are at ₹80 crore. Unfortunately, there has been a lot of loss but ultimate insurance loss is very low. It is the same in every catastrophic natural calamity. Only when insurance losses and economic losses come closer, it is actually a mature market. With natural calamities, people think it won’t happen to them or it won’t happen a second time. But in Chennai, there were back to back floods. So when we make projections for loss ratios, we always factor in two natural calamity events because that has become the order of the day.

NBFCs have become a major part of the ecosystem. Somewhere regulations have to be like the way they are for banks. Insurers have to make provisions for downgraded NBFCs. For exit, you need to have a market, that’s not there. So you make provisions.

These features have to come in if we want to increase insurance penetration and acceptability. Products have to be easy to understand, administer and create value. We have seen that with our own products as well. Unlike most other financial products, general insurance products are more complicated with too many exclusions, limits and sub limits. We must convert the terms and conditions to a language which we can understand easily.

Our big focus is online and we want it to become a credible distribution channel in the next three years. We are making considerable investments in technology, people, and processes. At present, online is very small. People still research online and buy offline but we are trying to change that. Digital partnerships also take time to scale up and mature. We are looking at a large number of digital tie-ups — wallets, e-commerce industry and new payment systems.

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