‘We want to double our exposure in health insurance’

Private sector insurance major Tata AIG General Insurance Co Ltd, a 74:26 joint venture between the Tata Group and American International Group Inc (AIG), plans to sharpen its focus on healthcare and hopes to double its portfolio in this segment by recruiting another 3,000 agents this year exclusively for health.

“Health need not necessarily be a loss-making segment, provided the insurance company avoids offering unviable rates for group insurance policies and carefully studies health reports of individuals before taking them on board,” said Kaushal K Mishra, the company’s CEO and Managing Director, in an interview with BusinessLine . Excerpts:

How would you evaluate the insurance industry’s performance so far this year?

The insurance industry, which has been growing anywhere between 15-20 per cent since 2010, is passing through a tough phase now. In 2013-14, it registered only 12 per cent growth, thanks to the slowdown.

Even in the first two months of the current financial year, the industry could grow only by around 10 per cent. We all hope that the trend will change from the October-December quarter, after which it will regain its earlier growth momentum.

Where do you expect this growth to come from?

I expect the auto sector to do well in the months to come. I also see growth possibilities in infrastructure.

If the Government offers some tax benefits to individuals on health premiums, as sought by the industry, health will pick up too.

What is your growth target for the current year?

We closed last year with a gross premium collection of ₹2,456 crore, and have been making underwriting profits for the last two years. This year, our target is to touch at least ₹3,030 crore of gross premium, with health being our key focus area.

Though we will continue to hold our leadership in marine and engineering, health is something we want to sharpen our focus on. Currently, our health portfolio is less than five per cent of our gross premium. We want to double our exposure in health this year.

When most insurance companies claim that health is still a bleeding portfolio, why do you want to double your exposure there?

We have been making profits in health so far. According to me, health need not be a loss-making portfolio as long as the insurance company avoids offering unviable rates for group insurance policies and carefully studies an individual’s health implications before taking them on board. The standalone health insurance company Star Health is a classic example of this. Except for some State Government policies, it clearly stays away from group health.

From industry experience, we have learnt that one should never accept group insurance at uneconomical rates. So we have avoided group insurance totally, and also the RSBY (Rashtriya Swasthya Bima Yojana), as they are not economically viable.

We have decided to focus on individual health till we get the right rates for group policies.

And what about auto?

About 40 per cent of our gross premium is from automobile insurance.

Though the industry’s average exposure to auto is around 47 per cent, we do not want to grow in that segment. We make some profit in the auto sector as well. But we would prefer our exposure to remain at the existing level. If I allow my people to go ahead and sell more auto policies, it may eat into the company’s bottom line. I have to balance somewhere. You have a limited bandwidth, and hence should use it judiciously.

What is your growth strategy for the current year?

We will open 20 more branches in the next couple of months to reach 100 by October. My main focus area would be small cities, where health insurance has not penetrated much and so hold a bigger pie.

In metros, everyone is fighting for the same audience. We currently have 7,000 agents. This year, we intend to recruit 10,000 more. Of this, 3000 agents will be exclusively for health.

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