To retain customers in a competitive scenario, insurers will focus on customer service and product innovation as key differentiators. The increase in width and depth of insurance penetration will trigger the spread of customer service networks along with standardisation of processes to ensure quality and uniform service delivery over a wider geography. There will be an increase in the use of virtual channels to reach out to and service customers in order to reduce operational costs and pass on these benefits to the end customer. At the industry level, detariffing will eventually result in an increase in insurance penetration, enhancement of risk assessment skills, product innovation, improvement in customer service and an increase in operational efficiencies. Customers will have a wider choice with better risk covers and will also see merit in maintaining a quality profile for a positive risk rating.
Which segment has seen a price realignment
Prices are now aligned to risk and have seen a downward shift vis--vis tariff rates in fire and engineering. Flexible pricing has reduced cross-subsidisation and group health insurance premiums are more aligned to the claims history. Risk-based pricing of motor insurance has begun and insurers will continually refine their rating engines based on ongoing claims experience.
It was expected that due to competitive pricing the overall premium volume would fall (after detariffing) at the time of renewal Has it happened What kind of renewal have you done
Overall, we have maintained our renewal volumes. Corporate customers are taking on additional covers to cover relevant risks. With a large investment pipeline, the need for risk management solutions is also growing. Insurance is being viewed as a tool to manage risk and not just as an expense head or as a mandatory requirement.
It was also expected that the public sector would have advantages over the private sector after detariffing. Have you lost any big corporate accounts to public sector companies after detariffing
Public sector insurance companies have large risk capacities and deep customer relationships which they would leverage to maintain and grow their market share. ICICI Lombard continues to focus on adding value to our customers through customised risk management solutions and high service levels which has helped us in customer retention.
What are the broad range of businesses you are undertaking What are the new sectors you are focussing on in the current year
We continue to build our platforms of growth. Retail and rural will be focus areas and we continue to invest in expanding our distribution footprint as well as service capability in these areas. Health insurance has vast potential given that less than 1% of Indias healthcare spends is covered by insurance. New product development, streamlined claims servicing and ongoing customer education will be required to drive penetration of health insurance. As Indian companies globalise, liability insurance and credit insurance will increasingly be in demand.
You are the leader in the health insurance sector. What kind of market share do you have in this segment and what kind of premium are you targeting from the portfolio this year
Our market share in health and accident insurance was around 22% for the three quarters ending December 2006. This portfolio contributed nearly 26% to our gross written premiums in 2006-07.
How have you managed to be profitable in the first five years without having a big investment portfolio
Our underwriting philosophy is anchored around risk with a P&L-based approach to pricing. Our strategic investments in building a robust technology backbone and optimised processes have helped reduce operational costs while allowing us to scale up rapidly. Appropriate customer segmentation, targeted service offerings and effective distribution architecture have helped us build a portfolio with a healthy combined ratio.
What kind of claims have you paid during the year Which segment has been the highest
ICICI Lombards claim disposal ratio increased to 96% in 2006-07.
Tell us a bit about your marketing network.
ICICI Lombard currently has 220 offices spread across 166 locations with an employee base of over 5,000. Our multi-channel approach to distribution covers brokers, agents, bancassurance, alliances, telesales and internet. Brokers contribute to about 15% of our premiums.
You are very close to some PSU companies in terms of premium. Do you think you will be one of the top four companies in a year or two
ICICI Lombard will continue to focus on providing superior customer service and innovative product offerings to our customers through multiple channels. We are investing in technology and in operational efficiencies to build a scalable business model.