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CEO Pushan Mahapatra says SBI General Insurance expects to grow at 35% across categories in FY17

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Published: September 9, 2016 6:11:58 AM

Despite being promoted by State Bank of India, growth in SBI General Insurance is coming through branches and brokers rather than the bancassurance channel. Pushan Mahapatra, managing director and chief executive officer, in an interview with Chirag Madia, said its joint venture partner Insurance Australia Group (IAG) is looking to increase its stake to 49% from 26% at present.

We are in the process of coming out with the three-year two-wheeler policy. We are also looking at a few products on both domestic and international travel. We will come out with a group plan which will focus on corporates travelling on international tours, said Mahapatra?We are in the process of coming out with the three-year two-wheeler policy. We are also looking at a few products on both domestic and international travel. We will come out with a group plan which will focus on corporates travelling on international tours,? said Mahapatra

Despite being promoted by State Bank of India, growth in SBI General Insurance is coming through branches and brokers rather than the bancassurance channel. Pushan Mahapatra, managing director and chief executive officer, in an interview with Chirag Madia, said its joint venture partner Insurance Australia Group (IAG) is looking to increase its stake to 49% from 26% at present.

Excerpts…

How do you see your performance in 2015-16 and what are your expectations for this financial year?

If we look at the figures of premium growth, they were very good in the previous financial year. The data suggest that even in the last few years, our growth was quite positive on major parameters and higher than the industry average. In the current financial year, we expect to grow at 35% across categories. It is important to report a higher growth compared to the industry as we have focused on semi-urban and rural areas. In the last two years, we opened branches in areas where general insurance is under-penetrated. Now, we are present in almost every state and growth is coming from smaller markets.

Recently, Irdai has come out with a discussion paper on listing of Indian insurance companies. What are SBI General Insurance’s plans? Is your partner looking to hike its stake in the joint venture?

Yes, Insurance Australia Group (IAG) is looking to increase its stake to 49% in the joint-venture. IAG has already given its intent and the valuation process is being worked on. If we go by the dates in the discussion paper of the regulator, we have time till 2021 to go for mandatory listing. But if conditions permit, we might come with an initial public offering prior to that. But for that to happen, we should be able to give value to shareholders in the public offering.

How much were your combined ratio, underwriting losses and claim ratio? Which segments contributed to your underwriting losses?

It will take a few more days as the claims ratio are still developing. There were a couple of things which had a negative impact in the last financial year. After the public sector undertaking (PSUs) insurers, we had the largest exposure in the Chennai floods, which did hurt us badly. We also had a couple of fire losses where our claims went into Rs 50-60 crore. While loss ratios were under control on the retail line, losses witnessed some increase on the commercial line.

What kind of distribution architecture and network do you have? How much of business are you sourcing through brokers and agents and which other channels are you planning to use to grow business?

Normally, people assume that we are more of a bancassurance (banca) player due to the strength of our parent company. But that’s not the case, as our growth is higher through branches and brokers. As on July-end, our share through the banca channel was less than 50% while the rest was split between branches and brokers. We believe that going forward all channels will grow equally strongly. In fact, direct channels such as agents and branches will grow very strongly. Even in the crop insurance where we go direct to farmers, we are targeting a 100% growth this fiscal.

What are your product line-up and have you started implementing ‘use and file norms?’ How are you doing that?

We are in the process of coming out with the three-year two-wheeler policy. We are also looking at a few products on both domestic and international travel. We will come out with a group plan which will focus on corporates travelling on international tours. Travel insurance is still at the nascent stage, but with growth coming back, there is a huge opportunity to build a business. For domestic travellers, we are bringing in a single-day insurance which covers transport modes such as rail, road and air. So, we can cover corporates in this plan.

How are you participating in PM Fasal Bima Yojana? In how many states have you been chosen as insurers? What kind of premium are you charging?

We are participating in both yield-based as well as weather-based crop insurance. We are present in five states for the kharif season. We are enrolling more people in most states. Once the enrollment gets over, we will get the clear picture on premium rates. Though the last date was in the first week of August, many states have asked for an extension. I assume the picture will become clear in a week. We have budgeted Rs 230-crore premium in crops this year, but I think we should be outstripping that.

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