Shriram General Insurance intends to increase its policy renewal rate to around 60% in the next two years from 40% currently.
“We are putting in a lot of effort to increase policy renewals. Our underwriting department is reaching out to the insured to verify their mobile numbers because it is a big challenge in the general insurance industry,” says Anil Aggarwal, managing director and chief executive officer said.
He added that the company is holding discussions with financial advisors on methods to better incentivise policy renewals.
Policy renewal rate refers to the percentage of policyholders who opt to renew their policies. While Insurance Regulatory and Development Authority of India do not disclose numbers on policy renewals at an industry level, it has urged general insurance companies to build a long-term relationship with policy-holders.
Nevertheless, industry experts note that the policy renewal rate for car insurance is currently at around 45%.
The net profit of Shriram General Insurance rose 47% year-on-year (y-o-y) to Rs 217 crore in the first half of 2023-24(April-March).
Gross written premium rose 32% y-o-y to Rs 1,310 crore in April-September. Around 83% of the company’s policies were issued through the digital mode.
Gross written premium in motor insurance segment rose to Rs 1,185 crore as on September 30 from Rs 920 crore a year ago. Around 90% of the company’s premiums come from the motor insurance business.
“In non-motor, we will focus on existing products like fire insurance. We have created a team of engineers who will do an inspection of risk. We will take decisions on the basis of that,” he said.
Overall, the company expects the gross premium to rise 40% in the current financial year, and 33% for the next year.
The company’s solvency ratio stands at 4.66, as against the statutory requirement of 1.5.
Solvency ratio measures the size of the insurance company’s capital compared to the risk that it has taken as a part of its business. Higher the solvency ratio, stronger will be the company’s ability to deal with a surge in its claims.
For instance, the solvency ratio of ICICI Lombard General Insurance stood at 2.59 as on September 30.
“The solvency margin will slowly come down. When we are growing at a rate of 40%, the solvency ratio will come down to below 4.5 by the end of this financial year,” he said, adding that the company aims to maintain a solvency ratio of 2.5-3.
Formed in 2008, Shriram General Insurance is a joint venture between Shriram Group and Sanlam, a leading financial services group in Africa.