Shrirang V Samant, CEO, HDFC Chubb General Insurance Company Limited, talks to V Jagannathan on deregulating the pricing of insurance services.
Chennai: The domestic non-life insurance companies are gearing themselves for a truly liberalised regime. The Insurance Regulatory and Development Authority (IRDA) has published a road map for detariffing, Roadmap Towards Freeing of Pricing.But some companies have expressed their unhappiness at the pace of detariffing. "The roadmap is good and brings out IRDA's expectations. Our company would have preferred a much faster detariffing than is given in the roadmap," says Shrirang V Samant, CEO, HDFC Chubb General Insurance Company Limited. Excerpts from an interview:
Is your company geared to meet the deadlines mentioned in the roadmap to separate underwriting from business development?
Our company has appropriate underwriting structure in place and is well equipped to meet the time lines mentioned in the roadmap. We have from the beginning separated underwriting from business development functions.
Are you ready with your own premium rates?
We are in the process of developing our own premium rates for those products that will get detariffed.
There is a view that detariffing all non-motor businesses will not succeed with the motor business itself being under tariffs. What are the issues here?
Detariffing is essentially an acknowledgement of business realities and an attempt to differentiate the risk exposure. Keeping one sector of insurance which comprises over 40 per cent of the market under tariff fundamentally goes against the concept of detariffing.
Obviously, the IRDA is concerned with the possibility that detariffing may result in non availability of insurance to what is technically known as uninsurable risks but I think the industry is working jointly with IRDA to resolve this.
Are you ready for detariffing of motor portfolio?
How are the four government-owned insurance companies likely to react to this proposal?
I believe the government companies are in favour of detariffing.
How have you fared in 2004-05, and in this fiscal till date?
The portfolio gross premium income for 2004-05 and the unaudited figures for this fiscal till September 2005 are:
| ||2004-05 ||2005-06 (till September'05) |
(Rs. In Crore)
|Fire ||3.50 ||1.84 |
|Marine ||0.49 ||0.33 |
|Miscellaneous ||179.84 ||90.62|
|Total ||183.83 ||92.79 |
What is your renewal ratio? How do you keep your account attrition low?
I hope you will appreciate that this information is confidential on account of competition.
Some private general insures have posted underwriting profits. What about your company?
Our company is meeting its projected profitability targets. We do not expect to post underwriting profits during the current year. The best way to reduce the underwriting losses is to be selective in building the business portfolio.
What is your investment strategy and what investment income you earned?
Our investment strategy follows the IRDA norms.
What is your management expense ratio and what is your plan of action to bring it down to the statutory levels?
The management expense ratio for 2004-05 stands at 25 per cent of the gross written premium. There is substantial amount of fixed cost in the expense ratio and, therefore, it will come down automatically as the business grows.
What has been your total claims outgo?
I am unable to give you more information than is in the public domain.
Do you have any plans to ask for additional capital from the shareholders?
Our current capital base is Rs120 crore and we will get additional capital from the shareholders as and when required.
What reinsurance programme does your company have?
We have both proportionate and non-proportionate treaty reinsurance arrangements in place.
What is your distribution network- number of brokers, agents, corporate agents, bancassurance? Could you give us the channel wise premium income?
Our distribution network consists of all the components mentioned by you. I am unable to give you channel wise premium income.