Chennai-based United India Insurance Company (UII) expects premium income to cross Rs. 5000 crore in the current financial year. This growth of 19 per cent over the income of last year will be higher than the 14 per cent growth expected to be recorded by the general insurance sector and thus help UII increase its market share.

Chairman cum managing director, UII, G. Srinivasan referred to a pick up in business after September 2009: "non-life business for the industry as a whole has grown by 12 per cent upto January 2010," said Srinivasan.

The industry suffered underwriting losses for the motor and health sectors. Group general insurance results were adverse. Investment income also suffered a set-back last year due to the economic slowdown. UII utilized the slack conditions to attempt several structural changes over the last 18 months that have helped in improving its underwriting performance and market share. Detariffing also helped improve income from fire and engineering portfolios. Srinivasan expressed happiness over the market getting stabilized and expects premium rates to go up. He pointed to the enormous potential for general insurance and expects a large part of growth to come from retail and personal segments.

Restructuring, new products…

The CMD, UII, of the second largest general insurance company, pointed to a slew of measures taken that helped improve the company's performance. These included: setting up separate verticals to handle the businesses of large corporations, bank assurance partners and motor dealers and also to focus on the development of agents: "we set up unit managers and agency managers to mentor agents. These took care of recruitment and training of the agents. We created back office systems to improve claim settlements and third party claims.

"We introduced several new products - like a super top-up policy for health insurance . This innovative policy operates beyond a threshold. For instance, if a policy covered upto Rs. 200,000, the new policy enhanced coverage even up to Rs. 20 lakh on affordable and economic premium rates. In this the individual can bear the expenditure upto the first Rs. 2 lakh threshold and the balance will be covered by the top-up policy," said Srinivasan.

Srinivasan pointed to the enormous growth potential of the health segment and is optimistic about the prospects of a growth of 35-40 per cent pa.

Several new products have been introduced for motor insurance also. One such is courtesy care: in the event of an accident, the facility of a spare vehicle will be offered for the period of repairs. Another will cover the medical expenditure of the occupants of the vehicle injured in an accident. Yet another policy provides for nil depreciation and for full reimbursement for replacement of parts.

Healthcare for weaker sections…

Srinivasan referred to a welcome focus on providing health insurance cover to the weaker sections: "the Rashtriya Swastiya Bima Yojana operated in partnership with the states has been designed to provide health insurance cover for population below poverty line. The largest such scheme so far has been introduced by the Kerala government and covers a crore of the state's population. Smart Cards have been issued for cash-free treatments up to Rs. 30,000. Andhra Pradesh, Tamil Nadu and several other states also provide such cover. For Tamil Nadu, UII is part of a consortium of insurers who will provide cover for major surgeries up to Rs. 100,000 for BPL families. It is a major step in providing the much need healthcare to weaker sections on a cashless basis," he said.

Srinvasan expressed the hope that the newly introduced scheme can be refined and improved upon with experience gained and hoped third party administrators will ensure that proper medical charges are levied.

The Kerala scheme covering 24 lakh families involved a cost of Rs. 80 crore. For all states put together the premium can amount to Rs. 2500 crore, estimates Srinivasan.

During 2008-09, general insurance companies suffered record under-writing losses due to intense tariff wars resulting in uneconomic premium rates. The UII chairman felt that this rate war had ended, that underwriting has been improving and appropriate rates are being charged. He felt that the premium charged for third party cover for motor insurance needed rationalisation.

Large number of vehicles don't have third party cover…

In a seminar on insurance organized in Chennai a few months ago, Srinivaan expressed concern over a large number of motor vehicles operating without the mandatory third party insurance cover. He said that there has been not much improvement in this: "around 70 per cent of two wheelers and around 30-40 per cent of four wheelers are not insured even today for third party cover. There is need for stricter enforcement by the authorities.

“Under the current practice new vehicles take third party insurance cover for the first year; if they do not renew the policy, the insurance companies are helpless." Srinivasan felt that police have the authority to enforce this. One solution may be a compulsory initial medium term insurance for 3-5 years as is done for life time tax collections.

Perhaps taking recourse to IT, general insurance companies, with the help of IRDA, can jointly build the database on the non-renewal of such policies and target these with the help of police.

There are at present 22 general insurance companies. The entry rules are liberal and thus there has been a proliferation of such companies. But not all of these are doing well. Srinivasan anticipates a shake-out in the next couple of years. There will be a move towards consolidation and only bigger insurance companies with sound finances will survive, he felt.

All the public sector general insurance companies have been implementing a core insurance schemes through HP. By the end of this year, this scheme will be in place in all the offices and the public sector companies will have state-of-the-art technology that will help them compete more effectively with those in the private sector operating in collaboration with global insurance companies.

UII is eyeing the prospect for expansion into international markets: "we have the wherewithal, financial strength and expertise to expand our operations abroad. We plan to focus on the Middle East and then expand to other countries in Asia and Africa," he said.

Srinivasan pointed to UII improving its position from the bottom of the four public sector general insurance companies. Presently it occupies the second position after New India Assurance: "our company focuses on customer service and considers this the key to success. We strive to improve our underwriting margins. Our solvency margin is the second highest in the industry. It was 3.32 last year and has improved further," he said.