New India Assurance will expand into new overseas markets, such as Canada, Qatar and Myanmar, in the next few months.
The company, which has a presence in 22 countries, has approached the Insurance Regulatory and Development Authority for clearance to enter the new markets. Depending on the local government’s regulations, the insurer will either form a subsidiary with a local partner or set up a branch office there, said G. Srinivasan, Chairman and Managing Director, New India Assurance.
Addressing media persons, he said the company’s overseas operations have been profitable. Last year, it made a net profit of Rs 200 crore, “of this, Rs 60-70 crore was underwriting profit”. According to him, the company expects to post similar numbers during the current fiscal, too.
In India, it will add 700 micro branches in rural areas this year to take the total number of branches to 2,000.
Growth plans “In India, general insurance penetration has improved to 0.8 per cent of GDP from 0.6 per cent a couple of years ago, thanks to various awareness campaigns by various associations. Still, there are a lot of insurable assets in rural markets, which can be tapped,” he said.
The insurance major will hire 1,100 people, including 500 officers, during the current financial year.
The company has earned a gross premium of around Rs 8,400 crore in the first nine months of the current financial year. This represents a growth of 15 per cent compared to last year, driven primarily by motor and health sectors.
Despite topline growth, the health and motor portfolios are still bleeding. “In the health portfolio, the retail sector is profitable, but group health is still a big challenge,” he said.
In the motor portfolio, the company expects the insurance regulator to increase third party insurance premium by at least 15 per cent to make it a viable business. “If that happens, the company will be able to register underwriting breakeven in the next three years,” Srinivasan said.
The common Third Party Administrator (TPA) formed by public sector insurance companies will start operations by the end of 2014. “We are in the process of putting in place the necessary IT infrastructure and hiring people,” Srinivasan said.
The investment in the new health insurance claims processing firm will be Rs 200 crore. General Insurance Corporation of India will invest 5 per cent of that amount, while the remaining will be contributed by the four public sector insurance companies -- National Insurance, New India Assurance, United India Insurance and Oriental Insurance -- in equal proportion.
The TPA will be initially used for captive purposes. Currently, public sector insurers outsource insurance claims processing related work to private TPAs.