General insurer HDFC ERGO is opting for a measured approach to bancassurance, keeping its reliance on the channel capped at 20 percent, significantly lower than industry peers, according to managing director and chief executive officer Anuj Tyagi.
Instead, the company is doubling down on its agency network, direct-to-customer rural outreach, and commercial lines to drive growth in the coming years.
“We are not necessarily steering clear of banca tie-ups, but are not planning on expanding it any further to prevent over-dependency,” Tyagi told Moneycontrol in an interaction. “Our distribution strategy is built on diversification, and we want to retain that strength.”
While bancassurance, a popular channel for insurance companies due to the distribution reach of partner banks, forms a major chunk of the portfolio for several insurers, HDFC ERGO’s conservative play is deliberate, according to Tyagi.
The company sees more growth potential in building deeper ground-level penetration through its agency force and rural push, especially as it eyes an above-industry growth rate in FY26.
Tyagi said HDFC ERGO is targeting 2–3 basis points higher growth than the industry average in the next fiscal, buoyed by a rebound in the motor segment and sustained traction in retail health insurance.
Although he did not specify an exact growth target, he noted that the company is optimistic about a recovery in its motor insurance portfolio after facing pricing headwinds in FY25, particularly in third-party premiums.
Currently, accident and health insurance make up the largest share of HDFC ERGO’s portfolio at 42 percent.
Motor and crop insurance each contribute about 18–19 percent, while commercial lines account for 20 percent. Retail business, which includes individual health and motor products, forms 59 percent of the portfolio and continues to be a key growth driver, growing steadily at 15–16 percent per annum.
“Retail remains our core. It allows us to be more granular, manage risk better, and directly engage with customers,” Tyagi said.
In contrast, group health insurance, which includes employer-employee and other group covers, comprises about 8–9 percent of the book and is expected to stay largely stable.
However, Tyagi said, the crop insurance segment could witness some flattening depending on state-level participation in government schemes.
The crop business is closely tied to the States’ involvement in the PMFBY (Pradhan Mantri Fasal Bima Yojana).
“Any reduction in participation directly impacts the company’s ability to underwrite in that space,” Tyagi said.
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