Expect general insurance industry to grow at 16-17% in FY18: Bajaj Allianz

A: The cross-subsidy does not work because this is a concept, which was prevalent in the times when you had the tariff allocation where you had huge margins in some business and there were some businesses, which was not tariffed so people who try to know overall look at a package. In today's time, it is free pricing, it is not a tariff regime. So, every line of business, every product has to be sustainable on its own if it has to survive for a long period of time.

So, I do not fully agree with it. There may be some truth if they have raised it. If you look at numbers, everybody is doing good in terms of pushing it. But from a country perspective, it can be done better. For a company to look at cross-subsidy to push the business, I do not think in the current scenario, is a good strategy to have. So, I fully endorse the view that there should not be any cross-subsidy in any lines of business.

Q: The general insurance industry in FY17 grew at over 30 percent. In this particular set up, what was the kind of growth which you saw at Bajaj Allianz General in both your new business premium as well as your gross written premium?

A: We also grew over 30 percent in terms of our topline business because predominantly what happened is because the Prime Minister's scheme on agriculture, this year the component of agriculture business for the industry was good and most companies did pretty good in terms of topline growth. So, we also grew well.

If you look at pure new business, the growth will be much higher compared to the traditional part of it. The traditional business would have grown at about 15-16 percent which is again, for the industry, that is how it had been, 13-14 percent or close to that.

Q: The company has moved in line with the industry growth as far as FY17 is concerned. Help me understand what is the outlook that you have for FY18?

A: My belief is next year the industry should be growing close to 16-17 percent because the base effect of agriculture would be incorporated in next year's growth. So, this growth which went to 30 percent this time or close to 30 percent for the industry will actually get negated and it will come back to the normal growth which varies from 12 to 18 percent.

Q: Government's crop insurance scheme has worked well for the various general insurers, in fact making it one of the top-3 contributors to the premium. How has this particular scheme worked for Bajaj Allianz General and also, what is the kind of contribution which you got from this particular scheme in FY17 to your total premiums?

A: What we did was, we looked at the overall crop insurance market and we tried to get equivalent to a market share in the traditional business, in the crop insurance business. That is how we are positioned. So we did close Rs 1,400 crore of crop insurance, but the market share of the total crop insurance business is not equivalent to what market share we have for the entire business. So, it is skewed very high towards there nor is it underplayed. So, we have exactly the same composition that we have in the entire business.

Q: Help me understand the inorganic growth strategy for Bajaj Allianz General. There are a lot of smaller players, which are struggling to sustain their business. It is a capital intensive business. Would you look to acquire or merge with smaller companies or to maybe increase your market share in the general insurance space?

A: As far as looking for operations is concerned, yes we will always be open to it. If we get something good, why not. But it will not be a strategy to increase market share because we start acquiring companies. If we acquire companies, it will be for a reason that it adds value to the business and it adds value to the customer at the front of it.