Private general insurance company Shriram General Insurance posted an 82 percent rise in its net profit at Rs 400 crore for FY18. In an interaction with Moneycontrol, Neeraj Prakash, Managing Director, Shriram General Insurance talks about the business strategy and way forward. Excerpts:
What led to the 82 percent jump in profits for FY18?
Our net profit has risen mainly due to increase in the investment income and reduction in the loss ratio. The investment income rose from Rs 580 crore in FY17 to Rs 744 crore in FY18 while the incurred claims came down to 94 percent from 103 percent. Also, we saw a 10 percent increase in the net earned premium to Rs 1855 crore.
Majority of your business continues to be from the motor insurance space. Will there be a shift in strategy this year?
Motor is still majority of the portfolio and even in that, there is a higher share of the commercial vehicle business. We are not focusing on the non-motor business, because of the heavy discounting prevailing in the market. We believe that it is not sustainable in the longer term. It is not possible to play in that space and hence we are not interested.
How will your diversify your portfolio?
Diversification not just means entering newer segments but also expanding within the existing areas. We are diversifying within motor business where losses can be managed.
In the commercial vehicles space, there are heavy commercial vehicles (HCV), intermediate commercial vehicles and light commercial vehicles. We are looking at which segment among these are performing well and will be pushing those products.
Do you believe that the recent third party premium hikes by the insurance regular is adequate?
The heavy commercial vehicles have seen a lot of claims. While the insurance regulator has implemented hikes based on claims, losses are high in some segments. We believe that on the HCV space, there will be further hikes in the future.
You do not have large bank partners to sell products. What will be the distribution strategy in this fiscal?
While we are not aggressive on the bancassurance front, we tied-up with some regional rural banks. These partnerships should start producing results. Also, we are in talks with some large banks and are hopeful of getting a few on board as corporate agents.
Among the other channels, agency is seeing a positive growth and we have seen the number of agents crossing 10,000 in FY18.
You also offer passenger insurance for rail travellers. Have there been large claims?
The IRCTC passenger insurance scheme has seen a positive claims experience. While we are not making huge profits, the losses have been contained. Through this initiative, we have been able to help the brand reach the masses.