NIC banks on health biz

National Insurance Company (NIC) is in the process of an elaborate overhaul of its business processes to take on competition in the deregulated general insurance market.

Working on the prescriptions of consultants Price Waterhouse Coopers (PwC), the nationalised major is working on product and distribution led strategies with a projected target of Rs 4,500 crore premium collection in 2008-09, a roughly 12% growth.

As part of the restructuring, the company has relocated a few offices in Mumbai and Kolkata. It had hired PwC to work on its business re-engineering initiative last year.

Sharing some of the company's key initiatives this year, V Ramasaamy, NIC chairman and managing director, told DNA Money, "There are a host of recommendations from PwC, which we have started adopting in our processes as per our convenience. We are striving for a 25-30% growth in health insurance as part of the retail initiative.

Various such initiatives would include selling cheap flat and house insurance at discounted rates for which we are preparing sales campaigns targeting flat owners."

There will be a distinct focus on corporate clients this year. NIC has selected a few regional offices in Mumbai, Delhi, Chennai, Kolkata and Hyderabad to deal exclusively with corporate clients who pay annual premiums in the range of Rs 25-50 lakh.

"Cross selling of our products with our agency force will be significant this year." Ramasaamy said. "We have projected that 20% of the business should come from agents this year from 9-10% till now. The potential available in bancassurance is huge and the focal point would be encouraging agents to go to banks and drive businesses."

Following a PwC recommendation, NIC has introduced a centralised claim settlement system. As a pilot, it has started the process with one of its offices in Kolkata. This exercise, according to the chairman, has halved the time for settlement of motor claims from 40 days to 20 days.

The second-largest general insurance company by premium income and market share, NIC mopped up Rs 4,030 crore of premium in the financial year 2007-08, registering a growth of 5.7%.

"In 2007-08, the decline in insurance rates was lower than anticipated, down by almost 60-70%. We do not expect rates to come down any further this year," Ramasaamy said.

FY08 was a tough year for general insurers, as the free-pricing regime saw heavy discounting. Growth in premium collections fell at most companies as the sector grew just 12%.

In FY 08, NIC saw its premium from fire decline 22% to Rs 377 crore from Rs 481 crore the previous year. Motor insurance premium increased 6.6% to Rs 2,143 crore.

Owing to increase in rates, health premium grew 46% to Rs 685 crore, contributing close to 15% of the portfolio mix.

How has FY 09 year been so far?

"This year started on a good note with a 15.7% growth in April," Ramasaamy said. "We were able to clinch a group mediclaim in Andhra Pradesh and good support from bancassurance."

Source: DNA Money