Recently, we came across news in an online Publication, economictimes.indiatimes.com
India’s insurance sector witnessed dramatic changes in the last 10 years after it was opened up for private players at the turn of the millennium. An influx of private players and the tough competition that ensued forced state-run insurance firms to focus more on the quality of services, rather than just acquiring new customers. RK Kaul, chairman and managing director of the state-run Oriental Insurance, explained the company’s strategy to survive and thrive in a highly competitive environment in an interview with ET. Excerpts:
What are the growth prospects for the company in the face of tough competition from both private and public sector rivals?
As an organisation, we are undergoing a transformation. We are concentrating on the retail market and, especially, on the service aspect. We are also extending our operations to cover a wider area. In India, premium is collected upfront and we’ve already collected around Rs 1,000 crore in the first two months of this fiscal. In the current year, we have grown at 14% and expect to retain this momentum.
Health insurance is a loss-making business for most insurers. How do you plan to turn it around?
Earlier, the cost of health insurance was subsidised by the tariff structure in motor and fire policy. But this cushion doesn’t exist now. Health insurance is one of the largest segments for general insurers today, and it will become a profitable proposition once there is a cor-rection in rates, which will happen sooner than later. We are looking to increase our spread and target the young population, especially the entrepreneurs and those in the unorganised sector.
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Experts from Medimanage.com give their opinion:
Oriental Insurance, though has collected Rs. 1000 Crores if first two months of this fiscal, they have slipped to no. 4 position (from earlier no. 2 position) in market share & expected to continue so in next 2-3 months too due to their changed outlook towards risks.
Oriental’s health insurance portfolio is shrinking & the same would be detrimental to their market share numbers. The increased reach expected by them would be achieved thru Retail segment which is a good strategy as the loss ratio in retail segment is better than the corporate sector.
Unorganised sector reach can be obtained thru’ pushing all distribution channels to focus on this sector & creating products that would attract this segment.
For young to get attracted, Oriental should look at distributing products thru their online intermediaries as this segment is net savvy. Also Oriental should create attractive product that would make a young Indian to buy Health Insurance policy instantly.