The National Insurance Company (NIC), headquartered in Kolkata is India’s oldest general insurance company and has climbed to the second position in the insurance sector in the last six years. This despite the challenges following liberalization of the India’s insurance sector. NIC chairman and managing director Rajesh Aggarwal in an interview with the FPJ correspondent Ambar Mukherjee gives an overview of the initiatives taken by the company in overcoming the challenges and ensuring its upward movement.
THE FREE PRESS JOURNAL: After the liberalisation of India’s insurance sector, non-life insurance has been characterised with high growth and intense competition. What steps have been taken by the National Insurance company to face the competition?
RAJESH AGGARWAL: In fact competition has made us stronger – Only 6 years ago we were No 4 amongst 4 PSGIC. Today we are the industry’s 2nd largest non life insurance company notwithstanding the fact that we are headquartered in the East which has traditionally not been as prolific industrial development -wise as the other parts of the country.This resurgence may be attributed to the dynamic and visionary initiatives taken by its corporate management and implementing them fully both in letter and spirit by NICians of all offices pan India and Nepal.
Some of these initiatives are as follows. Adoption of innovative marketing strategies, expansion of office network, enhancing customer delivery services, harnessing of technology to extend last mile insurance in under served geographies, recruitment of employees from all cadres including specialists, up skilling of employees through a well planned learning and development programme, effective agency management, strategic alliances with automobile majors and two wheeler sector and bank assurance tie ups. Today our strategic alliances contribute approx. 21% to the total business of the company. The captive customer base of the Banks has helped us expand Reach and increase the insurance penetration.
Q: What is the position of National Insurance company in the insurance sector?
A: With a work force of 14902 skilled personnel and 1998 offices all over India including operations in Nepal, National Insurance stands tall today as India’s 2nd largest non life insurer. Leader in 2 zones that is North and East, NIC recorded a premium of Rs 11282.64 crore in the last fiscal with its highest ever profit before tax amounting to Rs 1196.74 crore as against 1007.82 crore in previous year. NIC contributed a handsome Dividend of Rs 165 crs to the National Exchequer in 2013 -14 and proposes to contribute Rs 194 crs this fiscal.
NIC is India’s oldest general insurance Company. It was incorporated in Kolkata on 5th December, 1906 to fulfill the nationalist aspiration for Swaraj. Sixty-six years later, after nationalisation it was merged along with 21 foreign and 11 Indian companies to form National Insurance Company Ltd, one of the 4 subsidiaries of the Govt. owned General Insurance Corporation of India.
Q: What is the net worth of the company?
A: Net worth of the Company is Rs. 3790.55 crore as on 31.03.2015.
Q: What is the gross overall premium earned by National Insurance company?
A: Gross overall Premium (global) earned by the company is Rs. 11282.64 crore.(FY 2014 -15)
Q: From which segment do you earn the largest premium revenue?
A: The twin Growth Drivers in the industry today are motor and health – NIC’s leads in motor where it draws the largest share of premium of 4944.67 crs constituting 46% of total GDPI. NIC is 2nd largest in health.
Q: What is the market share of the company at present?
A: As per figures till June 2015, the market share of National Insurance is 13.58%
Q: What are the biggest challenges that the company is facing at present?
A: Over the last five years (i.e.2010-2015) the non life insurance industry in India has been growing at an appreciable CAGR of 17%. The Growth Drivers have been Motor, accounting for 42% and Health at 22% of the industry premium. Adapting to the changing market dynamics NIC has also focused on Health and Motor Lines of Business successfully occupying Pole position in Motor and 2nd in Health which has placed us as Leader in retail insurance.
However, with increasing competition our biggest challenge lies in retaining this leadership position.
Some of the Challenges we face are, 1) Changes in the Regulatory environment, 2) Increasing consumer awareness and their involvement, 3) Segmentation, 4) Retaining the existing customers 5) Making available products at an affordable price 6) Products for multiple channels. 7) Innovative products to counter competition, 8) Fraud management 9) Technology enablement. 10) Training 11) Depletion of Manpower 12) Strategic Alliances 13)Insurance Awareness
Q: What are your future plans?
A: NIC’s development plan for the future builds on its existing strengths while also exploring new avenues for growth like product development. In fiscal ending 2015, our focus continued to be on Health and Motor segments, our growing and predominant business. In both these segments the Company has introduced new and innovative products. During the year we launched National Medi-claim Plus Policy, a high variant retail health insurance product.
Besides being a first of its kind in the PSU space, the product includes three plans with a sum insured ranging from INR 2 lakh to 50 lakh. Two new family health insurance floaters with several innovative and interesting features are on the anvil.
Q: What is your position in the health insurance segment?
A: The Company has been in the business of Health insurance since 1986. It has been meeting with the Health insurance requirements of individuals and corporate clients through product innovation and service delivery. While in the early days there was only one product called Mediclaim, with the passage of time it added many new products to meet with the demands of market. These products cater to the requirements of different segments like individuals, families, senior citizens, students, BPL population and so on. While earlier, the claim servicing was done in- house & a policy holder had to meet the medical expenses first and then claim reimbursement, in the year 2002 the claim services were outsourced to Third Party Administrators (TPA) & cashless system was introduced for the benefit of policy holders through tie ups with hospitals.
Despite the entry of private general and standalone health insurance companies after the passage of IRDA Act of 1999, the Company has maintained its position as a lead player in health business. With only Rs 196 crs Premium in health in FY 2001 -02, business as on 2014-2015 has reached Rs 3751 crores making the Company the second largest mobilizer of health insurance business in the country. This amount exceeds the combined health business of the five standalone Companies as at the end of 2014-15 (Rs 2852 crs)
Q: What steps has the company taken to simplify the process of getting claims in the wake of increasing complaints from customers of facing difficulties in getting their claims?
A: Some of the administrative measures have been as follows:
- Company has embarked upon an exercise for simplification of Claims Form.
- Faster Decision making enabled through enhancing financial powers with reference to Claims
- Increasing List of Surveyors and Periodic monitoring of their performance
- Regular Reviews of performance of our Operating Offices in areas of Claims Settlements, grievance redressal and Timeline Compliance
- Diligent pursuance of conformity with the provisions of Policy Holders Rights as laid down by IRDA.
For Motor Insurance which is the largest portfolio of this Company, we have cashless settlement arrangements. In case of Motor Tie-up business particularly in respect of Maruti Vehicles there is a system of automated surveyors appointment within 15 minutes. Turnaround time for settlement of claim of Tie-up vehicles are 3 days. In Health Insurance we are introducing the facility of direct payment of claims through our banking portal which will reduce the turnaround time in claim settlement. We have also drafted detailed claim settlement guidelines for the use of our offices and Third Party Administrators which address most of the contentious issues that are faced by them. These guidelines have facilitated processing of Health claims smoothly. Compliance with the Citizens Charter and Policy Holders Rights as laid down by IRDAI is our ultimate goal to ensure every Insured as a satisfied and empowered customer.