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United India CMD Srinivasan Sees A Repeat Of FY10 Performance this Year
Chennai based United India Insurance recently announced a bancassurance (selling of insurance products through bank branches) referral tie-up with Vijaya Bank. G Srinivasan, chairman and managing director, speaks to ET.
How do you read into the merger of Bank of Rajasthan (BoR) with ICICI Bank? BoR was your bancassurance partner.
Yes, we did have a bancassurance tieup with BoR but it only brought in close to Rs 4 crore in business. There is a growing trend of many banks wanting to enter the insurance business. We are confident that our existing tie-ups will help us tide over this (loss of a bank distributor). We have tie-ups with not just public sector banks but also private entities and cooperative banks. United India has a tie-up with agencies such as Federal Bank, associates of SBI and Tamil Nadu Mercantile Bank to name a few. The tie-up with Vijaya Bank should generate business of nearly Rs 50 crore in the first year itself. Insurance companies derive a good deal of income from investments.
What is your expectation, given the recent volatility in the stock market?
In fiscal 2010, we had close to Rs 1,700 crore of income from investments, which also included Rs 800 crore of profit from sale of equity investment. We had also invested in debt/fixed income instruments. Our belief is that we should be able to earn around the same level like last year (from equity investments) if the markets do not dip as much as in 2007. We are projecting our premium income to be around Rs 6,000 crore compared with Rs 5,200 crore in FY10. There was blood-bath last fiscal when premia rates dipped. One is seeing an upswing.
How do you read the insurance market at this point of time?
There has been an upswing in premia rates, notably in case of group health as well as fire and engineering policies. The prospects of the general insurance industry are directly linked to the economy and if the GDP grows by 9%, it will mean opportunities for our industry. Premia rates notably for group health have started rising. Medical costs are on the rise and this is forcing rates to go up. Health insurance grew 30-35% last fiscal and this growth rate should be maintained. The hike in premia rates in all lines of business will be based on customer profiles. Such of those who have a higher perceived hazard and claims will have to pay higher rates.
What about aviation insurance? We experienced two major disasters recently. Do you expect re-insurance rates to harden?
Most of the specialist lines like aviation are suitably re-insured globally. Yes, there were two major incidents but the industry factors in these. The hardening of premia and re-insurance rates will be based on the experience of the insurance sector. At this point of time, aviation rates continue to be soft.
Source: Economic Times
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