RR Belle, MD & CEO, SBI General Insurance, is the chief general manager of SBI (State Bank of India). Prior to SBI General, Mr Belle served as the general manager in new businesses department of SBI. He was in-charge of the general insurance project since December 2007. He started his banking career in 1974 as a probationary officer with SBI. During his long career of 35 years with SBI, Mr Belle held several important assignments in India and abroad.
SBI General Insurance is a joint venture between SBI and Insurance Australia Group (IAG). It is currently serving three key customer segments i.e. retail (catering to individual & families), corporate (catering mid to large size companies) and SME segment. SBI General covers motor & home insurance for individuals, and fire, marine, package, construction & engineering, group health & miscellaneous insurance for businesses.
Speaking to Dolly Mirchandani of IIFL, RR Belle says, “We expect to breakeven in FY15 and generate underwriting profit in FY17.”
Give us an overview of some changes taking place in the industry?
One of the changes is the enhanced focus on rational pricing. The finance ministry, IRDA (Insurance Regulatory and Development Authority) and General Insurance Corporation of India (GIC) have called on industry participants to stop ‘suicidal pricing’ i.e. undercutting one another by offering policies at low premium to grab a bigger market share. Insurers have been asked to adopt risk-based pricing for all products. The industry needs to move in this direction for a sustainable future.
Approach to bundled products is another issue where the industry is awaiting IRDA communication.
Bundling of products refers to tying of insurance products with other products like online booking of air tickets, credit cards, vehicles, consumer durables, home loans or personal loans.
Bundled products can play a major role in enhancing penetration. Several products which have not yet generated sufficient volumes despite their benefits and low prices can gain with bundling. However, there are clear customer concerns and the industry needs to take care of them.
The IRDA has released an exposure draft on health insurance regulations. The draft has several provisions which will make health insurance purchase, renewal, transfer (portability) and claims much more convenient for customers. But, some provisions, especially those relating to premium pricing for future renewals, will prove to be a challenge and may lead to increase in premiums. The draft is undergoing discussions. Hopefully issues will be resolved to everybody’s satisfaction and the segment growth can really take off in a big way.
All insurance companies need to focus on sustainable development of the industry which will be beneficial for players and customers. There are tremendous opportunities in the market and players’ success will strongly depend on their ability to offer unique and differentiated value to customers and partners.
SBI General posted a whopping 481% growth in premium income at Rs. 2.5 billion during FY12. Would you consider it a satisfactory performance?
Considering that we received a premium of Rs. 430 million in FY11, the premium accretion in FY12 is satisfactory. From an aspirational perspective, given the market opportunities, we would have liked to do more. This is incidentally reflected in our top-line target of Rs. 7.5 billion for FY12.
By when do you expect to be in the black?
We expect to breakeven in FY15 and generate underwriting profit in FY17.
Comment on the technology initiatives taken to improve customer service.
Our IT system is a key part of our strategy. It is designed and implemented as a single integrated customer and partner centric business solution with all the functionalities, specifically catering to huge volumes of business and documentation. The system supports all lines of general insurance business and multiple distribution channels—both direct as well as through intermediaries.
The expected benefits are that the system is designed to automate business processes by linking them and supporting IT software services through a single business process flow that is centralised. The system provides good experience to all types of users of the IT solution for example: customers, employees and agents among others. The system enables communication with our customers (internal & external) using various communication mechanisms such as instant chat/messaging, media conferencing, SMS, email, fax and e-document generation and delivered all integrated as a single solution.
What is the strategy to expand your motor insurance business in India?
We have an attractive value proposition for our motor insurance customers consisting of products with several innovative features, risk-based pricing to provide incentives for better use, a superior customer service model and a well-trained and customer aligned distribution force. Being a new business, we are still building our distribution force with focus on agency and bancassurance channels. We will soon launch online sale of motor policies. We are confident that providing rich value to customers will help accelerate development of motor business.
Do you think policies like plate glass insurance and burglary insurance for businesses have huge growth potential in India?
We have both these products as part of our products offerings. Besides these there are many other products that have a lot of potential. These products are liability products, home and shop insurance and personal accident.
What are the challenges faced in the home insurance segment?
The issues are of customer awareness, simplified products and a distribution model. Rising household income, enhanced home ownership and risk awareness will be the key catalysts to spur demand for this line of business.
How do you plan to expand your corporate agency channel?
We are aiming to develop a multi-distribution model with contribution from all channels. Corporate agency channel will play a key role in expanding our business. We are looking for partners who are aligned with our approach of doing business which is focussed on providing benefits to customers and partners.
What is the game plan for rural markets?
During the last year, 16% of our business came through rural areas, which is much higher than IRDA norms. The figures show the importance we give to this line of business. On the rural front, we are having close synergies with SBI. You would be surprised to note that SBI is the market leader in SHG (self-help group)-Bank Credit Linkage programme having extended loans to millions of SHGs.
SBI is also one of the registrars of UIDAI (Unique Identification Authority of India). As a registrar, SBI will collect both demographic and biometric information of the bank’s 170 million account holders. SBI is one of the top enrollers with more than 2.5 million enrolments. The bank also has a good business correspondent (BC) network. There are other dimensions as well. So we plan to tap these opportunities to build a strong rural portfolio.
What are some of the products in the pipeline?
We will launch our liability and various other products after obtaining the necessary approval from IRDA. During this year, we will file more than a dozen products including personal line products like travel insurance, baggage insurance, home package; liability products, rural products and commercial line products like jewellers block and bankers indemnity. All these will enable us to cater to the needs of personal and commercial segments.
What are your future plans for FY13?
Maintaining a balance between rapidly growing top-line and bottom-line is our foremost challenge and in which we are making good progress. Rolling out our IT infrastructure with multiple functionalities is a continuing priority from last year. Enhancing our physical presence throughout the country is another priority. We plan to have 50-55 branch offices by the end of this year.
Finally, keeping our employees engaged with the organisation will be a key objective as the company rapidly scales up both the business volumes and employee numbers.