'Our higher growth is coming from retail lines'

'I think this is the most interesting time for anybody to be in the industry, considering the plans and commitment among the players.'

Anuj Tyagi, who took charge as MD and CEO of HDFC Ergo on July 1, discusses the insurer's plans on focus areas of the retail line of businesses in an interview with Aathira Varier/Business Standard.

As you take charge from your predecessor, what are your immediate plans?

The non-life insurance sector has witnessed significant growth, aided by a positive regulatory environment, which has also contributed towards propelling financial inclusion in the country.

It becomes more interesting when you have a regulator who is so forward-looking. We have a shared vision.

Financial inclusion is incomplete unless insurance gets embedded into it.

I think this is the most interesting time for anybody to be in the industry, considering the plans and commitment among the players.

In my opinion, the industry is poised to grow at a sustainable rate of around 15 per cent in the medium-term.

We are one of the large companies. So, it brings more responsibility on us.

I think we are well-positioned to leverage the opportunities that this industry will offer in the times to come.

I don't think we need to change anything. We will possibly start expanding our footprints, and we are just doing some of those assessments. Our focus on retail health will continue.

Among product lines of the company, which will be your focus area?

Mainly health, motor, commercial and crop insurance are the four lines of business. We will continue to focus on all lines.

We still have a fairly large market share in commercial lines, which is upwards of 7.2-7.3 per cent.

So, we are a very large player on commercial lines, especially in property, engineering and liabilities.

We will continue to focus on those lines also. Our higher growth is coming from retail lines.

There is more expansion in the industry happening in retail lines, so we will continue to focus on those lines.

Recently, certain insurers increased premiums on retail health products after the master circular on health insurance, which saw reduction in the period of moratorium, waiting period for pre-existing diseases, etc.
Has HDFC ERGO made any revisions?

See, it (master circular) will have some impact. The fact is you are expanding the risk horizon, so it logically will have some impact on pricing.

We have also made changes in the pricing of our products but in our case, change is a norm.

We don't wait for a three-year period and then increase prices by a large sum.

We are saying the medical inflation is increasing, if you increase prices in a big block, the customer takes a big hit.

Increase prices in small doses, practically every year, so that customers also know that as my risk increases my prices will also increase.

On a portfolio, our price increase is about 8 per cent on the entire portfolio.

Optima Secure, which is the largest-selling product, will see nearly 7.5 per cent price increase.

So, on average, the portfolio increase is about 7.5-8 per cent.

In Q1FY25, there was a sharp fall in the company's combined ratio...

We noticed an increased-frequency trend in the third-party portfolio and strengthened the reserves in line with this.

The same is corroborated by the data published by the Ministry of Road, Transport and Highways (MoRTH) in its latest yearly publication "Road Accidents in India-2022" dated October 2023.

There has been an increase in third-party loss ratio for us and the industry as a whole.

This increase in loss ratio has trickled down to our combined ratios.

Our solvency ratio had also gone down to 1.56 times but this will improve as the company has raised around Rs 570 crore through a capital infusion from our shareholders in Q2FY25.

Feature Presentation: Aslam Hunani/Rediff.com