The state of policy paralysis in India has hurt the general insurance industry significantly, says managing director and chief executive officer of HDFC Ergo, Ritesh Kumar. In an interview with Vishwanath Nair, he speaks on the growth drivers of the future, HDFC Ergo’s expansion plans and the company's online strategy. Excerpts:
How has the recent slowdown affected the general insurance industry and your business in particular?
In a state of paralysis that our country has been in, incremental asset creation has taken a backseat. There are no new projects, so there is no premium from them. Since there are no incremental projects getting completed, the fire premiums are stagnant. We have seen motor sales slowing down considerably. Motor insurance contributes 46% of the general insurance industry's premium and there the sentiments are low.
What kind of growth have you witnessed this year? What will be the drivers in the future?
In the current year, we have grown 20% and are growing profitably. But the growth rates have come down. Our portfolio consists of one-third motor, one-third accident and health, and the rest of other products. Of the total registered vehicles in the country, roughly 100-105 million must be running on roads, against that there are about 55-60 million insurance policies on vehicles. So there is a huge gap between the number of insured vehicles versus the stock of vehicles and that is an opportunity set. If you look at health, there is again a huge development potential there. Similarly, in case of home insurance, nearly 98% of the houses are not insured. There again you have an opportunity.
What are your expansion
We now have about 105 offices spread across India. Of this, we added 27 offices in the current financial year. In the next financial year, we plan to add 25 more offices. These are your brick and mortar sort of presence. This means the number of our employees has increased. We had 250 employees five years ago, by the end of the year we will be closer to 1,800 employees. We are adding a lot of presence. We are also hoping to develop our agencies over the next few years.
The penetration of the general insurance industry in India is abysmally low. What is required to improve this?
The primary sales need to be increased because we, as a secondary industry, benefit from better sales. We must look at distribution reforms in terms