General Insurance Business As Usual Post Bajaj-Allianz Split; No Incentive To List Soon: CEO
Allianz has entered into binding share purchase agreements with Bajaj Finserv to sell its 26% stake in Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance to the Bajaj Group.
It is business as usual at Bajaj Allianz General Insurance and it is likely to stay as such, according to Tapan Singhel, chief executive officer at the general insurance company.
"What do you think will change?" he asked, on a question regarding the Bajaj-Allianz split. The company's solvency has been the largest in the Indian general insurance market, he said, adding that capital is what a company requires for growth.
"We already have that. From 2008, we have not required capital infusion and have been generating capital for quite some time," he said in an interview to NDTV Profit.
In March, Allianz entered into binding share purchase agreements with Bajaj Finserv Ltd. to sell its 26% stake in Bajaj Allianz General Insurance Co. and Bajaj Allianz Life Insurance Co. to the Bajaj Group.
In terms of rebranding, it depends on when regulator approvals come through. However, when the company lists on bourses will depend on the promoters, Singhel added.
From a company perspective, the incentive to list is limited, according to Singhel. "The promoters have to decide when to list and it is not mandatory despite the regulatory nudge."
Other Key Highlights From Interview
Health insurance premiums are seeing a spike across the industry. Is the trend expected to continue?
Health insurance growth rate is double-digit. Let's try and understand the price hike. The insurance industry merely collects money from many to pay to a few as per the contract given to them. If the outgo becomes more than the collection, the industry will hike prices, increase efficiency and eliminate frauds.
But for a complete picture of what's happening, one must also look at who is making how much money. Assuming we collect Rs 100 as premium, Rs 18 goes as GST to the government. Apart from that, pick up the top 10-20 hospital chains — the listed ones — and check for profit margins. Lack of transparency in pricing by hospitals remains a challenge with health insurance not being a profitable business for several insurers.
What is the reliance on bancassurance and what's the way forward given the signaling from the government and regulator?
As a company, we have multi distribution and don't have high reliance on any one distribution channel.
Bancassurance in the general insurance business is covering of assets, for instance in the SME, MSME space. As it is, most are not covered under general insurance. In fact, 2% of GDP loss happens due to NAT CAT events and SMEs and MSMEs not being covered for those.
What is the likely impact of the government going to permit 100% FDI in insurance? How will BAGIC stand out amidst higher competition?
India should have at least 500-1,000 insurance companies.
For a country of this size and scale when you talk about efficiency and penetration, the government's move is good and I hope it brings in awareness.
What will be new for us? Pick up any cutting-edge technology or product. Why would you not find us at the cutting edge at each of our 450 product offerings? Competition is good for good companies. Good companies do better with competition. More players coming in will create more awareness and push innovation and better customer experience.
