Will look to expand banca partnerships with PSBs’, says ICICI Lombard chief Bhargav Dasgupta

After making strong inroads into private banks and NBFCs for distribution of its products, ICICI Lombard General Insurance will closely look at strengthening its partnership with public sector banks’ as part of its overall distribution strategy to increase partnerships post the recent opening up of bancassurance channel by IRDAI, Bhargav Dasgupta, Managing Director & CEO has said.

This leading private general insurer, which already has more than 100 Banca and NBFC tie-ups, does not have a very large market share in the public sector banks’ segment and the company would therefore look at this more closely in the new milieu, Dasgupta told businessline.

Currently, Banca including NBFC contribution for first half of 2022-23 was more than 11 per cent of company’s gross direct premium income of ₹10,555 crore.

In its efforts to increase insurance penetration in the country, insurance regulator IRDAI had few days back allowed banks to enter into bancassurance partnerships with as many as 9 Life insurers, 9 general insurers and 9 health insurers. 

Bancassurance is an insurance distribution model where insurance companies partner with banks to sell policies. Both the bank and the insurance company get to benefit from this arrangement. While the bank earns a commission from the insurance company, the insurer gains from the distribution network of the bank.

Dasgupta highlighted that IRDAI is moving towards an open architecture and allowing the market to determine what is right for the customer.

In the case of banks, the regulator wants them to decide which are the partners and how many partners they want to work with rather than the limited number of three that was there before the latest reform, he noted.It will open up opportunities in bancassurance partners who had reached a limit of three earlier stipulated by the regulator.

“So this is the overarching change in regulation that we are seeing and we have been saying very transparently that this is very positive,“ Dasgupta said.

ICICI Lombard General Insurance already has a diverse distribution model starting with broking, agency and banks, etc. Bancassurance for non-life sector is relatively smaller in the country. 

SUSTAINABLE MODEL

Dasgupta also made it clear that the company would only look for partnerships that would be sustainable model and a win-win-win for all three —customers of the bancassurance partner, the bancassurance partner and ICICI Lombard.

“Our approach has always been building sustainable businesses. This principle will not change even when we look at expanding partnerships in public sector banks segment. The business has to be built in a judicious and a sustainable manner for it to be viable for the long-term for all three stakeholders,” he added.

Dasgupta said that the priority for the company remains tying up as many as new partners as possible, an approach that had been taken by the company over the years. 

For the first half of this fiscal, ICICI Lombard recorded 47 per cent growth in net profit at ₹ 940 crore (₹641 crore). Gross written premium in this period grew 23 per cent at ₹10,832 crore (₹8776 crore). In FY22, net profit had come in at ₹1,271 crore.

BHARTI AXA INTEGRATION

Dasgupta said the acquisition of Bharti AXA General Insurance has been completed and added: “overall we are satisfied with the way integration has gone through”. All the physical infrastructure, products and people integration are done, he added.

“So the core integration effort is largely over and we have digested it. It has happened within a tight time frame of 12 months. There are more synergy benefits than what we anticipated,” he said. 

CROP INSURANCE

Asked if ICICI Lombard would re-enter crop insurance, Bhargava said the general insurer had in 2018 come out of crop insurance as it felt the reinsurance terms were completely adverse to insurance companies. However, he noted that the company was in a way still in crop insurance due to Bharti AXA General Insurance, which it had acquired.

“So we have a small book of crop insurance which we want to continue to write because the scheme has also been modified. So we have got to write the book as part of what we got from the acquisition,” he said. 

He also did not rule out ICICI Lombard re-entering crop insurance in a big way, stating that there was no fixed strategy on this front. 

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Published on December 11, 2022