Dont expect pricing in India insurance industry reach an economically viable level : Clement Booth, Allianz SE - Economic Times
Clement Booth, in charge of global insurance lines at leading German insurance company Allianz SE, is planning to increase presence in unconventional businesses like credit insurance, expatriate healthcare insurance, satellite insurance and director's and officer's liability insurance in India. In his first visit to India, Booth tells ET about the changing trends in underwriting and modeling natural catastrophe risk.
What potential are you trying to tap in the Indian insurance market?
India has a lot of market potential. It is going to be one of the very important economies in the future and we need to be a part of it. We see more possibilities in specialty cover such as marine and aviation.
We have credit insurer Euler Hermes and expat worldwide health insurance from Allianz Worldwide Care. We plan to extend these specialty products to Indian corporates. We have a long-term approach for India. Right now, we are running the race in traditional lines such as health and motor insurance, but as things unfold, we will expand to other businesses.
Indian insurance industry is often criticised for under-pricing. What is your view?
From a regulated market to a deregulated market, there is always a steep cut in pricing. We still have four state companies active in the market. We don't see pricing reaching a level that is economically viable.
So far, our company is making good profit in the same market. We are putting quality and results ahead of volume everywhere in the world and also in India. Insurance premium is made of three components - capital, investment in risk-free basis with some volatility charge and administration charges.
In the past, tariff regulated the market while capital market will dictate what returns are required in the future. It is a long-term business, which will reach at a certain time. There aren't any perfect insurance markets.
Which markets are important for you?
Globally, Europe is most important in terms of volume, then comes the US and then Asia. India, China and Russia are major potential growth markets. The Asia-Pacific and the rest of the world contribute 6.5% to our property and casualty premium and 11.7% to life and health.
The year 2011 was difficult for insurance companies, given a huge number of natural calamities. How did you deal with it?
Our profit was on our expected lines. We made a profit of 7.80 billion in 2011. In a normal year, losses caused by natural calamities run to about 1.0-1.2 billion per year. But 2011 ended with claims of about 1.80 billion, 600-800 million above the normal. A year like 2011 from probability standpoint is likely to occur once in a decade to once in three decades.
14 May, 2012
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Source: http://economictimes.indiatimes.com/opinion/interviews/dont-expect-pricing-in-india-insurance-industry-reach-an-economically-viable-level-clement-booth-allianz-se/articleshow/13128875.cms
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