United India protects turf

Venkatachari Jagannathan
20 March 2007

Six years after the opening up of the non-life insurance industry, one private insurer is threatening to break into the top four of the till now exclusive preserve of the government-owned insurers. The fourth rank is now being occupied by the Chennai-based United India.

"True ranking would emerge only after the stabilisation of the detariffed regime. In the rush to grow the topline we don't want to sacrifice the long-term consistency. However, our focus is on writing good quality business that boosts our bottomline rather than being concerned with the topline growth," he responds. And that is one of the reasons for the company not going in for captive insurance tie-ups with vehicle manufacturers or their dealers. "The dealers demand higher commission rates than the maximum permissible," he explains.

According to him, what exists today is not a true detariff regime. There is no freedom for companies to decide on their pricing structure. Further, companies are allowed by the Insurance Regulatory and Development Authority (IRDA) to use pricing as a unique selling proposition."

What he says is true. Not many know that some of the United India's motor insurance policies are priced lower than those of the other insurers.

However, Garg is confident that the company will close this fiscal with a gross premium income of Rs 3,500 crore as against the target of Rs 3,400 crore. Last year, the company earned Rs 3,154 crore as gross premium. "The premium retention is also high for us. Our premium retention is 73 per cent while the reinsurance out go is just 23 per cent."