A large single non-life PSU is needed for market health: United India CMD

Girish Radhakrishnan, CMD of United India Insurance
Following the 2018-19 Union Budget announcement to merge National Insurance Company, Oriental Insurance Company and United India Insurance Company, several new merger equations have been doing the rounds. Among others is the proposal is to merge all the three firms with New India Assurance. Girish Radhakrishnan, CMD of United India Insurance, in an email interview, tells Namrata Acharya that a single company would have the muscle to regulate market behaviour and curb the “adventurous” marketing practices of private firms. Edited Excerpts:

1. What is your vision about United India Insurance, particularly in view of the impending merger?

United India is an 82-year-old company with a history of technical expertise and financial prudence. Post nationalisation, the company has often been noted for pioneering efforts in areas such as engineering insurance and for several innovations like micro-offices. In the event that the merger of the companies goes through, United India will, I am sure, be the decisive flavour in the new entity.  Our technical expertise and conservatism will go into the building up of the weltanschauung (philosophy) of the new company.

2. What is the present status of the merger exercise?

The process is going on. The consultants (Ernst & Young) has been formally appointed and their project report is expected in a month’s time. The report will be studied and the government will take the final call on the modalities. Once government approval is in place, our formal merger work will start immediately.

3. What are the practical challenges you see in the merger?

The challenges are principally two – rationalisation of offices and manpower deployment, and building a common technology platform to ensure smooth data migration. I believe both these are doable; they just need a considerable amount of hard work. A working group of GMs from the three companies has already studied the challenges and prepared notes on dealing with them.

4. What do you think are the reasons that the public sector insurance companies are losing market share to private ones?  What needs to be done?

With the entry of so many new players, some with perceptible hunger for business, it is natural to have some erosion of market share of established large players in an industry growing in double-digits. The PSUs are realistic enough to work that into their plans.  What some companies ought to be careful about while pursuing business is indulging in what a PSU CEO described as “adventurous” methods.

5. Do you think having a public sector mammoth (like LIC in the life insurance sector) in the general insurance sector help regain market share?

A single large PSU would certainly have the leverage of size, the concomitant capacity and appetite to ensure it has the predominant market share. It would also be able to drive the market and have the brawn to even regulate market behavior to some extent.  That would be good for market health and curb the “adventurous” tendencies I alluded to earlier.

6. How do you propose to improve upon your solvency ratio?

We have worked out a detailed three-year plan that includes improving the Solvency from the current 1.52. The plans relating to solvency improvement involves shoring up underwriting and pricing standards in certain key areas like group health and focus on managing our motor Third Party claims book. These initiatives were put in place just before the close of the last financial year and are just beginning to kick in now.

7. IRDAI has been talking about having a sandbox in insurance. What has the progress been?

The regulator has done well to introduce the concept of Sandbox in India, especially in the context of new Insuretech/Fintech ventures setting up shop who, I expect, will be the most prolific users of the proposed sandbox environment. It is, however, at a very nascent stage – IRDAI has a committee looking into it and taking inputs from players in the market.

8. Do you think uncertainty about the merger has adversely affected the performance of public sector insurance firms?

We are aware that some of our competitors have tried to leverage this so-called uncertainty, but we don't believe there has been any significant loss of business due to that. As regards internal working, the three companies continue to work as independent entities until D-day.


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