While the second wave of COVID-19 pandemic will have some impact on SBI General Insurance's on-ground sales during April-June, the company's chief financial officer Rikhil Shah does not see a major impact on earnings as he expects digital sales to continue to grow.
In an e-mail interview with BusinessToday, Shah said he expects auto insurance to continue to see growth in FY22 as COVID-19 has made personal vehicles a necessity. Following are some excerpts from the interview:
Which segments contributed most to the gross written premium in FY21? Does health continue to be a strong contributor?
FY21 demanded special focus on the health and SME lines, and we managed to maintain a balanced growth. While health showed a 66% growth over last year with 16% contribution to the business mix, motor showed a 37% growth with a 26% contribution to the business mix. Corporate fire showed a 33% growth with 11% contribution to the business mix. Crop contributed 27% to the mix.
Health has shown exponential growth over the last 2 years, especially in FY21 and is one of our top three lines of businesses.
How has SME segment fared over the course of FY21? What are you plans for the segment going ahead?
SME segment has done well for us registering a growth of 38% for FY21. We see continued growth in this segment for FY22 as awareness of insurance increases and measures are being taken to reduce underinsurance in this segment. We also expect that the 2 new standard products introduced in April, Bharat Laghu Udyam Sooraksha and Bharat Sookshma Udyam Suraksha, specifically catering to SME segment will give a further boost to business.
What is SBI General Insurance's outlook for FY22? How much significance does COVID-19 assume going forward? What other factors are you looking at?
Q1 FY22 looks slightly challenging as the second wave of COVID-19 has peaked. This time around, COVID-19 has impacted rural and semi-urban market also which will also impact on-ground sales. However, health line of business and digital business channels would continue to have strong growth during this period. We have also registered encouraging growth in our property insurance book on 1st of April which is when a large chunk of corporate accounts are renewed.
Are you expecting headwinds in auto segment in view of the second COVID-19 wave?
Rather, I would say, auto insurance will continue to witness growth in FY22 along with the car, two-wheeler and tractor sales going up. COVID-19 has mandated people to distance from others, which is why commuting by own vehicle has now shifted to be a necessity from being a luxury.
Any new products that we can expect to see in your bouquet?
Considering the need of the hour, we are soon going to launch a few products in the health segment which will be on par with the best in the market. Apart from health, we are also working on other lines of businesses which are planned for this financial year.
How many Covid-linked claims have been filed in last two months?
We have received over 4,700 claims related to COVID in last two months i.e. March and April, 2021 amounting to Rs 60.49 crore.
How do you see the second wave impacting your earnings in Q1FY22?
The second wave, understandably, is much more virulent than the first one. However, we have not witnessed lockdowns as severe as that of last year's which gives us reasons to believe that the current quarter will be better compared to Q1 FY21. At an overall level, we do not foresee major impact on our Q1 earnings.
The regulator and insurers had not anticipated such a huge jump in Covid cases when they launched Corona Rakshak and Corona Kavach policies.
How are you dealing with rising claims? Are you still selling these policies?
Yes, we have continued selling Corona Rakshak and Corona Kavach policies. Apart from these Covid specific policies, our other health insurance plans also cover claims related to Covid.
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