Universal Sompo plumps for bancassuarance for impact

Says branches of promoter banks will give it an edge in gen insurance market

KOLKATA: Universal Sompo, the general insurance venture between Allahabad Bank, Indian Overseas Bank, Karnataka Bank, Dabur Investments and Sompo Japan Insurance Inc will hit the market with a range of products from April.

As a late entrant, it is betting on a huge network of around 4,000 established branches of its partner banks to hawk retail insurance policies and hence lower the procurement cost in a fiercely competitive detariff market.

Talking on the company’s plans over the next one year, O N Singh, chairman, told DNA Money, “We are aiming at premium collections of around Rs150 crore in 2008-09.”

He added: “A capital of Rs235 crore would be sufficient to create a book of Rs1,500 crore. And the company can break even within two years’ time”.

“Bancassurance will be a key channel for us and we are targeting 30-35% of the business from this. With a huge network of branches, we propose to focus a major portion of the business from retail and the small and medium enterprises segment. The books are less risky and well spread out compared to corporate accounts, where rate cuts in a detariff regime will impact premium significantly,” Singh said.

Apart from using the branch distribution of its bancassurance partners, Universal Sompo proposes to have 18 of its own physical branches across geographies at present and gradually scale it to 45 over the next one year.

In the course of the next one year, the company has targeted a diverse business mix. While motor insurance is slated to be 30%, SME and retail would constitute about 40%. The balance 30% would constitute health, accident, marine etc.

Whether the company has lost out on account of being a late entrant in the over Rs25,000 crore general insurance industry, Singh said, “In fact, we are at an advantage as we are entering when the turmoil in the rate cut is settling down. Moreover, leveraging on a bancassurance network, as an insurer we are saving a lot in terms of procurement costs.”

The promoter banks are doing their bit: “All the banks including Allahabad Bank, IOB and Karnataka Bank have almost 100, 75 and 55 people respectively who are into insurance selling.”

While Japan-based Sompo has a 26% stake in the company, Allahabad Bank has a 30% shareholding.

Other partners IOB and Karnataka Bank have 19% and 15% respectively with balance 10% being held by Dabur.

Universal is also in the process of getting its underwriters trained in Sompo training offices in Singapore and other locations.

g_nandini@dnaindia.net