Mumbai: ICICI Lombard General Insurance wants to be known as a risk manager for its customers, and not just as an insurance company. For this, the insurer is looking to boost its product portfolio and increase customer engagement touchpoints, the company’s chief financial officer Gopal Balachandran told Mint.
“What we have tried to create is to significantly enlarge the role of ICICI Lombard from not being just a risk transfer partner but to aid risk management,” said Balachandran, adding that this is a continuing effort, and the company is now aiming for some scale.
Having been slower than some peers in terms of product launches, ICICI Lombard is now betting on new product launches as well as policy add-ons and value-added services to increase revenue and customer retention, and improve customer experience and operational efficiencies, Balachandran said.
“Honestly, we did not do a great job historically in terms of our ability to come out with new product launches or for the matter of fact, in relative benchmark with competition. But, over the last 2-3 years, we have made cognizance of it,” Balanchandran said.
On Monday, the general insurer launched 25 products and features to mark 25 years of operations, many of which are backed by technology and artificial intelligence.
“On a thumb rule basis, we end up investing around 1-1.5% of premiums every year into technology,” managing director and chief executive officer Sanjeev Mantri said at the launch event. “These investments are pertinent and we don’t see that changing irrespective of the pressure coming from the market.”
Some of the products launched on Monday include Elevate Her, a women-specific health add-on covering benefits such as maternity, IVF, hormonal health and menopause care; Paw Care, a pet insurance policy covering veterinary treatment and surgeries; and Motor Cyber Cover, which protects connected vehicles against hacking, cyber extortion and software restoration costs.
Despite pressure on underwriting profitability for the general insurance sector, the idea is to keep investing in avenues that the company believes will give a return over a longer-term horizon, Balachandran said.
Currently, ICICI Lombard has a 8.5% market share in the general insurance market and these launches are aimed at increasing the company’s market presence, drive profitable growth and deliver return on equity (RoE) of 18-20% to equity shareholders.
The company has a three-pronged approach to increasing its share, including onboarding more customers through new offerings, competitive pricing, and ensuring or increasing to the right level of coverage for existing customers by offering specific add-ons and increased tenure options to policyholders at the time of policy renewal.
The hope is that this will eventually translate to higher revenue growth for the company. Citing the example of some recent add-ons launched under the insurer’s women-centric and personal accident insurance offerings, Balanchandran said that such products have been well received by the market in the past and have helped increase market share.
“It will logically get translated into an enhanced revenue outcome… that’s a key enabler. It will also help us keep the overall cost of operations under check,” Balachandran said, adding that this eventually helps policyholders as well given that lower cost of operations help keep pricing at an “acceptable level”.
“We have generally maintained that we should have an alpha of at least 100-250 basis points over industry growth numbers,” Balachandran said, adding that small business remains a key segment and has been growing at 20-25% for the last 4-5 years. In the small business segment, the insurer offers products for shop cover, property increase, cover for goods in transit including marine transit, and employee group health, among others.
The company announced its results for the April-June quarter on 15 July.
Net profit fell 46% year-on-year (y-o-y) to ₹403.17 crore from ₹747.08 crore a year earlier. Adjusted net profit, excluding the impact of two large fire losses and the Supreme Court’s motor third-party provision, declined 23% to ₹575 crore.
Gross written premium (GWP) rose 10% y-o-y to about ₹8,860 crore in the June quarter from ₹8,053 crore a year earlier. Underwriting loss widened to ₹629.88 crore from ₹293.14 crore a year earlier.
The company, in its investor presentation, said focused renewal execution supported by digital and AI capabilities helped improve retention by 4.3 percentage points y-o-y in the June quarter.
“ICICI Lombard remains among the best franchises in the sector, with far superior operating and financial metrics. However, we see the competitive dynamics and regulatory scenario as less favorable for profitability in the near term,” Emkay Global Financial said in a post earnings note.
The brokerage firm revised its FY27-29 estimates to project an increase of 110-180 bps increase in combined ratio and 9-12% reduction in profit after tax. It also revised the FY27 target price 10% lower to ₹1,900. Today, the stock ended 3.2% higher at ₹1,675 on the NSE.
The insurer's gross premiums grew 7.5%, trailing the industry’s 10.9%, as management prioritised profitability amid severe competition. Commercial premiums declined 14% as the company exercised restraint amid aggressive pricing, soft reinsurance renewals and increased reinsurance capacity, Macquarie Research said in a post earnings note.
As such, growth remained healthy with motor premiums rising 14%, health 24% and retail health 70%, which lifted retail health market share by 100 bps y-o-y to 4.5%, it added.