Expect 12-15% growth in general insurance this year: Mahesh Balasubramanian, Kotak GI

We did see a spurt about three years back as insurance came into the market. That particular year, we saw a growth of about 25%. Otherwise, the outlook seems to be that we will probably be growing at about 12-15% , says Mahesh Balasubramanian, MD& CEO, Kotak General Insurance. Excerpts from an interview with ETNOW.

What are the trends you are observing in the general insurance sector? What is the growth outlook there?

This year, we will probably grow at around 12-15%. We did see a spurt about three years back as insurance came into the market. That particular year, we saw a growth of about 25%. Otherwise, the outlook seems to be that we will probably be growing at about 12-15% though there are some headwinds in terms of the automobile sector not really performing as expected.

We also do not see large capex projects coming in. That is also going to put a little bit of pressure on the property and engineering side. Health insurance premiums have been growing. One hopes that that will continue to grow at about 20% odd. Overall, 12-15% growth rate is what the outlook looks like as we stand today.

Following the raise in the FDI limit to 74%, what is the impact you see of that on the industry and on your company operations?

In 2015, the government decided to increase the FDI from 26% to 49%. One has to look at what has happened since then and how much money has come in; what has been the impact on growth rate and penetration and what has been the impact on job creation.

If you evaluate the decision taken in 2014 and see how we have performed as an industry, the expectation was that about Rs 60,000 crore should come in but I do not think one has seen any number even close to that. Rather about Rs 2,500 crore has come in the last three years. Has penetration gone up significantly? The answer is, the results have not been so gratifying.

On the general insurance side, the penetration stands at 0.93%. On the life insurance side, it is about 2.6-2.7%. Overall, we are still at about 3.5-3.6% penetration vis-à-vis the world average of about 6.3%.

I do not think too much has happened in terms of job creation at least on the GI side. One has probably seen about 6% growth in jobs across three years. Have we realised the potential or the results of additional FDI in the last three years? I do not think we have been able to see the results in a manner which impacts the industry progress.

What sense do you get when you look at the number of players in the industry?

One is not sure whether by increasing it further, one will see the results.

Source: The Economic Times