Underwritingprofitablecorpbusiness[1]

7/29/2019 Underwritingprofitablecorpbusiness[1]

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Underwriting Profitable

Corporate business. IsLine wise Profitability

- Myth or Reality?


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Corporate Business in Bajaj Allianz

Attracted by Low rates in Non-tariff premium

Tariff business makes money (mainly RI)

Tariff business cushions any bleeding in Non-tariff

portfolio Renewals becomes cheaper in case of a good

insurance cycle for Non-tariff business Break-evenbecomes difficult

We are losing money on some accounts inspite of

continuous renewals

Corporate Business


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For The Current Scenario

Follow the principle of accepting the entire portfolio

Get as many Corporates into our books by adopting

market trends.

Lure profitable accounts into remaining with us by

offering cross subsidy, valuation, risk management and

GAP exercises

Retain them with the best services u/w and claims

Educate them on the impending detariff situation and itsadvantages.

Simultaneously weed out loss making/bad moral hazard

clients.


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Profitability

Work with Group Clients who understand the conceptand need for insurance

Adopt the Portfolio approach initially underwritebusinesses where we have expertise, thus creating aniche

Create Specialists instead of Multi-skilled workforcewho are sensitised to clients needs

Work on the Assembly line concept

Allows prudent underwriting decisions based on the

merits of the risk


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Profitability

Treat each line as a profit centre

Portfolio approach internal business credit

Develop and work on a linewise database to capitaliseon companys niche areas

Identify and train manpower to create specialistsinstead of multi-skilled workforce Allows

underwriters to accept risks based purely on merit

Whole Account Profit Sharing concept: Sharing ofprofits made on each Account based on the profit made


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Impact of de-regulation

Impact on Corporates

Gamut of product options to choose from

Pricing may not be the sole criterion in selection ofcovers

Due to increased competition, clients will enjoy thebest products at best prices and best coverages

This then becomes an indicator of the maturity of themarket, thus leading to Linewise profitability

Underwriting will become Grading driven risks will

be accepted based on grades after a detailed Riskinspection of the risk

RI decisions will be based on these benchmarks


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Achieving Profitability

In a de-regulated scenario:

Insurers can capitalise on their strengths toconcentrate on their niche markets

Underwriting will become more prudent:Focussing on law of large of numbers, claimfrequency and magnitude

Grading of Risks is imminent: Risks will be ratedaccording to potential hazards and loss potential

RI treaties will also be based on these

benchmarks Clients will move from Unprotected risks to

Protected risks


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Achieving Profitability

Work on a Profit sharing model Client gets benefiteach year if overall business is profitable for us

Client eventually moves from Un-protected risk toProtected risk not with a view to save premia but tocontinue running his business profitably


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Case Study - 1

L&T ECC

Prudent Insurance Decisions

Believes in understanding insurance before decidingwhat to buy

GMC Policy is not profitable because of adverseclaims

Portfolio is factored 80:20

80% depends on Claims Experience

20% added to arrive at premium

This avoids IR problems and keeps portfoliowin-win for both client and insurer


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Profitability for L&T ECC

MOTOR 0 0 0 0 0.00%

ENGINEERING 33,191,572 17,486,430 11,401,675 6,747,405 103.79%

HEALTH 275,361 4,355,970 0 5,835,120 133.96%

LIABILITY 1,583,684 1,580,808 0 0 0.00%

MARINE 338,277 945,733 0 128,411 13.58%

MISCELLANEOUS AND OTHERS 2,165,457 2,160,252 0 246,204 11.40%

PROPERTY 2,136,180 2,127,261 0 130,943 6.16%

Overall portfolio for 2004 05 39,690,531 28,656,454 11,401,675 13,088,083 85.45%

MOTOR 0 291 0 0 0.00%

ENGINEERING 23,525,465 8,416,568 147,437 1,942,834 24.84%

HEALTH 0 0 0 1,170,267 0.00%

LIABILITY 832,306 284,749 0 0 0.00%MARINE 0 79,281 0 73,548 92.77%

MISCELLANEOUS AND OTHERS 5,901,867 2,089,520 0 106,500 5.10%

PROPERTY 2,270,440 619,035 22,500 180,595 32.81%

Overall portfolio for 2005 upto June

30, 2005 32,530,078 11,489,444 169,937 3,473,744 31.70%


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Case Study - 2

St Gobain

Underwritten by Bajaj Allianz for last 4 years (fromco-insurance to 100%)

Profitable Fire / MCE business

Adverse claims in Marine Inland

270% during co-insurance 180% after full share

Detailed pattern study by our surveyors andtechnical team helped us identify and plug loopholes

Suggestions to improve packing

Snaps during loading / unloading trucks

Surprise checks at frequently claiming dealers

Higher excess of Rs. 15000 per consignment

Claims settled at 85% where recovery rightswere not protected


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Profitability for St.Gobain

ENGINEERING 3,394,176 785,239 0 0 0.00%

HEALTH 1,126,445 625,041 1,422 575,025 92.23%

LIABILITY 153,136 37,760 0 0 0.00%

MARINE 7,442,364 2,466,871 1,662,594 7,616,137 376.13%

PROPERTY 17,076,223 12,879,421 0 0 0.00%MOTOR 166,627 43,621 0 0 0.00%

MISCELLANEOUS AND OTHERS 401,080 98,051 0 0 0.00%

Overall Profitability for 2005 05 29,760,051 16,936,004 1664016 8191162 58.19%

HEALTH 0 285,756 70,515 209,840 98.11%

LIABILITY 0 37,760 0 0 0.00%

ENGINEERING 366,494 781,667 68,750 0 8.80%

MARINE 2,795,476 2,235,297 670,226 4,773,834 243.55%

PROPERTY 1,999,686 4,456,754 0 0 0.00%

MOTOR -13,398 34,716 0 10,263 29.56%

MISCELLANEOUS AND OTHERS 5,449 99,929 0 0 0.00%

Overall portfolio for 2005 upto June

30, 2005 5,153,707 7,931,879 809,491 4,993,937 73.17%


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Underwritingprofitablecorpbusiness[1]

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