August 27, 2009, the Inauguration Day of Branch Manager’s conference, thrilled the participants when Mr. R. Thyagarajan, the Group Chairman, started his ridimic speech. There were some moments that stood out bright. The conference was ceremonised by Hon’ble MD Mr. J.S. Gujral. No particular subject was deliberated by him but his apt inputs and questions after every speaker made his presence felt throughout the conference. The summing up of each session with his concise comments helped immensely the participants to get crisp message from each presentation. During this conference participants were introduced to various aspects of insurance. The Suryavanshi Conference Hall was jam-packed continuously for three days.

Mr. R. Thyagrajan, Chairman Shriram Group, was the source of inspiration throughout the conference. Participants were benefited by his deliberation on all current issues and timely inputs delivered in his lectures. He stressed upon profit making rather than on profiteering. He emphasized on reduction of administration cost to as low as 25% from the current market trend of 35-40%. He specifically mentioned about the importance of Consequential Loss/ Loss of Profit Insurances and its huge potential in India.  He asked to identify the market trend (Customer Oriented Products), and loss portfolios to earn profit in long run. Mr. Chairman discussed a systematic approach to penetrate the market, with the help of skilled Agents and Brokers and outlined the importance of training for Brokers. He explained about the huge opportunities available within the group in India and overseas. 

The most important thing in the conference was the participation of MD’s/CEOs of various Shriram Group Companies.  A vibrant presentation on “What to Sell within Fire” by Merrick Oeschger from Sanlam, South Africa made the session live.  The presence of Mrs. Subhashree from SCUF, Mr. Prasad from Andhra Chits, Mr. Manoj Jain from Shriram Fortunes, and R. Shridhar from STFC strengthened the ties with SGI and assured of fullest cooperation in every area.  STFC have 327 branch offices across the India, employing more than 40000 people, 14 Lakhs depositors and has Assets Under Management (AUM) in excess of Rs. 12000 crores (US$ 2.2 billion), with  live contracts of more than 5,00,000 customers. He disclosed that STFC, finances 35000 vehicles every month (an average of 1000 vehicle every day.

Among other dignitaries Mr. P.S.Gopalkrishnan, Chairman, SGI, Mr. Rajgopalan, Mr. Chandrashekhar, Mr. N.C.Vijairagavan and Umesh Revankar were present on the occasion and contributed significantly with their deliberations. Meeting ended with Award ceremony to “The Best Branch” “The Best Area Manager” and the Best Profit Center.” All VP’s AVP’s, GM’s, AGM ’s conveyed  their messages in the presentations and kept the session lively throughout the duration.

GENERAL INSURANCE PENETRATION LEVEL IN INDIA

Despite the fact that general insurance business has been growing at a healthy rate of 16% annually between  2004-05 to 2008-09, its penetration level is just 0.60% of India’s GDP against world average of 2.14%. India ranks 136th on penetration levels and lags behind China (106), Thailand (87), Russia (86), Brazil (85), Japan (61) and the US (9). The penetration of general insurance in India remains low on account of low consumer preference, largely untapped rural markets and constrained distribution channels.

One of the biggest constraints facing the general insurance business is the lack of reach beyond the cities. While life insurance players are struggling with the quality of insurance advisors, general insurance players face difficulty in getting intermediaries to distribute their products. The average ticket size and the commission rates are extremely low (compared to life insurance). While the average ticket size of a life insurance product is around Rs 20,000, the average ticket size for a general insurance policy is lower at around Rs 5,000. Further, with commission rates for general insurance being at around 10-15%, compared to life insurance which is around 35-40% (in the first year), intermediaries do not prefer to distribute general insurance products.

In India most of the motor insurance policies belong to the third party category. However customers are increasingly taking comprehensive policies, due to growing awareness and increasing sales of relatively expensive vehicles. The lack of road discipline and poor road conditions have been the main causes for the high incidence of accidents. Health insurance is the second-largest contributor to the general insurance space after motor insurance and has also been the fastest-growing segment. Health insurance as indicated by its premium is a Rs 61 billion business annually and has grown at a 5-year CAGR of 37 per cent. Improving per capita income, rising healthcare cost and increasing group covers has propelled its growth.

THE NATURE OF VEHICLE CRIME IN SOUTH AFRICA             

The high levels of violence associated with vehicle crime and a relatively low vehicle recovery rate of 43% for stolen and hijacked vehicles confirms that organized crime is primarily responsible for vehicle theft and hijackings in South Africa. Criminals (i.e. professional thieves and robbers) are in this business to make money and not to take the vehicle for a joy-ride

 What is driving vehicle crime in South Africa?

As with all businesses, the success of this “business” is determined by the market, it encompasses the demand and supply for vehicles. Unfortunately, many of the market forces that deter-mine the illegal vehicle market are exactly the same as those of the legitimate market

 The markets for stolen and hijacked vehicles Criminals use the markets to dispose of stolen and hijacked vehicles:  

 The South African motor vehicle market, accounting for the disposal of approximately 50% of stolen and hijacked vehicles;

 Exportation to other countries, accounting for approximately 30% of stolen and hijacked vehicles; and

 The Second-hand parts market (i.e. chop shops), accounting for approximately 20% of stolen and hijacked vehicles

 In view of the high rate of vehicle theft and hijackings in South Africa, it is not surprising that the risk profile of vehicles features prominently in purchasing decisions. Unfortunately, the lack of reliable published information on vehicle risk profiles results in decision-making that relies on anecdotal information, or worse, information gleaned from unreliable sources. Sedans are the most frequent target for criminals. However, mini-buses and pick-ups are at a much higher risk of being stolen or robbed than any other type of vehicle. The risk of robbery for mini-buses is the highest. It was found that entry-level (i.e. cheaper) vehicles of popular makes and models are of high risk in all age groups and classes of vehicles. Closely linked to this is the legitimate market volume. It was also found that vehicles with a high market volume are normally of high risk. Although all of the above mentioned is true, it was found that in some cases, irrespective of the age, type or market volume, the brand characteristics (e.g. performance, the status associated with a vehicle, etc.) do play an important role in the risk profile of a vehicle. As in the legitimate market, some vehicles are more desirable than others.                                                                 (COURTSY: SAICB-June, 2009)