Bajaj Allianz General Insurance: Senior citizen mediclaim product has been profitable

TA Ramalingam explains that the company is focused on building business for the long term, even if it means taking on a little more risk

Bajaj Allianz General Insurance has had a good run with its product for senior citizens and lately it has even relaxed the tough underwriting conditions, even if it has meant taking on more risk. In an interview to Moneylife, TA Ramalingam, head-underwriting, Bajaj Allianz General Insurance, discussed the company's experiences that have led it to take a more balanced approach. Excerpts:

How is the business from Silver Health (senior citizen mediclaim)?

The product covers the age group from 46 to 75 years, with pre-existing covered up to 50% from second year of the policy. It is a medically underwritten product and hence the premium-to-claims ratio is good.

We are aware of the risks and what we are getting into for this product. The regular mediclaim (Health Guard) does not enforce medical test up to age 45 years unless there is some adverse declaration.

We see claims from regular mediclaim rising after the four years pre-existing disease (PED) waiting period. For example, a 40-year-old person without undergoing any medical test, may have claims after four years PED waiting period and increase the loss ratio.

Do you reject a lot of proposals for the senior citizen's product (Silver Health)?

Earlier, the underwriting was tough. We are now looking at the degree of illness. Like, what is the degree of hypertension, diabetes? We have to look at this from a long-term perspective, as people do renew mediclaim in 85% of the cases. If it is small risk over a period of time, we take it.

What we want to underwrite or not is under our purview. Ninety of the 100 cases will be good if properly done. If the illness is major, we may load the premium, or offer the policy with exclusion of the illness (tailor-made policy). But, only 10% will accept such exclusions.

Some insurers have strict underwriting for specific diseases like diabetes. What is your approach to underwriting?

Most Indians suffer from something. If we become extremely strict, the mediclaim portfolio will be dead. We have to give the benefit of the doubt to the customer by not being totally negative. We take a balanced approach to a certain extent and to our degree of comfort.

Somewhere, we also take a risk. Sometimes, the sum insured is low and we experiment. If we do 100% perfect underwriting we will loose business. We try new things. Sometimes we succeed, sometimes we do not. We have learned a lot by experience.

The process is constant feedback from the in-house claims processing team. Based on the claims experience and the rich data over the years, we refine the underwriting. A certain customer segment may have few claims that could lead to a trend of losses. It may be something we ignored or waived. We make a decision to go ahead or not in future so that it does not have adverse impact on the portfolio. We do a post-mortem of our decisions and take corrective measures. There are latest findings from medical journals and we will factor it in underwriting.

Why not enforce medical test for the regular mediclaim (Health Guard) scheme?

If we underwrite 200 policies per day, may be 50 have problems. If I make all 200 people go for a medical, it will handicap the marketing of the product. It will be considered too procedural when compared to competitors who may underwrite quickly.

With Silver Health (senior citizen product), customers are mentally prepared for a medical exam at the age of 45 years and above. If we find over the next one or two years that there is need to reduce the medical exam age (based on loss ratio), we may reduce it to 40 years or lower (Health Guard). Today, it has not reached the danger mark.

Is there any worry over the loss ratio?

We have to constantly monitor it. We have to attract new business to subsidise the loss ratio, else we will end up with an aging population on our books. We have to be fair to existing customers and continue their renewals as per product policy terms.



Janak Raj Gupta

5 years ago

I am a senior citizen (68yrs)
My wife is 66yrs
We want to buy medical insurance
Can you help us


5 years ago

This first time i have come across a underwriter who admits of holistic approach to Sr Citizens Mediclaim.When you write the products in large numbers, losses average out and with experience, data base and maturity you would be able to break even, and also produce profits.Till now such policies were taken as a compulsion/ welfare & subsidised.

Ramesh Kapadia

5 years ago

Bajaj Alliance Mediclaim for senior citizen is indeed attractive.Will it not be feasible to raise the age limit to 80
considering present day life-span is longer?My experience for the settlement of claim is quite good once all proper documents are submitted.

Chemicals, non-ferrous sector generate highest net profit growth in Q1FY11

The bottom line of the chemicals sector grew by 95% to Rs1,062 crore from Rs543 crore, supported by a 29% growth in revenues in the June quarter

The chemicals sector registered the highest net profit growth of 95% in the first quarter of FY12, from among the 29 major sectors tracked by Moneylife Research. The total bottom line for the 44 companies in the chemicals group jumped to Rs1,062 crore in the April-June 2011 period from a low Rs543 crore in the previous corresponding quarter. Net profit growth was spurred by an impressive 29% growth in revenues in the three-month period ended 30th June, according to data compiled for these companies.

Among the best performers was Gujarat Flurochemicals which registered a 31% growth in net profit margin on net profit which increased to about Rs160 crore in the first quarter from Rs42 crore in the year-ago period. Revenues were up 180% from Rs185 crore to Rs519 crore in the period under review.

India Glycols, the pioneers of ethylene oxide, also registered strong growth in revenues, from Rs338 crore to Rs631 crore, with operating profit growing from Rs22 crore to Rs83 crore for an operating profit margin of 13%. The company registered a net profit of Rs26 crore.

For Himadri Chemicals, net profit was up by 67% from Rs18 core to Rs31 crore. Revenues were at Rs211 crore, a 49% increase. BASF India too registered strong sales growth of 53%, up from Rs664 crore to Rs1,016 crore year-on-year.

Companies in the non-ferrous sector generated a 35% growth in net profit.

Hindustan Copper and Hindustan Zinc were the main drivers of this strong growth in the sector. Net profit of Hindustan Copper grew from Rs26 crore in the year-ago June quarter to Rs60 crore in the first quarter this year. Operating profit in the June quarter was at Rs68 crore up 86%, with an operating profit margin of 25%. During the June quarter last year the company had reported a 30% fall in revenues due to a breakdown at one of its plants. Therefore, increase in revenue in the current quarter is on a deflated base.

As for Hindustan Zinc, the net profit was up 68% from Rs891 crore to Rs1,495 crore with a net profit margin of 53%. The operating profit for the recent June quarter was Rs1,588 crore, up by 55%, with an operating profit margin of 56%.

Among the poor performers for the sector was Sterlite Industries, whose net profit dropped by 18% from Rs419 crore to Rs343 crore in the period under review. However, revenues were up by 31% at Rs4,173 crore and operating profit was up by 48% to Rs268 crore. The operating profit margin for the June 2011 quarter was just 6%, which was considerably low as compared to its peers in the sector.



Ramesh Kapadia

5 years ago

Your updates are quite impressive on the chemical Industry,however multi-national chemical industry is not covered.shall appreciate if more light is thrown on the working of these companies.

Share prices in no man’s land: Friday Closing Report

Nifty to find its direction after Monday’s move

The market snapped a three-day winning streak on dismal global cues, after US Federal Reserve chairman Ben Bernanke gave no signal on fresh stimulus for the economy in a speech last night.

Contrary to our expectations over the last few days that the Nifty would move in the range of 5,065 to 5,200, the index today breached the lower limit of the band and closed in the negative, wiping off the gains of the past two days. The Nifty is at a level from where a fall of 60 points could make the downtrend more prominent. The 20-day moving average is 4,998. Today’s fall was on a large volume of 76.26 crore shares on the National Stock Exchange (NSE).

Defying global cues, the Indian market opened with small gains, but soon slipped into negative terrain on profit-booking. The Nifty opened eight points up at 5,161, and the Sensex resumed trade up 24 points, at 17,190. The indices rose to their intra-day highs in initial trade, with the Nifty at 5,164 and the Sensex touching 17,211.

However, selling in IT, metal, oil & gas and power stocks soon dragged the indices lower in volatile trade. A feeble recovery attempt in noon trade was shot down, as key European indices opened lower and slipped further, after a report that European Central Bank (ECB) Executive Board member Juergen Stark would step down from his post, because of a conflict over the ECB’s controversial bond-buying programme.

With no positive triggers, the domestic benchmarks slipped to the day’s low in the last few minutes of trade, the Nifty down to 5,047 and the Sensex to 16,831, and the market closed at around these levels. The Nifty closed the day at 5,059 points, a loss of 94 points from its previous close, while the Sensex ended at 16,867, down 299 points.

The advance-decline ratio on the National Stock Exchange (NSE) was a negative 490:930.

The broader indices also ended lower, although they outperformed the Sensex. The BSE Mid-cap index declined by 0.84% and the BSE Small-cap index was down by 0.75%.

Barring the BSE Consumer Durables index (up 0.37%), all other sectoral gauges ended in the red. The top losers were BSE Metal (down 3.16%), BSE Bankex (down 2.35%), BSE Oil & Gas (down 2.30%), BSE IT (down 2.29%) and BSE Realty (down 2.05%).

The key performers on the Sensex were Hindustan Unilever (up 2.52%), Hero MotoCorp (up 2.05%), ONGC (up 0.34%), Bharti Airtel (up 0.29%) and HDFC (up 0.23%). The main losers on the index were Sterlite Industries (down 5.49%), Hindalco Industries (down 5.47%), Jaiprakash Associates (down 4.58%), State Bank of India (down 3.68%) and Reliance Industries (down 3.33%).

The leaders on the Nifty were HUL (up 2.60%), Hero MotoCorp (up 2.27%), Bajaj Auto (up 0.19%), ONGC and HDFC (down 0.15% each). The major losers on the benchmark were Reliance Communications (down 6.66%), Ambuja Cement (down 6.40%), Hindalco (down 5.85%), Sterlite (down 5.61%) and SAIL (down 5.49%).

Markets in Asia, with the exception of Taiwan, closed weak on renewed fears that the US slowdown would lead to another recession. A decline in Japanese machinery orders and a slowdown in industrial production in China also added to the misery.

The Japan Machine Tool Builders’ Association said machinery tool orders fell 12.7% in August to 98.96 billion yen ($1.3 billion) from July. Industrial production in China rose 13.5% in August from a year earlier, down from a 14% increase the previous month.

The Shanghai Composite shed 0.05%, the Hang Seng fell by 0.23%, the Jakarta Composite declined by 0.17%, the KLSE Composite was down by 0.05%, the Nikkei 225 contracted 0.63%, the Straits Times tanked 1.11% and the Seoul Composite tumbled 1.83%. On the other hand, the Taiwan Weighted gained 0.82%.

Back home, foreign institutional investors were net buyers of stocks worth Rs14.18 crore on Thursday. On the other hand, domestic institutional investors were net sellers of equities worth Rs266.61 crore.

ICICI Bank, India’s largest private lender will recruit up to 6,000 people this fiscal to help its growth and expansion, the bank’s managing director and chief executive Chanda Kochhar said today. Most of the recruitment will be at the entry level and will be done either directly or through institutes training graduates in banking and insurance, where the bank has tie-ups. The stock lost 2.61% to settle at Rs895 on the NSE.

Expanding its footprint in Africa, Bharti Airtel will operate 2G and 3G mobile services in Rwanda for which it has announced an investment of $100 million in the next three years. The move follows receipt of licences to operate mobile services by the Rwanda government. Bharti Airtel added 0.05% to close at Rs399.70 on the NSE.

Prime Focus Technologies (PFT), part of the global visual entertainment services company Prime Focus, has launched new enterprise-class iPad application. PFT will showcase the application at International Broadcasting Convention (IBC) 2011 from 9 to 13 September in Amsterdam.  Specifically developed to augment CLEAR, the application is an indispensable resource for creative work involved with content, as it provides a complete creative toolkit that can be used anywhere. Prime Focus tanked 4.27% to close at Rs60.55 on the NSE.



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