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    Underwriting Profitable Corporate Business. Is Line Wise Profitability - Myth or Reality?

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    rajasekharbo
    This document discusses achieving profitability in corporate business lines for an insurance company. It notes that while tariff business is often profitable, non-tariff business can lead to losses if not properly managed. It recommends focusing on retaining profitable accounts through good service and risk management practices. It also suggests educating corporate clients on regulatory changes and the benefits of a more flexible insurance market. Case studies on specific corporate clients show how focusing on niche areas and prudent underwriting can lead to profitable portfolios.

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    Underwriting Profitable Corporate Business. Is Line Wise Profitability - Myth or Reality?

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    rajasekharbo
    19 views13 pages
    This document discusses achieving profitability in corporate business lines for an insurance company. It notes that while tariff business is often profitable, non-tariff business can lead to losses if not properly managed. It recommends focusing on retaining profitable accounts through good service and risk management practices. It also suggests educating corporate clients on regulatory changes and the benefits of a more flexible insurance market. Case studies on specific corporate clients show how focusing on niche areas and prudent underwriting can lead to profitable portfolios.

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    Underwritingprofitablecorpbusiness[1]

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    This document discusses achieving profitability in corporate business lines for an insurance company. It notes that while tariff business is often profitable, non-tariff business can lead to losses if not properly managed. It recommends focusing on retaining profitable accounts through good service and risk management practices. It also suggests educating corporate clients on regulatory changes and the benefits of a more flexible insurance market. Case studies on specific corporate clients show how focusing on niche areas and prudent underwriting can lead to profitable portfolios.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    19 views13 pages

    Underwriting Profitable Corporate Business. Is Line Wise Profitability - Myth or Reality?

    Uploaded by

    rajasekharbo
    This document discusses achieving profitability in corporate business lines for an insurance company. It notes that while tariff business is often profitable, non-tariff business can lead to losses if not properly managed. It recommends focusing on retaining profitable accounts through good service and risk management practices. It also suggests educating corporate clients on regulatory changes and the benefits of a more flexible insurance market. Case studies on specific corporate clients show how focusing on niche areas and prudent underwriting can lead to profitable portfolios.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 13

    Underwriting Profitable Corporate business. Is Line wise Profitability - Myth or Reality?

    Corporate Business

    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-even becomes difficult We are losing money on some accounts inspite of continuous renewals

    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 its advantages. Simultaneously weed out loss making/bad moral hazard clients.

    Profitability

    Work with Group Clients who understand the concept and need for insurance Adopt the Portfolio approach initially underwrite businesses where we have expertise, thus creating a niche Create Specialists instead of Multi-skilled workforce who are sensitised to clients needs Work on the Assembly line concept Allows prudent underwriting decisions based on the merits of the risk

    Profitability

    Treat each line as a profit centre Portfolio approach internal business credit Develop and work on a linewise database to capitalise on companys niche areas Identify and train manpower to create specialists instead of multi-skilled workforce Allows underwriters to accept risks based purely on merit Whole Account Profit Sharing concept: Sharing of profits made on each Account based on the profit made

    Impact of de-regulation

    Impact on Corporates Gamut of product options to choose from Pricing may not be the sole criterion in selection of covers Due to increased competition, clients will enjoy the best products at best prices and best coverages This then becomes an indicator of the maturity of the market, thus leading to Linewise profitability Underwriting will become Grading driven risks will be accepted based on grades after a detailed Risk inspection of the risk RI decisions will be based on these benchmarks

    Achieving Profitability

    In a de-regulated scenario: Insurers can capitalise on their strengths to concentrate on their niche markets Underwriting will become more prudent: Focussing on law of large of numbers, claim frequency and magnitude Grading of Risks is imminent: Risks will be rated according to potential hazards and loss potential RI treaties will also be based on these benchmarks Clients will move from Unprotected risks to Protected risks

    Achieving Profitability

    Work on a Profit sharing model Client gets benefit each year if overall business is profitable for us Client eventually moves from Un-protected risk to Protected risk not with a view to save premia but to continue running his business profitably

    Case Study - 1

    L&T ECC Prudent Insurance Decisions Believes in understanding insurance before deciding what to buy GMC Policy is not profitable because of adverse claims Portfolio is factored 80:20 80% depends on Claims Experience 20% added to arrive at premium This avoids IR problems and keeps portfolio win-win for both client and insurer

    Profitability for L&T ECC


    MOTOR ENGINEERING HEALTH LIABILITY MARINE MISCELLANEOUS AND OTHERS PROPERTY Overall portfolio for 2004 05 0 0 0 0 33,191,572 17,486,430 11,401,675 6,747,405 275,361 4,355,970 0 5,835,120 1,583,684 1,580,808 0 0 338,277 945,733 0 128,411 2,165,457 2,160,252 0 246,204 2,136,180 2,127,261 0 130,943 39,690,531 28,656,454 11,401,675 13,088,083 0.00% 103.79% 133.96% 0.00% 13.58% 11.40% 6.16% 85.45%

    30, 2005 Overall portfolio for 2005 upto June PROPERTY MISCELLANEOUS AND OTHERS MARINE LIABILITY HEALTH ENGINEERING MOTOR

    32,530,078 2,270,440 5,901,867 0 832,306 0 23,525,465 0

    11,489,444 619,035 2,089,520 79,281 284,749 0 8,416,568 291

    169,937

    3,473,744

    31.70% 32.81% 5.10% 92.77% 0.00% 0.00% 24.84% 0.00%

    22,500 180,595 0 106,500 0 73,548 0 0 0 1,170,267 147,437 1,942,834 0 0

    St Gobain Underwritten by Bajaj Allianz for last 4 years (from co-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 and technical 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 rights were not protected

    Case Study - 2

    Profitability for St.Gobain


    ENGINEERING HEALTH LIABILITY MARINE PROPERTY MOTOR MISCELLANEOUS AND OTHERS Overall Profitability for 2005 05
    30, 2005 Overall portfolio for 2005 upto June MISCELLANEOUS AND OTHERS MOTOR PROPERTY MARINE ENGINEERING LIABILITY HEALTH

    3,394,176 785,239 1,126,445 625,041 153,136 37,760 7,442,364 2,466,871 17,076,223 12,879,421 166,627 43,621 401,080 98,051 29,760,051 16,936,004
    5,153,707 5,449 -13,398 1,999,686 2,795,476 366,494 0 0 7,931,879 99,929 34,716 4,456,754 2,235,297 781,667 37,760 285,756

    0 0 1,422 575,025 0 0 1,662,594 7,616,137 0 0 0 0 0 0 1664016 8191162


    809,491 0 0 0 670,226 68,750 0 70,515 4,993,937 0 10,263 0 4,773,834 0 0 209,840

    0.00% 92.23% 0.00% 376.13% 0.00% 0.00% 0.00% 58.19%


    73.17% 0.00% 29.56% 0.00% 243.55% 8.80% 0.00% 98.11%

    Questions

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