Royal Sundaram Bets On Motor Premiums, Targets 35% Growth

Royal Sundaram Alliance Insurance Company (RSA) is likely to close the current financial year with a premium income of around Rs 600 crore. It is also expected to clock a 35% growth in income in 2007-08, despite an overall reduction in insurance premium rates from this month.The private general insurance major hopes to leverage on the advantage of having a lower share of property and engineering risks (where the recent rate cuts have been more severe) in its portfolio and higher motor premium volumes (which account for 51% of the total portfolio).Right now, our efforts are focussed towards renewal premiums falling due in April this year. These are early days of a detariffed market and we expect prices to find their own levels in 12-24 months. While there is an average of 25% decline in insurance premiums, the current growth in infrastructure projects and real estate on the back of a robust GDP growth will drive insurance volumes, Antony Jacob, managing director, RSA, said.With marine insurance being subsidised all this while, there is bound to be a correction in prices here. Health, personal accident and home insurance are also set to grow in the coming months, he added.RSA hopes to ride on a 45% growth in the automobile business. The drop in own-damage rates and increases in the third-party premiums will equate for itself. However, we are disappointed with the roll-back of the hike in third-party premiums from 150% to 70% on commercial vehicles, Jacob said.