ICICI Lombard General Insurance Company Limited (ICICIGI) Earnings Call Transcript & Summary

Maybe I'll start off. So 15 years premium growth of Lombard round about 13%. So just want to take your view on since India, next 2, 3 years will become more manufacturing, slightly no different, right? We are building like a [ block flow ]. How to think about the medium-term premium growth, maybe at a broad level at industry? And how as an organization we are thinking about advancing?

So I think 5, 15 years, you take 23 years, industry has grown at 15% compound rate. So I'm just using this much more longer-term period, right? So therefore, our view is I think mean, all of you are experts in putting a number to what could be the GDP growth of the country over the next 4 to 5 years to longer-term horizon. So I think I'll leave that to you. Growth of GI should generally be 1x to 2.5x of their GDP growth. if you assume 6%, 7% growth, then GI in India should kind of flow 15% to 20%, in that range. Because even in these last 2, 3 years, we have seen cycles of softer stages in pricing which is quite right. I think the growth in premium certainly [indiscernible] . So there's no reason why it's not going to continue to grow, and I do think that for the overall market. And that's why when you look at it again, since you said, macro level picture, if you look at studies that have been done across the globe as to what, how does GI or [indiscernible] Grows in terms of GDP multiplier when countries cross per capita threshold of $2,000, which is what India is currently at, then the growth of that 1x to 2.5x of GDP is real. And as to that extent, penetration should logically start to improve, which currently is at about 1%, which usually be at 3.7%, maybe in 2 to 3 years. So that's where we are. So that's -- for the growth should be 15% to 20%. Within that, I think our objective is stay disciplined and kind of ideally we prefer to have our performance relative to market in terms of growth. Last 15 years, we have point on why slightly subdued for us because of, again, the point that I made. Markets have been very, very competitive, very aggressive pricing. Hopefully, the impact of that is what all of us can see. And to that extent, I think the objective is to growth rate faster than the industry numbers. Maybe we are going to up the percentage for us. So that's the problem. It is more an aggregate but in that, of course, different segments can exhibit different outcomes.

Market has remained competitive for a while on the [indiscernible] discuss about. So does that mean we'll continue to see market share in those segments, but we will be more focused on profitability versus...

That is what we have generally done, what we've done our philosophic underwriting, not just -- not that we are [ misled ] since '17. Even otherwise, we have always tried to follow underwriting profitability as largely between that, which is to look at that, that does not mean that you will only look at underwriting. Equally, we would be very focused on segment. If you think [indiscernible] business standpoint, we'll obviously have disproportionate market share. We think in mind, of course, they have vertical compressor. So hence, markets, will remain competitive. You have to identify pockets of opportunities within which you're able to reach [indiscernible]. That's what we have done even in the past. [indiscernible] as we look ahead at it is exactly to do the same. And in the process, hopefully, as we have seen in many cycles in the last, as I said, 23 years, many cycles getting reversed in different segments at different points of time. Some of them have reached the market, some of the acquisitions had continued for -- in some segments much more longer term, some segments 2, 3 years. But I think if you have stayed disciplined in terms of your course of trying to still, as I said, identify pockets of opportunities, possibly in the long run access kind of stage number.

How about on the motor side? At least we have been communicating that things are improving at the margin on the competitive side. But at least from our numbers, we are seeing at the diversions with the industry will actually call up in the recent past.

That's what we have kind of indicated towards quarter 4 is where we have said we are starting to see some early signs. And more so, I think in the current year, you'll only start to see some more real impact of the changes play out. So hence, we have to wait for maybe 1 or 2 quarter before which we can [indiscernible] on the ground, when we look at it, we get to see a lot many players starting to talk to get far more reasonable. And that's what evidence of the monthly numbers, even those players who are very, very aggressive in the last, I would say, 12 to 18 months. You can see clearly month-on-month or quarter-on-quarter which will be a lot many players, whether they are small-sized companies, whether they have ,midsized ones or even some of the relatively large multi-let players. All of them are starting to get reasonable in terms of their numbers. And now with, let's say, this new guideline on expense orf management coming in post from 1st April, as we also mentioned in the April call, I think 1/3 of the market is more than the threshold spent out. So there is no reason why the [indiscernible] Will wait for the third year to come through before the start asking these companies to get back to the limits of less than 30 or less than 35 as it is the case. So, there is enough and more pressure on these companies to start getting far more [indiscernible] . so obviously, we should start to see those numbers playout and...

I am still not clear on why the divergence of our numbers versus industry has actually widened in the recent past. Because [ TP ], I think, was growing reasonably well in line with the industry for us, let's say, by till January and then last 3, 4 months, you've seen that TP has declined in a few months for us, but industry actually has grown.

Yes. [indiscernible] that each companies will take. But I think we generally will refrain from commenting on monthly splash quarterly numbers. Rather look at outcome versus.

Additionally what we were commenting what you were seeing some player. Obviously what you're seeing in new set of players who are actually growing again much ahead of market.

At least not in the recent past. Most of the players have started to get reasonable. I said there is numbers available for case can be cable monthly numbers, pretty much there see month-on-month, quarter-on-quarter, how different players are executing in terms of growth. And so far as TP is concerned, TP, there's nothing that we can do atleast super it's more reselection. And secondly, as we keep saying, TP is a long tail business. Not sure as to what risk selection are those companies willing to take but they should wait and look for large development over longer sites.

We have seen that right. Let's look at it probalby this way. All those companies which were very aggressive exactly on it. If you look at developments , it has kind of played out at us. So, that's exactly -- it's what it could lead to. I don't know what is their convergence to write some of their growth numbers. It could be driven by their -- investors' expectations. It could be also change in shareholdings which has happened in some companies. New shareholders, they also still want to get very aggressive in the initial year possibly, we don't know. Changing the topic a bit like now on the feedback we get from the international [indiscernible] Because the [indiscernible] business, because of the growth component. And a lot of losses get ignored because of the account, [indiscernible] which is [indiscernible] losses, but like people are focusing much more on the catalog and which is where the comfort is. but the competition doesn't end because of some of the investors are just...

Which is absolutely okay. That's the nature of this business. You have to kind of stay invested, you have to make sure that you keep investing the right cohorts of segment which you think are vital. And that's what will aid, let's say, incremental growth over longer term, which is why we keep talking our profit growth numbers over longer horizons whereas [indiscernible] over 1 or 2 periods. Yes, in the short term, yes, there could be some challenges, which --

But what we're seeing on the ground is what I can talk about, which is on ground. I think we have seen...

It's not the point I'm trying to highlight is more about abatement of less sensible or competition or the competitiveness of the space -- is that like some of the investors globally just focus and it is not happening just in India, everywhere the motor like now. Unless you are able to do the driver level rather than a vehicle level in terms to get to the driver level in so that you can discriminate in a big way.

Also in India may have been easy thing, right? Now the same vehicle is driven by multiple persons. It's so easy as what...

Most of data is limited.

Of course, even in the current country, data is very reasonable. Forget about whether underwriting asset or contacting the customer. Underwriting the customer helps a lot more in terms of risk selection. But even within the underwriting of the asset, you can still do a lot of segmentation and portfolio selection. It's exactly what we have done. But now with KYC coming, yes, your point is absolutely right, with the effective KYC coming in from 1st of January, '23. Then you get possibly in the past, we were not even aware of the customer information at all. Now if we're kind of knowing a lot more customer information. And as to that extent, it helps a lot. But for us, we have generally been trying to apply various proxies even in the absence of customer data in the past . And we are trying to see if there are particularly the context of motor, for example. You're trying to see if there's a positive correlation between [indiscernible] and the customer vis-a-vis the last experience of the individual. But generally, we see a positive correlation. Logically, it's correct. Some of the high credit score generally is relatively better driver, better -- we have seen generally that getting [indiscernible]. So hence, to that extent, those outcomes is something that we have been testing in the past. And now with the KYC coming through, it actually had access to it. It's the way we look at it. But to your point on motor is saying to look at a month's number and then start thinking...

I think last 2, 3 months, we have seen that trend eventually.

Which is the nature of the business that we are in. I'm just saying that...

Well, I was not saying that.

I can only tell you that if you ask us, has any of our approaches has changed? No. I think in terms of the approach, there is...

No. I think limited point was that the expectation that competitive intensity is reducing at the margin, and we are not seeing that play out in terms of our numbers be more closer to the industry. Actually it's the reverse is what was seen in the last 3 months, which is what the question was.

I think from our standpoint, I think the approach has pretty much remained the same. And clearly, over the next -- at least this year, we should see a lot more change. On ground, as we speak, I think we are already seeing, including some of these large multi-line players who are equally aggressive are now starting to talk to that. That's the feedback on from the ground. So we'll see some of those numbers in there.

So okay, when you said a little more longer picture, right, because obviously it was alluding to it. From management point, what do you think is the long term? Like is it a [indiscernible] data consistently been? Is that fair view of your long term.

in terms of.

Even, let's say, operating performance, right, let's say, right, we continue to do a little bit of market share consciously because of the competitive? How long is the long management say, okay, that will be time where see it's not like we are only competing at multi players and they can continue to be irrational? But just for conversation on, what do you think is the threshold level, is that a fair point?

What I'm saying is I think at least what you're seeing on the ground is we are not seeing any of the players wanting to continue to play for lifetime.

Correct, right.

So that's -- those days of months. Thankfully, since last year, particularly towards the end of the year, all those currency valuations on price to sales is all again hopefully behind us. People are all starting to talk a lot more reasonable when it comes to underwriting. And therefore, a lot more sanity coming into the market, particularly in the context of motor. People expected a lot to happen on pricing of motor third party because for 3 years, there was hardly any price change. So there was an expectation last year that we will possibly get a double-digit price revision. In reality, I think the market got a single-digit weighted average price increase of 3% to 4%. What does this do? Again, it means that these players have to put a lot more emphasis or focus on more on underwriting -- and hence, to that extent, obviously, is where we are kind of getting that achievement of player started to get 0reasonable. Now to answer your point on what could be a reasonable time period, again, it could vary between different segments of business. You ask me motor on damage. We typically tend to play out as we have seen historically over the 3 years. because that's a time cycle within which most of the launch development starts to be repriced. If it's third-party much more longer in terms of [indiscernible] , which is why some companies will get very aggressive in underwriting that position could end up taking calls on inflation assumptions, which could be not in accordance with the actual loss development or let's say the claims payout. And that's primarily, as you have seen enough examples in the past as to how third-party loss issues have spiked for reasonable number of players in the market. So hence, that cycle of development would be much more lower. Then the inability could be again a short take, which could generally again play out within Lets say 2 to 3 years. If you look at corporate lines, which are fire, engineering, money, aviation, liability, et cetera, et cetera. Those are businesses which have looked at over cycles of 3 to 5 years. Because in 1 year, you may have, let's say, a large loss which could impact your performance all in the very same year, you may not have any [indiscernible] In which case, you will have possibly a relatively better lost $6 billion. But can you say that in effect, the outcome is positive or negative, very difficult to kind of [indiscernible] . Therefore watch out for the development over 3 to 5-year cycles. So what over we right or even for whatever the industry rights, again, you have to look at it over cycles of at least 3 to 5 years. Because one season could be fantastic, next season would be adverse. So that does not mean that the portfolio is, let's say, lost. So again, watch out for it.

So different segments exhibit different time cycles. I think the question for us to look at is motor is specific since you are largely kind of discussing on that. last couple of years. Further, it got the competitive intensity got further accelerate because of various factors that we have discussed in the earlier earnings calls. Hopefully, one of them are wariness today as we speak. Hardly, we see any reduction in claim insurance. In the past, there are challenges on, let's say, the supply set constraints being significantly being affected because of shortages, et cetera. Now those things are behind us. Demand seems to be largely pretty much back in terms of private [indiscernible] Two-wheeler maybe still some time. So hence, all those factors which were influencing players to get aggressive on pricing, which is where we are seeing is significantly behind us. And therefore -- and with the change in regulation, which is significantly putting emphasis on trying to keep the overall cost of operations under check. Also [indiscernible] Players to get far more reasonable in bringing down their cost of operations. We have always historically operated at lower threshold on expense of management. So hence, there is clearly pressure on those periods to get reasonable which is what we have seen -- and walter will continue to remain competitive because it is by far a commoditized offering, right? It's easy to go after segment. By far we , the largest contributor to overall revenues in terms of premiums for the last of 21 of the 23 years. So hence, it is easy to go to segment by any player in the market. But some of players get their play incorrect, keeping in mind that they assume that the policy is only one year, but the claim tail development would be much longer. So they get that part wrong, which is why we have seen instances of players starting to execute underwriting outcomes, just far more adverse.

The last 2 quarters that you mentioned, you're seeing the same of turnaround in terms of competition. So some reference point if you can give, is it been TD, 2-wheeler...

If you look at primarily where we were kind of slightly lower in terms of our mix of business as private car, because our mix of private cars to the overall motor revenues were about 50 to 55 -- 54% In the past. And that number came up to less than 50% at the end of last year. So therefore, that was relatively by far the most competitive segment, at least in what we have seen. So there already, we are seeing signs of 2 changes. One is, if you remember, we had talked about in quarter 4, I see some number like exhibiting a small [indiscernible] price increase. As we speak currently, there are players in the market who are talking about exhibiting a similar kind of a price change. So that is one factor, which is kind of holding things coming back. The second is when I talked about our expense of management. Clearly, we are seeing signs on expense of management being talked about by many of these players who are already exceeding those pressures. For us, it's not a change, which again create some opportunity.

[indiscernible] some time back. So why is not really actually followed in the industry? I mean, what is the distributor commission which is...

I think companies look at the overall cost of operations. When they look at running the businesses, you have to look at it from the lens of combined ratios. Expenses is one element to it, and the last experience is by far is the largest contributor to the overall combined ratios. When you look at what the calculations has done currently is they are very clearly said that you all both commission plus operating expenses put together. You cannot exceed the threshold of 30%. As I said, very clear the market are beyond the threshold of 30%. So therefore, now we have to take it down. And there are enough these incentives for players in the market in case if they do not make those thresholds. So which is what we are kind of going to clearly see those players starting to bring it down. Certain segments will exhibit different characteristics in terms of cost of distribution because we ask from the industry was to significantly give flexibility in the way how we [indiscernible] were rather than have too much of micro management of regulations. It's the right regulatory [indiscernible] done it. And today, the flexibility is given to companies. Now they can decide for a particular segment, you may have a high LR, maybe a relatively lower expense management. But [indiscernible] , it could go after segments which are, let's say, low on NR, but let's say, high on expense management. So that's a call that each company have to take. And depending on that, it kind of gives us the flexibility. But in the aggregate, make sure that you are using the threshold of 30% or 35%.

Isn't the commissions to the OEMs or the dealers, isn't there a cap on...

The early thing that you have gaps in terms of how much you can pay commissions for different lines of businesses. Whatever commissions caps, They are equally now on even excess of management as a whole for a company as a whole. And within that expense of management there are, again, further caps on how much can you pay for higher, let's say, motor, health and so on and so forth. Those are the micro management of regulations that existed, which possibly constrains the players in the market to kind of operate free, which is when the change that regulator of [indiscernible] done and today, they have given the desire flexibility in the way how they want to operate. And you will see how it plays out.

I'm still confused here. I mean what are the element the cap that you mentioned, those, I think around 15% or something the cap which was their in motor insurance as a percentage of revenue? I'm asking the quarter that we can pay to the dealer. Yes. So you could tell us...

99% in case of private cars.

How much?

19.5% and 22.5% in the case of 2-wheelers.

And commercial?

19.5%.

So those were really followed in the industry?

Not necessarily. I think it depends on each companies in terms of what do they want to look at, which is what I said, I think you have to end up the look at the overall expense of management in the aggregate in terms of how companies have been writing their businesses. And on that basis, is where now the regulator was very clearly said, there is too much of constraints given to the market, in terms of different limits which the companies are required to follow. Rather than that, give the flexibility and give them one single limit for them to monitor it.

So this is different in the total business? Let's say someone to writes up [indiscernible] utilize to...

That's a call that the company has to take, whether managing the expense of management is relatively better off as compared to taking an exposure in the segment, which can be significantly loss making for them.

And what about -- you talked about this 9% price increase that you have taken...

Single-digit price increase.

Single-digit And this is since when?

Quarter 4 of last year.

And no price increase since?

Right. No further price increase on top of that no further price increase.

no further price increase. And how do you see the competitor in the...

It is what I said. Already, we are seeing a lot of many players also wanting to kind of increase price change. Some of them we have seen already affecting a change in terms of prices. Also, we have seen some of the companies starting to moderate their overall expense of management. So it's a combination of both.

So the distributor commissions, how do you see that shaping up from in last 2, 3 years I said 1/3 of the market is more than 30%.

more than 30%. Which is a regulatory threshold right now later. So they have been given a light path if we can do to less than 30% over a 3-year period.

I mean my question was more on the [ EUM ] is actually the sum of everything. I'm talking about the 19% in the specific...

That is very difficult to kind of comment, which is what I said. We will have to leave the flexibility for the players to operate at. If they want to end up paying, let's say, 40% for sourcing a particular line of business, that's the call that each companies will have to take. In which case, for them to beat the threshold of 30%, they have to make sure that the rest of the lines operated, let's say, maybe less then 20%, or less than 10%. that's the call that they have to take, End of the year, they have to be within 30%.

But are you seeing the sign of distributional commission also going down?

Again, difficult to comment because there are different segments of businesses which operate with different cost of distribution. For example, we are operating -- we are going after segments which are high on LR relatively low on cost of distribution. Equally, there are segments which are low on health loss ratio , in which case the cost of distribution could be higher. So I can't give you one fits answer for the point that you're asking because different segments will exhibit different loss issue experience and a different cost of distribution.

Any reason why not on [indiscernible] platform is that a...

That's a strategic call taken 13 years back, where we did not want to lend our brand name to a franchise which compares purely only on price. So insurance is not any ecommerce sale. It's not something -- it's much more beyond that. So therefore, we didn't want to let our brand to a franchise which largely compare some price. And two, what the platform does is it is the right thing for them, which is essentially to say that for them, if they find someone else offering a higher cost of distribution, then they are happy to work with that other insurance partners. In which case in industry, there may not be continuity of insurance or, let's say, continuity of insurance with the same platform for that first insurance company. So then there will be churn of insurance companies. So -- and thirdly, and therefore, the relative cost that you play on the platform is something that we evaluate and see whether can we end up incurring the same or slightly lesser amount of spends in order to build our own platform, which is [indiscernible]. And there, we have seen at least in the historical past, the relative cost that we spend up as, let's say, sales marketing or brand in advertisement. It's far better than what I kind of end up being to the platform.

[indiscernible] is 15%. What is the commission generated to their platform?

Since I'm not on the platform, I cannot actually comment very difficult for me to comment on that.

So IFRS is, I think 3 key changes right. So one is, of course, right now, they have not put any specific time frame. But we understand that maybe it will transition over the next 3 years or so. The 3 big changes would be one will be more. Every quarter, we have to come back and explain maybe a mark-to-market moment [indiscernible] which thankfully have not been required to so far at least. But because of that investment velocity will not change. The second change will be more, I think, as what we have discussed at the gap, you're required to expense all the cost of it, which are incurring for sourcing of businesses, which globally if you look at it, they will be to do it. Hence, the underwriting outcome will be better. And therefore, to that dictionary maybe to some extent, combined crude slightly bit. But the third bigger change is more the discounting of reserves. And this could be more relevant for players like us, which have been kind of reasonable in our losses of estimates. So that's going to change. .

How does that impact between it.

Because you will be allowed to discount results today. Today, you're not a discount results at all. Some say for motor third-party paying an on to pay 6 years from now. I'm carrying those payment likely outflow, which is 6 years from now on a normal basis. I don't go [indiscernible] discounting. Globally, either the time may not be as long. What whatever date is so long, you'll be allowed to present [indiscernible] , let's say, using a is [indiscernible] Whichever it is more. So now when you look at my current net numbers because I'm carrying the results are on a nominal basis, my notations are inflated -- and that's what my combined ratios are equally higher. But on the flip side, my investment leverage is better because my network is subdued and therefore that leverage is relatively higher than what you see in the global component. So that would undergrew the change. So we may see discounting of business per limited. The question is what happens at the very first time of transition. In the very first year of change, because you will be discounting a lot of your liability. Suddenly you will see a lot more sectors [indiscernible]. So that could vary for different players in the market.

When is that possible?

The next 3, 4 years.

Is that to the new accounting...

They are talking about 2 things. one is just IFRS. And then they're equally talking about currently, India is on the Solvency I regime, which is largely product capital based on just premium claims. Going ahead, we are saying we will complete the transition is capital very quite subtractive for capital on a late risk associated with reinsurance, credit that's associated with investments and any operational risk that you're exposed to. So effectively, you look at all risk elements and correspondingly provide a capital charge.

More likely what banks are today like now?

Exactly. So that one is on the Solvency II framework, which is nothing but a replacement which is right thing to do. So again, they want to do both of the transitions possibly simultaneously at the same time, which is like it would happen in 3, 4 years.

Just a basic question on policy. Some people were very heavy on Motor T, especially Motor TP, when you are[indiscernible] to -- I'm just trying to understand in the current solvency, how should like one understand...

The balance sheet leverage is high. So I don't know at what losses they're running the look at. If they're running the loss issues at a book of 120%, then maybe they may possibly have that leverage because leverage is investment in a special network. So if they don't think the book at about 120% a lot, then their network is significantly lower, so it's possible. So a question for -- to ask for is, rather how is the large development going to happen for that book, which can tell you only over a period of time. And thankfully now every company whether listed or otherwise, since March 22. In the company have to put on their website, [indiscernible] there is separately for the long tail as a business still separately put out. So what's important for all of us is to look at the development over like 6, 7 years. One drive distribute doesn't mean for example, license numbers timing for the last 7 years. And you can see us over the last 7 years in terms of how we are. Same thing should logically happen for the rest of the year.

Some of the unlisted are anyway the investors will have access to all these information which you're talking about?

Maybe or may not. I don't know what information are giving. Possibly, yes. [indiscernible]

Just predicting the course of action. We're not into any cuts of faces because had your competition being a listed company, the reciprocal to the data would have been very differently. But you have to report this data, let's get that from right now, which it will start getting reflected.

Why do you think many companies in the players [indiscernible] have seen a spike over the years. Some of those companies grew retail in the last 4, 5 years. All of them have to see an increase in the loss ratios.

Even though over the period event of investors who are in private motor willl relate at the valuation eventually will be impacted because of the trial and, therefore, be sensible?

It is quite possible. All I'm saying is there is an increased disclosure that is available to the market. And even we wanted to invest in any of the company, I'm sure they would look at both the reported financial report...

I mean, the education also the market is looking at the...

We have been talking a lot about it, for example. And we have been talking about it also for every company to kind of start disclosing this. And thankfully, the kind of [indiscernible] management for every players, whether that or otherwise. And to that extent, that please tell you in terms of how bad is quality of business is.

So question on are -- if you look at [indiscernible] big mover in terms of compensating for the motor losses. So what we understand is the reinsurance rates doubled. So is there some process you can share on the sustainability of these profits and how actually happened in last 2, 3 years where the reinsurer by the forecasted and we were able to pass it on to the customer and retain the same loss ratio. But the absolute profits went disproper because the expenses some thoughts if you can share the sustainability of the profit?

Which is what I said. I think corporate lines, in general, you have to look at those cycles of 3 and 5 years because if a catastrophic loss happens, when a large loss happens in that year, it starts to impact your numbers. And hence, you may not be able to reflective of -- you may not get a better underwriting outcome in those specific periods. For industry, these are high-exposure segments. Not every player in the market will have the balance sheet strength and solvency to write small business, unlike motor. What we effectively do in some of these exposure-led businesses, we tend to write a little larger-sized exposures, where competition is less. Generally, these risks are relatively better managed from a risk management standpoint. Thirdly, there's also an element of reinsurance which gets [indiscernible] because not every player will be able to keep those risks managed. And because it is reinsurance driven, pricing is also defined by the reinsurers, which is reasonably better. And so therefore, it's a combination of all these factors. So now if you look at it in that context, on some of these large risks which are there within the corporate lines portfolio, we tend to write relatively larger proportion of those factors. And then to that extent, the portfolio outcome is relatively better for us. And the second, why does it translate to -- let's say, consistently keep translating better outcomes for us is also because of the fact that given that we have been far more disciplined on underwriting. Even the portfolio that we are kind of reinsuring is also favorable for the reinsurers. So when they give us the terms of commissions, you would have possibly heard us talking about this for quite some time. The terms of reinsurance that we have got is also getting better every time, both in terms of the panel of reinsurers who we work with, which is to take care of credit risk point that I talked about. And equally, the commission on reinsurance that we enjoy as a part of the risk transfers that we do, it's equally beneficial. Therefore, it kind of aids, let's say, the eventual underwriting outcome. So it's a combination of both those factors.

So what is the ticket size of -- on the customer side in terms of the quantum of, let's say, the [ term insured ] that we normally [ do ]?

Generally, [indiscernible] this category, just the risk which is what some are insured, this is more than INR 2,500 crores.

[indiscernible] like more factory insurance [indiscernible]?

Relatively.

So this line of business -- just to add to his question itself, this line of business, do you expect the insurance hike, price hike and competitive intensity relatively higher than the segment this year? Will there be some impact then?

The effect is more for players in the market because their portfolio outcome to the reinsurers have been adverse.

We are writing more of the risk. We are doing less of the insurance. So...

Whereas relatively consistently over years, I think we have been focusing a lot more on this election, that's one. Secondly, we are putting a lot of emphasis on value-added services, which is primarily to make sure that we are able to possibly minimize the number of losses that the corporate will be subject to. And therefore, to that extent, the portfolio outcome is relatively better. And three, as I said, the solvency position of many players in the market because of some of the received calls, they are not able to write all types of business. Like I said, ICICI Lombard has effective underwriting. So the combination of all these factors is what is leading them. And because they are writing, unfortunately, not so risky should be kind of written at those levels of pricing. And hence, to that extent, they are either getting maybe slightly reduced rates of commissions from the reinsurers or maybe the panel of reinsurers with whom they are working with is possibly -- may not give the same quality of products ICICI Lombard is writing with that. And hence, to that extent, there could be risk of a credit risk, which is possible. In the event if there are large claims, they may not be able to recover the claims so easily. Or thirdly, this is what -- at least what we have seen again in the market is, given that their portfolio outcome is more adverse, the cost of reinsurance, which have seen an increase, which is what we expect also in the earnings call, for us, it just kind of increased by about 40% to 60% for the catastrophic loss protection costs that we have to pay. That we understand for the market has kind of increased much more, so therefore, a factor of all those.

How many number of reinsurers do we have an option to reach or order? How does that...

To understand, so by reinsurance regulation, you can see only 4% of it is mandatory for [ entry list ]. Whichever is that you rate, 4% is mandatory.

And specifically for fire insurance, when you're trying to reinsure, how many reinsurers are there, just to understand what is the -- since you mentioned that you're getting a better pricing, just wanted to understand how many reinsurers do we take hold...

There are many insurers that we work with. Most of them, so if you look at our panel of reinsurers, generally, we work with most of the reinsurance majors globally, which is Munich, Hannover, Swiss, SCOR, Lloyd's. Those are the ones that we kind of largely work with.

And when you look at payments, so our market share, I think, is 13%, 14%?

On corporate lines, generally, it will range between 13% to 17%.

And what will be the mix of the customer between retail and commercial? And it's largely commercial or...

Corporate lines are below retail corporates. So therefore, the relative -- so the other way to look at it is there are large corporates, and then there are those small and mid-corporates. As I said, relatively, the weightage for us will be more on large corporates because we have been able to execute a lot more [ direction ] there. Having said that, if you look at our SME portfolio, which writes not only this fire insurance, it also writes marine rights, liability. It also writes their health insurance profile. That segment of the business consistently over the last 6 years has been compounding at 25% plus. But that's a segment that we have been kind of growing over the last 6, 7 years, but that's doing very well. To answer your point, it could be multiple set of reinsurers who we kind of work with. And in terms of portfolio mix, we are positive on both the large-sized segment as well as small and mid-corporates.

Does the parent advantage really help us get this business? would you say that...

Maybe initially, it's definitely yes. And also into certain accounts where, let's say, the bank relatively have a better relationship, that definitely kind of helps it. But having said that, over periods of time, this is one segment where we have largely tried to create our own relationships of directly working with corporates and where we are able to see a lot more value-added services that we are able to execute with these companies, and which is why, to your point on why have you been able to hold on to those renewal upwards of 90%, 94%. It's primarily because, one, we are able to go directly with them: two, we are able to kind of take care of most of their service requirements in terms of issuance of policies or, let's say, servicing of those claims; and three, the value-added services initiatives that we are able to exhibit to them, they kind of find a lot of resonance with it because if someone who can play a very important role in mitigating their risk, obviously, they like that because the relative cost of renewal is lower, and the possibility of a loss gets minimized. And hence, the longevity of that corporate to work with an insurance company like ICICI Lombard is much more open.

Let's say we'll compare it, is this business also tender-based or it's more of relationship-based?

Relationship, unless it's a government business. If it's a government-owned account, then yes. Possibly some of the businesses is tender driven. But there again, increasingly, what we are saying is, given the relative strength in some of the other players in the market, including maybe the state-owned companies are getting executed, we are actually seeing a lot -- some of those government accounts also getting transferred to companies like us.

And in terms of cat losses, this year is also in a lot of chemical plants, a lot of fire good players, so in terms of cyclicality of the loss ratio and pricing, where do you think we are in? Let's say motor, we said that competition may have peaked out. In terms of fire insurance, where do you see that the nature of competition or price sensitivity?

You saw the impact of softness in pricing on fire continue for 10 years, right, from 2008 to 2018. And the cost of which, if you look at with the portfolio that got exhibited by all the primary companies like us to the reinsurers, they did not see enough return on capital for that, which is why in 2019, they exhibit the price revision or they have put a lower price, to say that you need to price your property risks at these levels of low prices, which is why those -- the next 2 years thereafter, unlike the normal 10% to 15% price growth rate that you've seen in fire, in those 2 years, which is '19-'20 and '20-'21, the growth in fire insurance for the market was upwards of 25%, 30%. Because pricing corrected, ICICI Lombard in those same periods grew at almost over 30%. We grew much faster. Secondly, what we did, because the price was to be positive, we retained much more than what we would have normally retained because it made a lot of sense for us to do that. That's what we exactly wait for. So clearly, we saw periods of rates getting higher. Now what's effectively happened, very recent development, which is what we spoke in earnings call, which is to say that our area in the -- in the drive to create a significant kind of open architecture across segments, across areas. Even on property insurance, I've said that you cannot have IIB-based pricing as a part of the reinsurance contracts. So effectively, in that sense, the base pricing or the IIB pricing as a part of the reinsurance contract gets done a little bit. What does this do? Automatically, logically, prices should drop. Now can that significantly collapse, maybe like a motor or health, may not be because these are high-exposure segments. You cannot suddenly see the price drop crazily by a significant amount of percentage. So hence, which we have indicated, possible indication seems to suggest, again, early days, we have seen it for April 1 renewals, which is where bulk of the corporates renew; or maybe January 1, which we will wait for it to happen. We had said roughly you will see a single-digit price revision in terms of price drop happening, which is exactly what you see in the April month numbers, if you're talking about by 1-month numbers. You saw a flattish growth on fire insurance specifically for the month of April. But the offsetting effect to it is the increase in cost. Equally, you saw more number of catastrophic losses getting -- and maybe it's an effect of climate change or whatever it is. Clearly, the reinsurers have again seen that they were impacted by large number of catastrophic losses and, therefore, again, impacted their return on capital. And hence, they've increased rates. Now the question for us is how much am I able to pass through, how much of it I am willing to kind of retain on my [ net ], it's a function of each company's appetite. So again, it kind of balances, which is very on-balance. The growth in fire insurance has been flattish.

Just last question. What is the kind of investment leverage in [indiscernible] fire insurance?

It again depends on how sensible your underwriting has been, if you have been able to make reasonable profits. So for example, ICICI Lombard's combined ratio, if were to look at a sneak on the corporate lines, will be anywhere in its 90s, so therefore, the direction I'm making a reasonable return on segment underwriting. And then, of course, the leverage will not be as big as Motor Third Party, for example, because, generally, the payoff period is pretty quick, because intimation cycle also is quick, and the settlement cycle also is relatively faster. Unless some of the risks are, let's say, co-insured, let's say, for someone else is the coinsurance leader and, let's say, the follower, in which case, then the time that it would take for me to get intimation of claims and so on and so forth would be slightly longer, but those could be where it named a specific list. But otherwise, in general, lower investment leverage, a lot more of the return on equity will come through underwriting of that. So for us, this has been very, very positive.

But even then to quantify ROI or investment, which [indiscernible]?

Which is why I gave you the numbers. I think now I think the math is something that you can do on your own. My [ combined] should be at 90s. Unlike when you see my overall combined, which is 104.

Even you said that...

Whatever came out [indiscernible] 30%.

Does that constitute of 10 players? Or mostly the [ bank renewals ]?

Midsized players, relatively. Midsized, small-sized companies, who are the ones who have been very, very aggressive in the last few years particularly, they have to really kind of maybe down to [indiscernible]. So hence, which is what starts to create a lot of challenges for fewer market -- orderly market done. So we will see. Looking at the regulator, in all fairness, our sense that we get is they're not going to wait until 30 for those players to get it down to less than usual. They will kind of start pushing it to be at [ 150 ]. so hence, you will see, I'm sure we will see that in the quarter that we are going to -- we will see in Q1 and maybe the subsequent quarters.

How the traction in the latest product like the motor floater pay as per use?

All of them are very positive. So in general, what we have seen is, of course, it will take a relatively longer period for it to become a higher proportion of the overall make. But we are seeing increased adoption of customers wanting to go for pay as you drive [indiscernible] price. And for us, this is not the time that we have just introduced it. I think we have [indiscernible] in our sandbox. The normal sandbox would allow us -- allowed us to experiment 10,000 policies [indiscernible] 30% at such time, which is 6 months.

6 months' time.

We exhausted that with consumers. So hence, customer adoption was pretty much there. I think the real thing for us is some of these products is -- for the customer is a great revenue situation because the customer itself is getting a benefit of discount. We need to make sure that we are able to kind of price the rest of the portfolio product. Otherwise, on aggregate, we will actually see a decrease in revenues.

Okay. This is precisely what do we gain and where we might lose.

Exactly, so which is where we will have to kind of make sure that the [ cross-consideration ] which was otherwise happening between the various customer segments kind of get priced rightfully. So for example, this segment of customers, I may give the benefit of discount because he or she is exhibiting a risk outcome which is relatively better. Hence, they should be kind of given the benefit of it. But the price direction of them were giving losses appropriately. So that's something that we do.

Although price is moving [indiscernible] indemnity...

So generally, we have been ahead of the market in terms of effecting a price change. For example, if you recollect since most of you are following us very closely, we effected a price change in quarter 3 of 2021, which was roughly a weighted average price increase of 8%. And I'm sure you would have heard us talking about, again, effecting a price change from February on the renewal book of over 19%. Market, at least what we understand, most of them, when we changed pricing in '20-'21, they remained in '21-'22. And some of them, I think as we speak, have kind of effected a price change. And generally, the ranges rates have been slightly higher than whatever increase in rates have been. So hence, to that extent, I mean that's something that, again, we'll have to keep looking at the portfolio experience in terms of how the loss development is playing out. What we have largely spoken on the retail visibility book is to run the portfolio at a loss ratio which is ranging between 65% to 70%. And at this point of time, I think we are largely operating within that range in terms of loss experienced. And we keep looking at whether the last development is exhibiting a different outcome or not. And if there's a need, of course, we will not shy away from any other price revision. As of now, we are not warranting any further price revision or whatever we have done at existing facility. So that's something that we do as a co-shared [indiscernible].

[indiscernible] in health?

I don't have this visibility mix.

We'll come back to you.

But I can come back to you.

I think more than anything, now that things come back to normalcies, but when you look at the loss ratio, they've still not come back to the pre-COVID level. And the pricing team has actually not been very meaningful. The [indiscernible] level is -- has been there. I'm just not trying to be able to understand why the TP loss ratios for all the players has still not moved back to the pre-COVID level. They're still below those levels.

Again, very difficult to comment. It all depends on what losses or estimate that those players are taking. So it's very easy to have a loss ratio on third party at a lower number if you provide for existing [indiscernible].

Do we get sense like [indiscernible] solvency angle to it has been from the regulatory point of view, if somebody is underproviding and -- the regulators have also been active about this entire underprovisioning of third party because they want to give something.

Which is why they wanted to first make sure that the market starts publicly disclosing, that isn't in private disclosures, which over a period of time will start also depicting how would [indiscernible].

But this is an audit taken from the regulator.

Second is regulator on its own also does independent review of reserves for each of the companies.

And can hold temporary capital to...

In the past several years back, there have been public circulars which have been put up on...

With the name of the people with...

With the name of the company being put up to strengthen reserves. As of now, I think clearly, what the regulator is doing is looking at each company's losses or estimates. And some of the changes that you see in terms of that loss experience as a consequence of maybe some of the regulatory direction.

Okay. So it may not be coming in public domain, but they are already accounting for it?

They do kind of look at it as a review on an annual basis. And wherever there are any observations that they need to make, they kind of give it back one-on-one to [indiscernible].

Well, just to come back to this question about the loan loss ratio, 72% for FY '23 for Motor TP.

Yes.

And it used to be 95%, 100% pre-COVID experience, in that range. Now if I understand, it's a relatively in a normal year. But still those loss ratio has not moved back to pre-COVID. So are there reversals in -- of last 2 years that have been [ reviewed ]?

So 95%, 100%, I don't remember the last time we got 95%, 100% on Motor Third Party. So therefore, in the past prior to 2018, if you remember, in a couple of years, we are also kind of talking about strengthening the Motor Third Party full book, which was the full book that was in existence until 2020. At that point of time when the U.K. Government Actuary's Department had estimated the loss ratios. Over and above that, in the very first year of dismantling of the book, we had taken an additional charge of INR 100 crores. And since then, we have been looking at what has been a fruitful development experience. In these 5 years that followed after the dismantling, I think [indiscernible] correctly 2 of the prizes, will continue to strengthen the loss ratios. So in 2018, it further strengthened, post which we don't see the need for any further strengthening of the third-party book. So hence, when you see some of those loss ratios, it could be an effect of the reduction, things that we would have done in those specific periods for the book that was returned of the third-party book, which, in that sense, we did not kind of underwrite those.

So we are seeing the client [indiscernible].

The client pool is okay. I was talking about the Motor Third Party commercial vehicle pool. Dismantled pool was only between 2015 to 2017.

So do you think that the current loss ratio are normalized levels or they will reach a point...

As we have been saying, actually, the annual loss ratios are largely reflective of what you can expect so far as the future is concerned for ICICI Lombard in the context of Motor Third Party. Two developments that we will constantly watch for, one is we will obviously see whether there are any price changes [ we're reading into it ] or not. Again, for '23, '24, we have not seen a price change. We are not sure if a price change will happen or not. Having said exactly to your point, however, there's a clear inflation that is getting attributed to core payouts. So hence, to that extent, we need to make sure that how do you now factor in for this [ inflation ]. You have to keep selecting the portfolios which you think is viable [indiscernible]. So hence, I may not go after segments which are, let's say, 80% loss ratios. I mean, largely staying within this range. So hence, it's like saying that we would want to kind of operate at these issues what we have seen on an annual basis. But if I can see some kind of a reasonable price revision, I will be willing to look at some of the segments which are still okay. But on balance, I will still end up getting to the loss ratio range that I spoke about. That's what we are wanting. So that's one, increase in pricing is something that we'll monitor. Two, we will also see how the 6-months-long liquidation will play out, which the recent development is at least the [indiscernible], which has given a slightly adverse view for that 6-month rule. What we understand is Supreme Court has stated the rule, which is a positive.

So then is it [indiscernible]?

I can say now this matter has gone to the Supreme Court. Supreme Court has changed the order of [indiscernible]. Once the verdict comes out, that will obviously [indiscernible]. If at all, it's very difficult to give rate for the final quota wars to come.

Sir, one question. Is next 3 years going to be better than last year's for industry and for us generally? Because we wonder which played out, economy and the COVID.

If you look at COVID, COVID obviously impacted the industry as a whole. [indiscernible] But the good thing is you have the -- the good part is if you are a multiline player, they tend to kind of help because you've got some relief for model. Whereas if you are a stand-alone, let's say, one-line player, it impacts you substantially, right? So therefore, to that extent, most of the COVID-related impacts are pretty much behind us, so unless another variant comes along but nobody can kind of predict it.

So sir, my question was...

I will answer your point on are things getting better or not, right? So that whole industry saw the positive on some of the most times in terms of COVID losses. Plus, you are also seeing players have, unfortunately, subdued demand, supply chain constraints. And that is to protect some where there is COVID impact on the industry in the last couple of years. What -- are things changing? Most of them are changing. As I said, pretty much COVID losses are behind us. Most of the supply-side than demand-related challenges are kind of pretty much near us. Economic activities are pretty much backtracked. Regulatory changes have generally been very, very positive whether you look at it in the context of product, distribution, expenses management, compliances. So in general, the environment, that seems to be very, very positive. So on balance, if you ask me, which is why we are kind of very, very confident and optimistic for the fact that the market should kind of continue to deliver a reasonably growth rate that is going on. What can equally impact in terms of this, you will regularly hear us talking about more licenses, more corporation, which can have some impact depending on what type of companies they are making. But if you ask me structurally, from an industry standpoint, I think we are rightly poised to capitalize growth.

[Foreign Language] Are we meeting at the end of the conference?

Yes.

But he wanted to meet our CIO. He wanted to come and visit the office.

Yes. Yes, more than happy...

So I'll send you the mail [indiscernible].

I think in general, I think we always look at all the options. I'm sure they would have applied [indiscernible] taken the right call.

Sir, we used to wonder like [indiscernible].

[indiscernible]

Yes, so we've started, right, [indiscernible] and then he knows [indiscernible].

I mean, initially, it gives.

So we've started on that -- talking about [indiscernible], so anything more to add in terms of the [indiscernible] product structure changes and any tie-up changes or tie-up in the past with product which we sell?

So in general, I think as what we've been saying, Bank has been a very, very important distribution partner for us. So hence, to that extent, I think they continue to be -- they will continue to be one of our important distribution avenues. So -- but on average, I think what we have always said is, in this business, you have to be always a multi-distribution -- you have to have a multi-distribution approach underwriting business because different segments accelerates, let's say, different customer touch points in which you can have an access of the customer. And hence, to that extent, you have to be kind of adding those multi-distribution avenues. In the past also, Bank used to contribute roughly about 5% to 7% of our annual revenues in terms of premiums. Even if you look at the latest numbers, I think on an average, they have been kind of contributing between 5% to 7%. Going there, I think thought process is still the same. Wherever there's an opportunity which kind of fits in within the requirement of what the Bank is kind of largely pushing across, that thought process will still continue to be the same. Just because there's a change in thought process to, let's say, increase the stake back to, let's say, more than 50% don't necessarily mean that things are really undergoing significant shift. Even earlier, even otherwise at 48%, they were continuing to distribute exclusively policies of ICICI Lombard. And going ahead, clearly, I think the thought process is to kind of continue the same.

It's exclusive, right? Lombard is exclusive [indiscernible]?

It's exclusive partnership.

Even health insurance?

Yes. So they only sell policies of ICICI Lombard on the non-life side?

So one rationale why Bank was always thinking about not increasing the stake was that at some time of time, ICICI Lombard goes and doing acquisition again.

Yes.

They know when to stop.

Yes.

Then the dilution comes again, then there's a problem with the -- like you have to go back to the regulator.

Yes.

Now like from a longer-term perspective, how do we solve this problem? Like are we seeing that in the near term or medium term, there is no acquisition possibility?

No, as of now, we are not looking at anything specific. So therefore, that's the action. And even if we were to look at why -- if you go and look at the market, I'm sure there are a lot of companies which are on the block. The question is what does those companies bring to the time. It's something that we kind of look at. Second, if it is a, let's say, relatively smaller-sized player, honestly, I'm just saying it will not kind of add so much of value for us because pretty much all the ingredients that could be there in that entity could be kind of residing with ICICI Lombard as we speak. Not to say that the next second, third, fourth largest private are available on the block, only if it's of a meaningful scale is what kind of could excite us. Or if there are avenues of -- areas which we are really interested in investing, if any of those entities have got those franchises or distribution, it would be something that we would actively look at. But as of now, nothing specific.

So retail [indiscernible] number?

Yes, retail is definitely an area which -- in which we are also investing a lot right now. So therefore, everything which is exciting, definitely, we'll be happy to look at if at all there is something. And as I said, there's nothing at this point of time. So hence, we're always open on acquisition. So we want to figure out and see what type of companies kind of really fits in within our requirements.

But then does it also mean that our ability to do stock acquisition will come down because we have to kind of make sure that...

We will cross that path as we kind of come through any particular asset. As I said, at this point of time, we are not evaluating any asset right now.

But just a basic question, sir. If we do any acquisitions, ICICI Bank, again, has to go back to regulator to increase [indiscernible] back to 51%?

It all depends at that point of time what type of an acquisition size, if at all, one is looking at it, right? I don't know what kind of acquisition...

I would think [indiscernible] 52%, again, look at 48%, [indiscernible].

Of course, yes. If it's -- again, if it's a transaction of a similar nature, then yes. If it goes back from 52% to 48%, then as per the current, again, Banking Regulation Act, the bank has to create [indiscernible].

You mentioned about retail health just now, that it is one of the focus areas. But the monthly number that come out, I mean, I guess, your retail health growth is a bit lower than the size, the rate that India are going.

But in 4 out of 6 months, we have grown faster than the stand-alone entities in the last 4 to 6 months. And that is exactly what we are recovering from. We have been growing faster than the industry. I think early days of, let's say, successes for us, obviously, we have to sustain this in terms of the investments that we're doing. You have seen those numbers as we go along.

In which are the areas you're putting in efforts to grow in retail health, I'm saying.

When you say which of the areas as in?

What are things you are doing?

Okay. So it's across. It's investment in people to start with, which is why we are kind of while we spoke about that 1,000 additions couple of years back, but that was not just a one-off investment. It's an ongoing one. Last year, also we did. Even the current year, we're kind of adding on headcount as of a starting point. Obviously, each of them will go on the field, get as we have explained on an average of 15 to 20 agent distributors basis the number of headcount additions that we do. Pretty much on track with whatever we had spoken about of the first lot. I think we are pretty much on track to kind of get to those number of agents. So hence, that gives us the confidence to kind of stay invested. So hence, people plus agency distribution addition are logical areas where we're kind of spending our -- spending alot of our time result. In terms of product capability, again, significantly to look at what we have been talking about, a large part of the health insurance currently is hospitalization insurance. The out-of-pocket expense was not necessarily getting [indiscernible] insurance, which is a problem that we were trying to solve through use of the ILTakeCare app. And that's kind of done very well in terms of the number of customer downloads, the number of customers who are using it for not just only for servicing of their claims, but also for sourcing of policies. And increasingly, it is also being used an app for cross-sell opportunity as well. So hence, to that extent, I think they have a new of -- obviously, while -- the current number is more than 5 million downloads plus. But honestly, there's a long way to buildup, but that's an area where we are kind of significantly investing. So therefore equally we're kind of investing on expanding the product capability as well. Thirdly, if you ask me, claim inflation is a reality. At the end of the day, you have to kind of make sure that you constantly manage the cost of claims. And two, we also have to make sure that you are able to create a network of infrastructure by which the customer is able to get an access to claim service, maybe as convenient as what would one could have expected it to be. On both those counts, on the second part, we have been obviously increasing the number of network or tie-ups that we have with, let's say, various service providers, whether it's hospitals, nursing centers, et cetera, et cetera, OPD care centers and so on and so forth. So that number is kind of increasing. So there's a clear separate network management team which exclusively focused on making sure that we're able to increase the reach for access to customers. So that's an area where we are investing in. Equally, we are investing on also to kind of manage the overall cost of claims. How -- I think similar to what we have been talking through on motor, maybe India is one of the very few countries where all the happening of an accident or an orally happening of the claims, the insurance company is possibly sort of the last to get notices of it. However, if we were able to change that process of trying to get our first notice of loss -- and to that extent, we are able to handle the process far more efficiently, not only just health, even motor or any other line of the business. So hence -- hence, in health also, we're trying to kind of do the same thing to try and see how we can possibly get the customer to have ICICI Lombard in first quote of call. In which case, then we can equally look at diverting the customer on the patient through a set of hospital providers where we can guarantee quality of care. And two, generally, we have seen that whenever we are able to manage this process at a designated set of service providers, we are generally seeing also the average cost of claims to be lower than what you would have normally seen where the policyholder or the customer would have ended up visiting a different service provider. So multiple areas is what we are kind of largely investing in.

You had a one-off in the first quarter, but even last month -- growth with respect to the market was slow. So what is still holding you back with [indiscernible] of the main bank. And what is the strategy if the [indiscernible] continue to be...

So as we've explained also, as we have explained in the earnings call, even this year and at least for the current year, our stated objective is at least for motor is to grow in line with the market on a full year basis. Motor as a category. Because generally, if you look at the market, largely it is sold as predominantly a comprehensive policy, which has a combination of both own damage coverage and third party coverage. So the stated objective is to grow in line with the market given the fact that the last 2 years, we've actually exceeded market share. And what gives me the confidence, at least what we are seeing on the ground as we speak, a lot of the players and there is public information. I mean, you can see those numbers either month on month or quarter on quarters. Many of those players were relatively smaller sized companies, midsized ones and even some of the multiline large players who are very aggressive, all of them have started -- more or less, pretty much almost everyone has started to rate it moderately. You will see some of those numbers play out both in terms of affecting small price divisions as well as, more importantly, affecting let's say, reducing the overall cost of distribution. And there, again, on the expense of management side, given the new guidelines that have come into force, more than 1/3 of the market participants currently are operating a threshold in more than limited [indiscernible]

The equipment , [indiscernible] you mentioned that we have a life bond and there is a [indiscernible].

So [indiscernible] a very, very fair comment to make. But having said that, if you look at the regulatory mindset currently it is to significantly push the overall market to keep the overall cost of operations under check. So therefore, in all fairness, at least from whatever we could sense in terms of the regulatory intent, they are all going to wait for year 3 to happen. And then push on these companies to get down to less than 30 or 35 [indiscernible] our sense is they will start possibly asking each of these companies right from Q1, maybe on a quarterly basis. I don't know what [indiscernible] they want to look at. But at least the sense that we get is, they want to look at this much more actively and closely to make sure that the industry as a whole is largely within the threshold that the regulatory is [indiscernible]. Forget about even if 30 or 35. If you look at the intent in that regulation, they're equally talking about over the years, the industry as whole has to further kind of bring down the cost of distribution. Therefore, the intent seems to be kind of clearly bringing down. So therefore, in all sense, all these companies have to kind of get a board approved plan subjected right from the year 1, and they have to kind of demonstrate earlier.

One question on the commercial lines. I think you indicated that reinsurance is higher than last year.

Correct. Yes.

So can you help us understand that when insurance, how does it affect different companies and how is ICICI Lombard in that overall because it's a cost to us, right? So how does that -- is there a cost advantage -- do we have -- it will be similar to...

That's a good question because if you look at -- from a reinsurance, so where does reinsurance largely come in. It's largely comes in with high exposure segments. Took mainly in the corporate lines. And of course, to some extent, also protect some of the retail lines also from the catastrophic impact, which is where you end up being a cost. But for the reinsurance that you do as a risk transfer to the reinsurance companies, you end up possibly getting an income in the form of commission on reinsurance. So it's a combination of both is what you have to look at because at the end of the day we are capital providers. And when they look at their outcomes, they obviously look at with a combination of both. How much are they paying as commission income and how much we are kind of charging for cost of reinsurance, combination of both is what they would also look at in terms of their return on capital. What has happened in the last, I would say, since the time the market got deregulated from tariff from the 2008 for 10 years in fire issuance, we have seen there is a softness pricing for the overall market. So therefore, because it was softness in pricing, many of the players who would have chosen to get very aggressive on pricing, have got terms of reinsurance -- when I say in terms of reinsurance, both on the commission income that they were getting as well as the cost of reinsurance that they have to pay was definitely much higher than what we had seen for ICICI Lombard. So therefore, to that action, we are at the slight disadvantage. Some companies may have chosen not necessarily to increase their cost of reinsurance is what the reinsurers are seeking. In which case, in order to maybe keep the cost optimal, they may possibly have got reinsurance conditions as a part of their reinsurance contracts, which could be adverse, which we will never be comfortable having some of those clauses as a part of our insurance contracts. It could be capping. It could be lost corridor to say that even if a loss ratio within a particular threshold will be on the net account of the insurance company, only beyond that is paid -- made good by insurers depending on what type of conditions are attached. So hence, that could be another way through which, lets say, some companies may not have seen a price increase. But equally, they have got terms of arrangement, which could be slightly more adverse, which we will never be comfortable for the underwriting/risk management strength. So that's the effect that we have seen in the market play out. And even in the current regime, so what is changing? Softness in pricing underwent a change in 2019 and 2020. Very -- I think we have talked about it where there was a price increase that got exhibited. Clearly, because of the pricing, market -- equally kind of grew much faster than the historical past. We grew disproportionately faster than in those periods, because again, when the focus shifts more to service, then obviously, we are a good exhibitor for a better service market share attached. So we grew disproportionately faster also we retained slightly more than what we have done in the normal past because it made a lot of sense for us to retain in those periods. Today, what's changing. Those IIB driven rates, which we are a part of the reinsurance contracts, which is in some sense acted like a floor price, that's been done in the business. So no longer, it seems like a more free to price market rate. So therefore, logical expectation is, again, prices could come off. Now can it come off substantially? It may not be so, because these are exposure portfolios. It cannot suddenly see a drop in -- we cannot see a crazy drop in levels of pricing, which is why the earnings call in April, we have indicated possibly that the pricing could be single-digit number. And in reality, when we look at the April numbers for the overall market for fire insurance, you would have seen that segment to be flattish. It seems to indicate that broadly, but this is April 1, just 1 cycle of renewal. We also have to see the rest of the year and January 1 when some of the corporates follow a calendar year cycle for the renewal placements.

And conceptually when reinsurance rate -- lets say go up by some [ 50%,] I don't know what is the exact number. How does the pricing move? Does it go in proportion and what ?

I [indiscernible] each company will have to take or at least...

But price is a market phenomena, right?

That is what I'm saying. So for example, when you look at for the [indiscernible] now that was one part of it, right? Therefore, price should start [indiscernible] drop in that particular case. But the offsetting point is exactly what you are saying. Again, globally, reinsurance have seen catastrophic losses. So for them to sustain a similar kind of a return on capital, they need to increase prices So for example, on the catastrophic cost, the ICICI Lombard was paying to the reinsurers, we saw an increase of about 40% to 60% But given that the markets are exhibiting a portfolio outcome, which was far more adverse, their increase in -- for the same catastrophic production will be much higher.

So now -- when commercialize lines in due price, will you price it above 50% higher?

Which is what I'm saying. So therefore, now the question when I see this, on the one side, there's a drop in price. On the other side, I will also look at passing through some of these cost increases on the reinsurance front, which is the combination of both I said on fire insurance, the market for the first month seems to have depicted a flattish growth. Had I not been able to pass through a large part of that growth, logically, the drop would have been much higher.

Correct.

So that's not the case. So therefore, we kind of do that. In this year, thankfully, there's also an offsetting impact as well, which is to say that on the one side, there's a price drop. On the other side, there was obviously a price increase. Moving ahead, what can happen? catastrophic losses are going to be a reality -- increasingly. So therefore, we have to make sure that we are pricing it reasonable. Unless you decide to keep the risk on the net. I mean if you choose to keep that 40%, 60% price increase on the net, then of course, it will have a P&L impact. You may still be able to get some growth because you are pricing it lower. But it will start getting reflected in your bottom line. That's a dangerous proportion to win because these are, again, high exposure segments. One loss can have a huge impact. It's not a motor on a health loss, which is why generally there's a passthrough.

Correct. And when you pass it on, price increase happens, what happens to the underwriting profitability? Does it go down compared to, let's say, 2019, 2020. Will it go down in...

Overall, it will be similar because if we're doing the pass-through of the price and increase absolutely. But equally, my insurance costs that I have to pay to the reinsurance have increased.

So i am saying is percentage basis will remain similar.

Pass-through is more or less the same, right? But again, very difficult to, again, give you an outcome on the profitability side because, let's say, this year, I experienced one large loss in fire insurance portfolio, my underwriting loss will be impacted. Will you say that my portfolio is adverse? That's the nature of the business that we are in, particularly for some of these exposure segments. One loss, one catastrophic event can clearly impact your portfolio outcome, which is why we say corporate books, you have to look at experience over longer cycles, maybe 3 to 5 years ideally. And then you can tell whether the portfolio book that you've underwritten is a reasonable one or not. But for ICICI Lombard, If you were to look at historically, not just 1, 2, 3 or 5 years plus, in general, if you look at the overall commercial lines portfolio, 2 things for us. One, we have a market share ranging which is between 13% to 17%, which is much higher than the natural market share of 8.2% that we have. Why? Because, one, you're able to exhibit a lot more direct value added services to the corporates with whom we source insurance policies. And because of which, we have also seen, let's say, retention levels of customers wanting to work with us to be relatively much higher. Thirdly, not many companies have the balance sheet strength and solvency to be able to write some of these risks, which is exactly what we largely focus on try some of -- writing some of these large exposures so that the number of players competitive element is lowered. The reinsurance terms that you get is better and the risk is also better hedged. so hence, the loss experience seems to be favourable. And hence, we can kind of get a disproportionate market share. But from a...

Competition from other multi-liner insurance trying to manage their...

Not so much on the corporate side to the extent what we've been able to exhibit. For example, the scale at which we have been able to exhibit value-added services to corporate...

The natural tool to change the product mix so has to reduce the expenses instead of -- is there a more competition coming from some...

Everything is possible. That could be possible. I may not be on the standard corporate life insurances, like you say, fire or engineering or let's say in aviation or in high -- because those are high exposure segments. It is possible on corporate health. On cooperative health, it is definitely possible because corporate inherently generally because it comes with a very high loss ratio, you can't afford a higher cost of distribution. It has to be slightly a lower cost of distribution. But let's assume a case for a company which wants to slightly pay more. That is possible only if those companies are operating at a combined or priority [indiscernible]. If you look at the industry combined today, many players are operating at, let's say, 110 to 115 plus, there's no headroom available for them to be able to kind of look at playing slightly...

But in the other corporate lines, like fire and probably -- you're not exhibiting any increased interest from...

The challenge for them is that they need to get appropriate reinsurance terms because these are high exposure segments. That's a call that each company should take. Are they able to get proper insurance terms or not? And again, going back to my same point, if their solvency is stressed, how do they write those risks? We may not get a better reinsurance term. Either in terms of commissions, incomes that they get or they may get some conditions attached to the reinsurance placement, which may not be beneficial from a corporate -- from that insurance competition.

Is it true for private multi-liner insurers?

It will be true for many of the -- for the reasonably sensible ones may not be so who are focused on underwriting, whose solvency is relatively better, balance sheet strength is better may not be so for them. But for the rest of the companies, which are very aggressive which had been very aggressive, had challenges on combined solvency, et cetera, for them they can not. So like those are the players who are currently having an expense of management which is more than 30%.

Just to conclude on that point, as you're having a cost -- you may have some cost advantage on the reinsurance rates. Will it be a good time for you to become aggressive and writing more and increase that 13% to 17% market share to a higher number...

We have been upgrading market share on commercial lines every year in the last 7 years. Again, because of the same point that I spoke about, which is to stay disciplined on doing the right risk selection and continuing to exhibit we say services, which is far more beneficial from a corporate standpoint. Why we keep saying value added services primarily because what we're effectively trying to do is to kind of look at their losses and see how we can minimize these losses which is what they like. If I'm able to give them a solution which kind of fits in minimizing their losses then they have to do kind of work with that. Pricing also is reasonably better. And two, even if you look at -- again, not just over 1 or 2 years' experience. In the last 8 years, we have seen so many catastrophic losses happening, right? At different points of time, at different places. It's not that every loss has appear on the same place. If you look at in each of those years, barring maybe be 1 or 2 categories, in the rest of the categories, our share of losses have been lower than the natural market share. I can understand in J&K us having a relatively better experience could be because of that particular exposure to that state. But consistently across states, across different categories, which means we're doing something right from an underwriting perspective, which is why I think we have been able to do a better job than relatively compared to other players in the market. And that's what -- and for us, if you ask me, it's very easy for us to double market share in 6 months. Why corporate? I can do that in any line of business, Very, very easy because I think we have got all the distribution reach, we got the service capability. We have got the tech infrastructure pretty much with us, very easy for us to double market share. The question is at what under. I think as of now, I think what we try to do is to try -- stay disciplined, particularly in corporates, we are trying to again go directly with them rather than maybe going through the intermediation route. Unless they have always worked with an intermediation, then yes, maybe we will go with that. But otherwise, we'll try to exhibit more relationships directly. Strengths in the process, we have been able to consistently increase market share year-on-year.

Actually, value-added services that you recall -- can you give a few examples of what is it that we are doing and how -- what does that translate into, if you may, taking share of that?

as I just said, market share increases pretty much there every year, that's public data. Sure. So essentially, I think this is an initiative which we started off almost about 9 years back now, where I think the [indiscernible] with one of the FMCG companies was when we looked at their marine loss experience. It was kind of resulting to a very high loss ratio. Therefore, we kind of then distilled it down. So obviously, it meant -- because the loss ratios were higher, the -- obviously, we have to kind of price it higher [indiscernible] at the time of interval with no corporates life. So they obviously will say I will find some other insurance company and willing to place the risk with their partner. But here, we kind of distilled that losses and said, what is re -- resulting into these high loss numbers. We saw of the various routes, which was carrying the cargoes of different consignments, couple of routes were significantly kind of leading to high losses. Why? Again, when we dug deeper, we realized that there were hijackers in those specific routes where the vehicles are being commenced. So all that we mentioned as a solution was simple GPS device which was kind of fit in the vehicles in those specific internet routes. And we kind of started tracking those vehicles. And those are simple triggers to suggest, I mean, is it taking the right route? Stopping for a long period of time. Am I able to reach out to the driver, et cetera, et cetera. And if they were able to find any of these triggers getting alerted, anyway of the motor third-party side, we were anyway working with various authorities at the back end. So therefore, we were able to put those alerts into action in the event if we find any of this. So the effect of it was -- For that particular [indiscernible] account, the number of hijacks came down to zero. So now it's a great conversation to have, right? Now I'm able to price this better, and therefore, the longevity of the company kind of stays on longer with us. That's one example of [indiscernible]. Similarly, when you look at the context of marine, particularly there are refrigerated cargoes, which are also kind of taken for various transacts just as an example. So again, what we have seen in -- and because it is a refrigerated cargo, you have to maintain the temperature at those particular thresholds right through the process. But many a times, when the vehicle is climbing uphill, sometimes they switch off the ACs, just to kind of get that elevation. Which creates challenges with respect to the way -- with the product getting damaged and therefore losses. Again, these days there are IoT devices available, which kind of sense signals to indicate whether the refrigeration is maintained at those temperatures or not. Again, we were able to get it [indiscernible] immediately swinging into action possibly minimize losses. A great example of my -- take fire insurance.

But these are things that the businesses themselves are not thinking often.

That's the problem, right. so I'll give you a classic example of many -- on the fire insurance. If we go to some of the corporate offices, you will see very swanky fire extinguishers being there. But when sometimes when you check the pressure levels in those fire extinguishers, it does not meet the requirement in the event of fire was to happen. So that's some of the -- maybe it's not so much of a priority. But again, what we did was, again, we had kind of installed IoT devices, which kind of emits necessary inputs to the factory [ managers ] to say what has been pressure levels. Automatically, you can swing into action. So again, it's a solution that's there on the fire side. If you look at most of the fire losses today, largely it is because of fluctuations in electric current. So again, there are devices that are available today to kind of monitor what current levels is getting generated. So again, you give the solution. So across areas at different points in time, I think we also kind of expanded the number of services that we are able to execute across fire, across marine, across health and so and so forward. And in the process, corporate today on -- each of these value-added services, today, we work with more than 4,000 companies, both small and the largest ones. And in the process, they have kind of liked the solution that we have given. And therefore we are -- of course, we're also doing it directly with them, they like the relationships of us playing a very important role in managing the assets as compared to just looking at assets, transfer [indiscernible]. And in the process, I think the customer retention rates in terms of corporate customers working with us has been upwards of [ 99.1% ]. So corporate position. So that's what we have done over the last 9 years in terms of different segments of business.

So on the metro business, you said we will be kind of maintaining the market share this year around. And this would be like [indiscernible] with the CV portfolio, we are seeing some uptick in the...

In CV, the thought process is still the same, which is as we have explained last year as well, again, it will be more opportunistic in terms of how we look at CV, We will not completely go all out as what the industry mix of CV is to the overall -- numbers. For the industry, it's about 40%, 45% of the premium CV. For us, we have said it will stay within the range bound of 23% to 25%. So that thought process is still the same. Nothing changes. What would change on the ground is what we are seeing is more of the private car side because that's the segment where you could have seen for us, generally, private car was contributing to about 55% or thereabout to the overall industry premiums. That number because of the competitive aggression and the fact that we were willing to let go some market share that proportion came over to less than 50, which is something that we are already seeing some signs of it getting eased out on multiple fronts. And hence, we should hopefully be kind of able to come back. And as I said in the aggregate maintain market share [indiscernible] overall motives.

And when we saw market share loss, was it more on the primary sales that the OEs for the renewable book and now we're seeing this easing out?

Predominately -- that is where we are losing. Equally on agency is also something that, in general, we are losing at all the distributor channels. But largely at the OE, which has been indirectly our relative strength in the past. So for example, if you would have looked at our mix of motor premium across different channels, historical past, I would got almost, let's say, 80%, 85% of business coming from OEs. And all the rest, let's say, I would say, 10% to 15% coming from agency and maybe the balance 5% or thereabout coming in from our own website, which is for the direct channel. Probably, if you would look at the same mix roughly, OEs will be about 60%, 65%. Agency will be about 20%, 25%. The balance 5% to 10% will be the mix that we would be getting in from our own website and other alternate channels of distribution . So we are also equally trying to create also a diversified mix not to say that any particular channel is not so preferred channel for us. Equally, OE is a very important channel, including the dealership. But it's just that we want to create a mix of business, which is more balanced in terms of the way how we're looking at the overall situation.

So what would be the current like OD combined ratio for the industry and at what level you feel you start check rating market share?

Which is what we kind of spoke about, right? 124 is the historical peak for the industry to operate at for the first half. Q3 numbers are available. Q4 I'm not able give you because still some companies, as I understand, are not yet announced results. So whenever that gets completed, I'm sure that probably disclosure. Right? So Q3 industry combined was for motor at 118. So we had seen some signs of moderation. Our sense is given what I spoke about on ground feedback. I think the sense that we get is possibly to -- have seen some more improvement over 118 or possibly would have been maintained at the same levels. And as we speak, I think Q1, possibly we will see a much better picture. So that gives us any change.Kind of starts to open up certain sense which we would not have been looking at. So that's the way why we believe that this year on aggregate, we should be able to grow.

So conceptually, when we become conservative in the cycle where pricing is very competitive. How does OE relationship with us kind of...

Which is why we never vacate a distribution. Cost of vacating the distribution is too expensive. In a -- and the relationship is not only at OE level, in fact, the relationship is more at -- the dealership. So there, we will never vacate a dealership distribution. Possibly, let's say, have 15% % market share was because we may not be very, very active in that counter, for example, we will moderate the share to maybe, let's say, 10% or 12% . And then as things kind of -- but the good part is even during this period, we have continued to stay invested in building -- expanding the distribution. So we continue to stay invested in creating service capability on the claims side. We continue to stay invested in the technology side. So that as we see some of these tides getting turned over, we are kind of rightly placed to capitalize the opportunity.

If we look at our long-term history, our combined ratios have averaged around 100% plus or minus and our ROEs have been around 20%.

That is right.

Last couple of years, it's been slightly lower than this. So just wanted to understand from you, how would you attribute one of the gap that is there on to 2 factors. One is the industry competitors [indiscernible]. And one is the decision side we have taken on the investment cycle [indiscernible]. So how will you split the between the 2.

So you're right. So it's a combination of all those factors. I think we were operating at a combined of 100 with the transaction of Bharti AXA, the combined on assets basis was 104. However, again, given the elevated competitive intensity, our own was 100 was not 100, it was 101, which is why the blended was 105. And at the time we announced the transaction, we said directionally, it will take 2 years for the combined to come -- come off. And we have spoken about various synergies that were discussion. And honestly, at the end of April 22, we did put out the synergy number, which was slightly higher than what we had anticipated. But the point is we have redeployed all the synergies back into the areas of the investment that we spoke about. So which is why my current combined which is standing at around 104%, includes the element of investment that we're doing on each of those avenues of whether it's retail health, digital, technology, et cetera, cliam service. We're kind of continue to make those investments. What we have spoken to the market in next 2 years and therefore, at 104% combined, you would have seen my ROE profile anywhere ranging between 16% to 18%. Next 2 years, we have said directionally, we want to see the combined go down to 102, which will broadly assuming to a reasonable mix of business between all segments, it should be in that range of 18% to 20% thereabout and post which obviously, directions will only take you down back to combined 100, In which case we may come back. But again, the ROE profile could be a function of what kind of business mix that you write -- because the reason why I'm saying this is possibly if you look at industry premiums, in the 23 years of existence, motor was always the largest contributor. But last 2 years, health has been the largest contributor. We'll have to wait and see how much does motor come back in terms of growth. If health continues to be one of the largest contributor the overall numbers, clearly, we know that the ROE profile of health is very different than OTC portfolios. So to that extent, one will -- has not require change on the ROE. But assuming we are able to kind of strike, as I said, a reasonable mix of the 2, then, as I said, between 80% to 20% over the next 2 years in terms of the ROE profile and from there on, we look at equities.

[indiscernible] number as a balanced growth between motor and health, you are not expecting more from health

So relatively, if you look at growth rate health will be faster.

Faster...

So that means because so that for the cohort of investments that we have done, it means better outcomes. So for what I mean by that is, let's say, when we announce 1,000 additions to headcount, let's say, '21, '22. That cohort has already started to play out in terms of, let's say, whether the additions of distributions that we spoke about, adding about 15,000 to 20,000 agents, that's pretty much on course. Similarly, we have said for the book of investments that we are doing that book is running at a combined of 110%, which is a loss ratio of 65% to 70% and an expense ratio, which is ranging between 35% to 40%. So that cohort is starting to play out for us. Therefore, the combined is better for that cohort. But equally, we're making further investments because at the end of the day the market share that I have on retail health [indiscernible] is 3%. My company market share is 8.2%. So -- but when we are saying 102 combined, it factors in for the investments also, which we will be doing which will be continuing.

So your retail combined -- today is ...

110% less.

When does this sort of normalize towards, let's say, company level...

Which is what I said, the market share is 3% today on retail health.

No, what I mean is this 110% that in year 3, year 4, year 5 reducing.

By year 3 or year 4 it will be around 110% on retail health. Because for the cohort of investments that have done, roughly it takes about 12 months for one, headcount to come into the organization and then the distribution to also get in place. So thereon, it's another 12 to 18 months for the cycle for them to become productive.

So for the first cycle and the second renewal.

Which is why I said roughly over a 3-year period is where you will see the investment which are done -- starting to pick 100% On health side, which has as to -- accrete but the leverage on the investment side is much -- on health is much lower. Investment level on retailer will be 2, 2.5x. It will not be like 4x as what you see on motor, which is why you get the you don't [indiscernible] which is why I'm saying, so therefore, you have to look at a combination of both

Eventually, you want to come lower than 100%, not immediately, but similarly...

Directionally, we will want to run the book at a combined of 100% because end of the day, we are an 8.2% market share company. So even today, even when we were operating at 100 or, let's say, whichever number, 100, 104 or whichever it is, any efficiency that we get in operations, we have deployed it back.

I'm talking about health.

We want to run it around 100 because my market share today is 3%. I need to travel sort of 3% to at the minimum, let's say, 8.2%.

But when you run it at 100, ROE for the health segment.

With the early teams. Because the leverage will be 2, 2.5x. At a combined of around 100, which is where we keep saying consistently for someone to deliver an early teens ROE, very unlikely for that person to operate at sub 65% loss ratio. Unless you keep affecting price revisions every year by a reasonable number, in which case, you have to then look at what in fact does it do on customer retention. That's 1 thing that one we have to watch out for. Or two, you will have to look at what kind of settlement practices is that institution exhibiting with respect to plain service.

Both the combination in health, you want to scale up this business, it is for growth or even if it be at the cost of diluting your return...

At this point of time, it's an investment for us, which is something which we're giving is very, very important for us because as I said, my market share is 3%. By natural or let's say the company level market share is 8.2%. Therefore, I need to make this investment. The good part is while we looked at some of the capability building that I spoke about, in terms of, let's say, some of the IL TakeCare Initiatives, the good news is customers are seeking for product line beyond health, which is improving the product density or cross sell. That is exactly what we want. And today, if that happens, it results also into a lot more continuity of insurance with -- of that policy holder with the insurance company. Otherwise, in some of the retail lines, there's a tendency to kind of shift to alternate players. But the moment you are seeing a lot more engagement capabilities being created, what we have seen, again, early signs, we need to see the sustained, early signs. We are seeing because of this engagement initiatives, which we have been able to effect. We are seeing customers wanting to retain with us.

Size versus the multiline players in retail health, how do you see the advantages disadvantages.

One advantage is the [indiscernible] regulatory arbitrage, which we've discussed. They could use the services of any existing [indiscernible] agent and start distributing health insurance policies. So that's a huge advantage. It's like saying MG Motors and Kia motors are paying allowed to use Maruti distribution right? So therefore, to that extent that. But to give credit to them, I think they have leveraged the arbitrage quite effectively in terms of whatever they have created. Going ahead, if you recollect again, the thought process what the regulator is significantly pushing across is to liberalize pretty much every segment of the business and create an ease of doing insurance business for the market as a whole. So therefore, there is a possibility that even the individual agency, let's say, restriction, which is correctly enforce could be done away with. But that requires an act change. But in case even that is done away with then pretty much everything is taken care of. We'll wait and see how the development plays out. What the regulator come out in between was because the standalone companies have given this benefit or an arbitrage, they had come out with a point of sale persons guidelines in 2015, 2016, which was a slightly reduced nuance as compared to, let's say, doing a full fledged licensing process. But of course, it had come with own caveats in terms of what kind of policies can that [indiscernible]. And they have set limits on for both motor as well as for health, retail health specifically. On motor, the threshold is at INR 50 lakhs, which pretty much takes care of every vehicles segments. I mean, if you know what proportion of motor vehicles have more than INR 50 lakhs. In health, the limit is capped at INR 500,000. Today, INR 500,000 for a retail health cover is pretty much not so great. All of us would have seen experiences in our own families, friends, et cetera, et cetera. in terms of how that limit of INR 500,000 is insufficient. So that's the other thing that we're working with the regulator to see on the PSP guidelines, if the limit of coverage is currently at about INR 500,000, is there a way to kind of enhance that or not. If that gets enhanced to whatever level it is, let's say, INR 1 million or INR 2 million kind of limit, again,a great positive. Our development is a way we see. So and now coming back to your point, do they have an advantage? They are a single product company. So therefore, they will ever able to different a [indiscernible] cost of acquisition over multiple lines, which is advantage that we have. A large part of the health insurance market today is corporate health. Generally corporate health is not separately placed with an insurance company. They place it along with the property, marine, liability, et cetera, which they may not be able to kind of do. And it is the volumes of employees of those corporate which feeds into the negotiation for us with the hospitals or at least service provider.

Again, they have a 5% differential in UM

Yes. So 5% differential is fine. But if you look at today, when I talked about 1/3 of the market participants had more than the threshold, it includes the monoline health companies as well.

And most of the companies, are you done with the calculation, how much of them are within that market share remittance where you know allows -- not required to oblige also.

As I said, many of the standalone health companies are also more than 35%.

But there's a concession if you are not...

Only in the first 5 years, only the first 5 years. For the first 5 years, there's a [indiscernible]. Most of the standalone health companies are already completed 5 years for obvious reasons as we speak.

So on the health side, in retail, what are the product gaps that we have compared to the SAHIs that is point number. And second number group health side, you have seen price hike as well in the last 2 years. With that base now going ahead, how do we see our growth in the group health side of the business.

The second one, I think as we keep saying you can't keep getting similar kind of price revisions of 75% -- 20% plus is what we have seen just a couple of years back. But the good news on the corporate health side is, if you look at that CAG audit report, which I possibly highlighted some significant amount of underwriting is also sustained by maybe the state-owned companies. And clearly, now there is direction given by each of this state owned companies to their operating offices to get better underwriting. So that automatically kind of opens up revenues of risks that we would possibly have not underwritten in the past. And hence to that extent, it creates an opportunity for us to gain some more market share, which is why our corporate health, our growth numbers, whatever you see is a combination of all 3 factors, which is increasing price to whatever extent it is increase in volumes because last 2, 3 years, hardly sectors talked about any hiring at least some of the sectors have come back in terms of hiring atleast and therefore, there is an increase in volumes. And 3 is accretion of market share given that players in the market are again starting to talk to get far more [indiscernible] So therefore, on the corporate health side, I think that we believe still the same point that I made on the commercial lines I think we should continue to lets say a accrete market share. But what would happen is what she mentioned, which is this line could possibly see some kind of a subsidization is being used by players in the market to possibly look at writing a lot more competent and in the process, possibly trying to manage their expense of management could be a reality. We will see how the development based out because, as I said many players are already in the incidence of limits. So we will see how the development plays out. On the first part...

But on that follow-up, like is it so easy to enter the profit book because as you said, it is also function of other businesses that you write for them?

Yes. So at least for the multi-line players, yes, they can because every year, you're pretty much on the block. And therefore, to that extent anyone who's willing to kind of significantly cut on price, which is exactly what happened between 2014 and 2018, right. So that's a call that each company has to take. What is it that they want to do from the underwriting perspective. If they want to significantly cut price, challenges today, they are already stressed on combined. Do they have the wherewithal to further stress the combined issue or not is something that we will wait and see. For which, they need to have continued free flow of capital, which I don't think is a reality . And therefore, to that action, this thing sustaining consistently may not be so. Maybe some accounts, some players definitely possible, but not on a sustained basis is what the sense that we get as we speak.

So you spoke about making investment in the health side because of the channel. and you also mentioned about [indiscernible] equipment. But on the corporate level, what are the key investments which we are doing right now.

On corporate health, you are saying.

No on the -- like in terms of fraud control in terms of setting up the teams of at the -- is the -- all those things are in place and the extra investment, which you're saying is purely on the distribution?

Significantly, it is on distribution and on the claims services is what I spoke. But on fraud management, something we are very, very actively invested in. We had our own, we call it as an internal loss control and minimization unit. This was a division we set back -- set it up way back in 2006, much before the regulator mandated a fraud management framework for the industry as a whole to be put in place in 2013 onwards. So and to that extent, we have enough years of experience not only in the context of health, but across lines of business. We actively look at as to whether what kind of frauds are being executed, particularly for the health side of businesses. And there are enough examples that we can cite for us. It could be as simple as an example of a 10 bed hospital giving 20 claims in a day as simple as that, right? Equally, we have seen instances of how for a particular procedure, the relative cost of billing in a hospital A and hospital b is significantly divergent. So that's another example. We have got all these capabilities -- should be there. Three, you also see many examples where there are unnecessary procedures being executed relative to what the actual cost of is -- or related to the actual procedures that is one is required to undergo. So we equally kind of spend lot of -- so when I said that we actively do a lot of work on managing the cost of claims, we do some of these and look at where is it that we see possible patterns of fraud getting exhibited and therefore, trying to create deterrence as the part of the process. On an average, on the health side specifically, we have seen frauds impacting loss ratios anywhere between 10% to 15%.

Have you had any instances where you had to drop hospitals from your network?

We do that.

And we even at your growing scale or growing network, you are still doing this?

We actually kind of [ de-impanel ] hospitals. incase hitting -- [ de-impanel ] or blacklist hospitals. The good news today, thanks for asking that. In general, there is not so much of information sharing between players in the market on the set of service providers who have generally been executing this fradulent [indiscernible] . Increasingly, that's an area where regulatory pushing the market as a whole to start sharing up information between players. Therefore, it is not a chaos that, let's say, an X [indiscernible] Service provider possibly [indiscernible]. And therefore, the entire Ecostatin, possibly we can create deterrences. That's now....

Your hospital bureau.

So it's like bureau. Exactly. So we do that. To answer your point, we definitely kind of monitor experiences of each of these service providers. start with the blacklist and then eventually kind of [ de-impanel ].

Because there have been instances where I guess for the same procedure or the same test, the variance, is 15,000 to 25,000

I would say that is 1 easier example. The other examples are you also get bills from hospitals, which have not been existed at all because I'm Saying, I think there are enough -- I mean if we can talk about it a lot, right? So there are -- unfortunately, that's the nature of the market. The question is, are you creating the right deterrences so that possibly, at least from an ICICI Lombard standpoint, we are saying that at least please stay away you from us with respect to about this. And that's reason why I said, on an average, the impact is huge. It's 10%, 15% impact on loss ratio. If you don't manage it well, it can significantly again increase your cost of claims and therefore, the price to the customer could be relatively higher.

Could you give any idea about if ICICI bank, How much of an attachment rate of health percentage you have there. You'll see. I mean, because I remember at one time, it was high and then it had a -- there was dip...

That was primarily only the decision, the bank took to discontinue retail benefit along with the mortgage loan, we had the retail benefit offerings.

You took that channel hiring...

That channel has already kind of come back in the form of retail indemnity. But the only difference is relatively, the benefit was a better margin product. For example, at that point of time, Benefit is contributing roughly about 5% to 6% of the revenue of what bank was contributing to us in terms of overall premium for it. But in terms of margins, they were contributing total 8% to 10% the retail benefit of it, which has now got substituted except for the brief period, yes, you're right, for that period when there was -- the decision continued on discontinuance of retail benefit, we did see a decrease in our overall health numbers. But today, that has been kind of started off with retail health indemnity which is...

How much of your Corporate health...

Corporate health this is again retail.

How much of retail has been...

So coming back now, if you look at what has been the bank's contribution generally to the overall revenues has been 5% to 7% even in the past. Even today, when you look at the numbers about bank contributes at about [ 20% to 25%. ]

So you have [ 20% ] overall GDP [indiscernible] 5% to 7% of top line, which used to be maybe 8% to 9% of profit of it.

But again, now 5% to 7% top line. 5% to 7% profit.

What is doing is -- because this ramp-up of indemnity has started to happen, but volume increase is happening.

So I'm talking about -- asymmetric profitability.

But I'm coming back -- I'm able to come back to the margins because I'm seeing a volume increase now. So therefore, it is large ...

Operating leverage led rather than a margin led.

That is correct. 1 last question.

On the motor insurance continuing on his question earlier. So -- got a significant [indiscernible] Bharti AXA plus you combined was around 15%. Now it's...

12%. ICICI Lombard and Bharti AXA put together 12% market share on motor. But currently, we are at 10.5% to 11%.

When you have this kind of a decline, have you exit -- [indiscernible] has it naturally gone -- you got exited from some of the dealerships...

So which is what we have been explaining earlier as well, what we have lost as a part of the integration is maybe 8 to 10 dealership counters. These are dealership counters....

8 to 10,

Yes. We haven't lost anything else, which is why we keep saying for us, it's a conscious call in some of these counters to reduced share, not that we have vacated any distribution. That's very extensive.

And this when it goes down, right? So most of the people experience this kind of -- when they experience [ claim ] then only they have some bad experience as they were seeing that I should go with...

Or price?

Or price. When price, let's say, it goes back to as you're saying some of the players.

You might to bring in...

As you if you do regain because -- most of the people just send me without even thinking about and they don't have...

Then the question comes to service.

But service happens only when claims happen, right?

Thanks to the Indian rules one in 3 private [indiscernible] process a claim, the claim insurance is very high . One in 3 private [indiscernible] absolutely.

So that means...

And in 2 wheelers, the customer does a trade off between -- they will not even go to anyone. They will be out of insurance. It's not that in 2-wheelers, people may go to someone else. But for the recent change where third party is mandatory for 5 years, before that before 2018, there will be 100% in insurance attachment on year 1, logically at the point of dealership. By the end of the first renewal, the number of customers who continue is 25%. It's a 75% drop on insurance. So it's not a customer suddenly go for some other players in the market in the case of 2 wheelers. And by the end of the 5th year, the number for that used to be a single digit of 5%. That's the reason why Supreme Court [indiscernible] said at least for third party have a coverage for a 5-year period. So hence, therefore, 2-wheeler, it's not a case where suddenly there's a shift from insurance company A to insurance company B, it could be completely out of insurance. But in private cars, thanks to the number of claim incidents that we see. So therefore, somebody who has the other experiences with me. And then to your question, you had the customer not experienced a claim in the first year. What you're saying is absolutely right.

And how much time in your experience, for example, let's say, price already [indiscernible]

3 to 4 quarters to gain back their share. Obviously, I mean it will be a gradual process. It can't be certainly, I cannot say that next month that will increase the market share from x to y, Which is why we are saying all these changes that we are seeing on the ground for the full year, we should logically be able to kind of be in line with market as far as market share [indiscernible] grow market share in next year .

What would you like to see? I mean you would want to see 101%, 102% kind of number.

So we would want to see, if you look at around '19, '20, industry was operating at a combined of about 110 to 115 which correctly is operating at 124. So we would at least want to see at least 10 to 15 points. No, let me I explain to you. What we will be able to hold on is a 5% to 10% depreciation related to market and beyond that it is difficult for us. Till that level, I think we'll be able to hold on based on brand, service, et cetera, et cetera, all that capabilities. But beyond that, so therefore, consider your point, if you see the combined coming down in that range of 110 around thereabout, then logically, we should also gain market share.

Sir, if you look at your finance ratio in health from [indiscernible] channels, what you close digitally through banking sector or through ICICI Bank. I mean is there any meaningful difference that...

We're not in any of the platforms in the first place, therefore. Whatever we source -- on our own website . So in general, I think at least in the retail health indemnity given that we are a very, very small proportion of the overall market. So therefore, as of now, no significant difference between the 2.

Sir, why are you not on the platform?

This is a strategic call we took 13 years back. Because we didn't want our brand to be lend to a platform, which compares only on price. And then secondly, when we have seen the relative cost of distribution that you have to pay with the platform vis-a-vis, let's say, building your own icicilombard.com. We believe we will be able to do a much better job in terms of creating our own platform. That's the reason why we have still invested in creating this.

Why would you do the platform...

Let's say, you reach a certain size on your core. So if you look at the other way around, many of the relatively -- as players start getting bigger, they want to go -- they actually want to kind of go and build their own platform. That's what we have seen. So therefore, unless -- If you take other way around, decision if you take other way around, can happen only -- if that platform becomes a very large monoline -- I mean a single kind of a company then maybe yes, we will look at it. But today, if you look at what the regulatory is talking about is to create the marketplace, Which actually kind of puts the platform [indiscernible]

Sir 1 last question, have you done an estimate of how much of the impact when you are able to expense -- share your expenses over the lifetime of the...

So that impact is not so much of an impact for us. The bigger impact for us is mostly discounting of resource. If you're allowed to discount -- I mean, because cost, of course, it does have an impact, but the impact on combined even if I want it's not a very big number. The largest bigger number of impact is, if you were to allow to do discounting of reserves and what is done globally. My combine will look better by 400 basis point.

Sir, you continue to have inflation in your claim. Like you are not able to discount. Have you done that successfully?

This is what I'm saying. The 400 basis point improvement on a combined ratio?

And what is the deadline for IFRS...

As of now, they are not -- at least what we understand is, again, regulator has created what we believe is a [ exhibition mode ] projects. IFRS is one of them. Risk base capital is the other one. They want to transition both of them together. Maybe in the next 3, 4 years, it should become mandatory.

This journey on 3% market share [indiscernible] to 8% that you have on is mandatory.

You don't have a time period as of now. But my thought process is obviously to kind of increase market share. Thank you so much. [indiscernible]

It means we have to revisit our ways of doing things. So for example, on the product side. Earlier, we had levered to wait for about 6 to 9 months so that by the time the regulator approves, we will be able to create the tech capability. Today, they have completely moved to use [indiscernible], which may have to be -- my time to market has been much faster. So hence, we have to invest in those capabilities by which I could exhibit that similar to the market assets. So hence, we have to continue to make into...

The number is above the...

We believe that's the kind of investment that we need to make, which is what we keep saying. All of these levers will play out in the form of increased revenues. So that will take time for it.

Sir, we are investor basically and its our trust. So what happens is...

But you were [indiscernible].

So what happens is the trust's principles are there...

Yes.

On the dividend, the tax gets in the name of the trust as the IT department has given us a return to share with the companies to say that as should be deducted on the name of the principles. So I'll be...

Just share it with us. We will definitely evaluate it and see what it is.

Sure, sure. [indiscernible]

Can I have 1 or 2 minutes? I don't like you remember me, last time same place, same [ where. ] [indiscernible]

Actually it was not as stressful as what we normally go through -- not as stressful.

So we actually stressful [Foreign Language] there's so much demand so much question. So if it's stressful, it's good. So the changes that I'm seeing -- so I'm [indiscernible] business there for investment and advisory. And for the last 17 years that I'm part of BNT, these conference have been a regular feature for us. Initially, a lot of these larger asset allocators, the fund managers and they used to take a one-on-one meeting, sir. Now if you would have seen there are a lot of group meeting which is happening in fact, the new concept we introduced what is called a track meet. So almost 130 people attended these meetings. And the reason is because now you want to hear what others are saying instead of doing one-to-one. In one-to-one you're just listening to what you are saying and I interested as a...

We get a much wider perspective.[indiscernible]

[indiscernible] which is no, I want to invest. So all the [indiscernible] I was talking to you [Foreign Language] but that's a good way to look at things also so...

We get a wider perspective of many areas.

Yes, what questions people have asking, what is the purpose of the... So this track need, which we did for this year is for a few companies where [indiscernible] stock is very hot or if there's a significant change in the company like Bosch -- 150 people a tender [indiscernible] one way -- and then people... Yes. So Ankit had part of our corporate advisory and wealth management team. So just a question your time [Foreign Language] -- it's a [indiscernible] we have been in touch with Vaneet quite a lot. Let's -- in fact we manage all of the insurance companies' investments also and we held them in a lot of data dissection whether you talk about SBI, Live, MaxLife and -- so it will be interesting to come and see what value add that we can do to you and -- So Ankit next time I don't want to come here after a year and [indiscernible]. Looking forward to seeing you.

All right, thank you so much.