New India Assurance taps reinsurance market

Dubai: The New India Assurance has a simple formula to grow its regional operations based out of Dubai. If as an overseas entity, growth through selling direct insurance products is proving difficult, go with reinsurance.

And that is exactly what one of India's leading insurance companies has done. Since last July the company has been offering reinsurance capacities to projects in the region's oil and gas sector.

That capacity has now crossed more than $4 million (Dh14.68 million), no mean feat given the recent start. "It confirms our belief that there is less competition from local players in the oil and gas sector," said John Philip, the outgoing chief operating officer at New India Assurance. "At the same time, the hydrocarbon sector was one in which there was a lot of premium scope for us."

To leverage that, a $30-million capacity exclusively for the oil and gas sector was created at the company's head office in India and available for this region. Going forward, if there is a need to do so, the capacity can be topped up, the official added.

"What's been achieved so far is way beyond our expectations because we never thought our capacity would have immediate acceptance from the global reinsurance players," said Philip. "Many of this has come from south-east Asia and London in addition to the few companies who directly underwrite oil and gas risks here."

Demand assessment

The shift in focus to reinsurance came about after the Dubai office found that it was not growing at the anticipated levels by selling traditional insurance products.

"The whole market for direct insurance is only growing by 5-7 per cent only," said Philip.

"We were basically concentrating on the retail business and more of motor, but that was not proving sustainable. But since the focus shifted to reinsurance, our business in Dubai is growing at 25 per cent. It's a strategy that's paying off."

Another focus area has been construction. While the sector is still to shake off the recession-induced drop in activity, there are still specialised projects emerging through the pipeline. That is what New India Assurance is excited about.

"There are some constraints to us doing business directly on such projects because there is a stipulation in the tendering process that the policies should be issued by a national insurance company," said Philip.

"So we follow the insurance leader winning the tender and release our capacity to them. "We are accepting all these businesses as reinsurance and not as a direct insurer because of the constraints. This is our strategy in the local engineering and projects sector."

The increased exposure to the region's construction sector has come about since 2008-09. On one recent project in Saudi Arabia, the company released reinsurance capacity of Dh400 million. It is also releasing capacities for projects from Adnoc in Abu Dhabi, again through the chosen lead insurer.

"The Dubai office does not have a treaty of its own; all the overseas operations of the company are protected by a global treaty arranged by the India office," Philip said.

But New India Assurance is not about to place all of its capacities in the reinsurance basket. At some point in the next financial year, the local office plans to push through products in the bancassurance and personal lines. Also on the cards are packaged insurance products for households and traders.

"Maintaining double-digit growth and outpacing the growth of the wider market here is doable — that's our expectation of the immediate future as well," said Philip.

Online services planned

New India Assurance is planning to go online with its marine cargo policies, which has been a strong line for the company in the UAE.

"We have grown 100 per cent on the marine cargo side and written up to $20 million [73.44 million] on a single consignment — very few insurers here are doing that," said John Philip.

"The biggest players in the line are AXA and RSA and it's going to be a core area for us."