ICICI Lombard Ramps Up Bets on Health Insurance, Eyes Strategic Buyouts to Fix Market Share Gap
Reportedly, the company has acknowledged falling behind industry benchmarks and has now intensified efforts to expand its product portfolio and distribution network in the space.
ICICI Lombard, one of India's leading private general insurers, has ramped up its investments in the health insurance segment and indicated plans to explore strategic buyouts as it moves to address its underwhelming market share in retail health.
Reportedly, the company has acknowledged falling behind industry benchmarks and has now intensified efforts to expand its product portfolio and distribution network in the space.
“Historically, we've been below the industry in terms of market share. We did not invest enough in products or on distribution expansion, which is why our market share has been at 3% in retail health compared to our aggregate market share of close to about 9%,” admitted Gopal Balachandran, Chief Financial Officer at ICICI Lombard.
After years of lagging in retail health, the insurer has launched several new products and expanded its health-focused sales force. While it isn’t actively chasing acquisitions, Balachandran made it clear the company remains open to opportunities in areas where it’s already investing organically.
“For example, retail health, we are investing organically. So if there are opportunities in the space of similar kind we are willing to look at it,” he added.
This aggressive push into health insurance comes as motor insurance growth, once ICICI Lombard’s crown jewel, continues to soften.
Aiming for 18-20% ROE
According to reports, ICICI Lombard is targeting a long-term Return on Equity (ROE) of 18-20% while improving its combined ratio by close to a percentage point each year.
Impressively, the company has achieved a ninefold increase in policy issuance while reducing its workforce by 20%, resulting from strategic technology investments that have streamlined operations without compromising on service.
“Despite growing at a slightly lower rate than the industry in terms of revenue, ICICI Lombard has outpaced the market in profitability, compounding profits by 20% over the last 15 years,” said Balachandran. The firm’s bancassurance tie-up with ICICI Bank is a valuable channel, contributing about 5-7% to overall premiums.
Counter-Cyclical Play Amid Industry Flux
In an increasingly competitive landscape, ICICI Lombard is deliberately taking a counter-cyclical stance, focusing on strengthening core areas such as health insurance at a time when rivals are spreading themselves thin across multiple segments.
“ICICI Lombard’s revenue growth has been slightly lower at around 12-13% than industry's growth numbers of 15-16%, meaning we have underperformed relative to the market in revenue terms,” Balachandran acknowledged, while underlining that profitability and disciplined underwriting remain top priorities as the company charts its next phase of growth.
Last year, it launched an AI-powered health insurance product named 'Elevate', designed to meet the demands of modern lifestyles, provide protection against unexpected medical emergencies, and counter the effects of rising medical costs.
Per the insurance company, the AI-powered engine behind 'Elevate' ensures a personalized experience that caters specifically to the diverse needs of our customers along with offering advanced features such as 'Infinite Care' and 'Power Booster'.
