Shikhar Insurance Company Limited is the leading general insurer in the domestic market. It has been leading the market in terms of many financial and performance related indicators since last 7 years. Insurance Khabar has interviewed Mr. Deep Prakash Pandey, the Chief Executive Officer of Shikhar Insurance Company on the occasion of 18th Anniversary of Shikhar Insurance. The excerpt of the interview is presented here:
What are the success mantras for Shikhar Insurance?
While other players in the market were claiming that every risk is covered by insurance, we started selling products with the information that what would not be covered under the insurance policy. As a result, the insured became familiar with the if and but of insurance which ultimately made positive impact on our brand image among the customer. And the social status of our promoter shareholders too have contributed in our business growth.
We have developed our marketing team ourselves.We not only hire manpower rather incubate them to make sure that they adopt the spirit of the Shikhar Insurance and prepare themselves to deliver best out of the best. We thought that market expansion should be done by developing a new concept rather than the traditional way. We intrude in the market and shared the potential shareholders that what are not covered under the plan they have opted for. At the time of claim, the customers themselves decide that which loss will be admitted or which one will not by their insurer.
We have diversified our services and created new insurance policies. There are always opportunities in the market. Probably, we have managed to identify and grab those opportunities.We have always turned challenges into opportunities. Our positive thinking has also worked in all challenges. That’s the reason that we are ahead today.
What are the future plans the company made to retain its glorious success?
The market is changing in many ways. Regulatory capital has been increased by almost two times to Rs.250 crores. Many companies are opting for merger. In such way, the status of companies is changing. After the merger, they are trying the chase the business pie gap that we have with other companies.But we have never looked back at our competitors. We always believe in moving forward. There will always be ups and downs and if you keep moving forward, you can reach your destination.
Shikhar Insurance is a leading company.How is the company presenting itself in the insurance industry?
A leading company means that the company is always ahead of others in the market. Everyone is looking at the business growth, regulatory issues and other new issues emerging into the market. Everyone has kept watching what Shikhar Insurance had done during the period of devastating earthquake in 2072. How we had hired the foreign surveyor and how payments were made to them. So, if we do something wrong, the market too will be pushed in the wrong direction. Therefore, we are moving forward with conscious in every aspect.
A new insurance act has recently been executed. What are the possible positive or negative effect on Nepal’s insurance industry?
Except for one or two issues, the current new insurance law contains the same things that have already been practiced. Insurance Act 2049 and other Guidelines implemented by the then Insurance Board from time to time have been consolidated in the new Act. Only the fee for penalty have been increased in the new act. The law has empowered the Nepal Insurance Authority. In my opinion, it will help the insurance industry to move forward in the long term.
According to the new act, the provisions for fines are comparatively high. Will it really motivate the insurance companies or will it affect other ways?
I say it would motivate for correction. It should not affect in any other way. Why am I afraid of when I don’t have to go to the wrong way. Nothing really stops us these days. Who has restricted me from taking right steps? Is my board directing me to make a mistake ? Has the CEO instructed his departments to grab business by any ill means? No, never. So, the act is there for us.
There is global economic downturn in recent months. Even in Nepal, some of its effects are slowly seen on the surface. How much has it affected the insurance industry of Nepal?
The pure impact of recession, economic downturn, financial crisis always come slowly and lately to insurance industry. But it affects.It first emerges in the banking sector. Eventually, the insurance industry gets affect in later stage. That’s a type of benefit to the Insurance Industry. As soon as the banking sector is affected, the insurance sector get time to think and decide about how to sustain itself. Those who have progressed by assessing the risk , they can sustain easily. It would affect those who have not assessed the possible risk amid the economic downturn.
How much downfall will it have on the business?
There is no business growth in real sense in the domestic market. Today, if I claim that I will achieve growth by 20 to 25 percent, it is not going to be even 5 percent. Among my product’s business portfolio, the size of some products has already shrunk and I have tried to recover them from the contribution of other products, but still I will not be able to achieve my target of 20 to 25 percent growth.
There’s no industrial growth since last few months. The import business is in downfall. BFIs do not have the ability to make additional investment. In the past, when there was enough stock, businessmen used to take loans against it. Now the situation has come to have less stock to lower the burden of high interest rate and poor demand. Motor sales are already shrunk by 40 to 45 percent.
The Government is mulling to settle long pending Covid19 insurance claim. But the Insurance Authority has made arrangement against the Covid19 Insurance Standard 2077. Are you ready accept that?
On behalf of the CEO of Shikhar Insurance, I would like to say that this matter was not unanimously brought by the Nepal Insurance Authority. It was brought after a lot of discussion. In my opinion, if we spend on this like we spend on other things, it will lead the general insurance market in a positive direction. That’s why we have to convince our promoters and shareholders and pay the pending Covid19 insurance claims.
The insurance industry in the rush of merger to meet the regulatory capital requirement and strengthen the risk bearing capacity. Is Shikhar Insurance in the race of merger or will expand its business without merger?
We have both options in our hand. I don’t have a problem with being big in terms of capital. But the thing is that first I have to satisfy my customers. I have to make my employees satisfied. Then only I can move forward. Our strategy is to go in that direction. Our company, which was number four, became number one after the devastating earthquake. It’s not a big deal. If you want to take a real position, you have to gain the organic growth.
Moreover, merger too is the need of the nation and if our investors think positively, no one is there to restrict us from merger. We should not go for the numbers race. All the players are claiming themselves that they are number in terms of insurance premiums income or business volume. Today, my profit rate has decreased, will I assume myself in the fourth position ? I don’t think so. There must to be organic growth. The future must be secured. All options are open to us. It doesn’t mean that we should rush for merger as other competitors.
Why are we strong in paid-up capital? The only reason is that we already had foreseen the future. The Insurance Authority had assessed Rs. 400 crore paid up capital for a general insurer. It seems that we can achieve success if we move forward by calculating and forecasting future.
Will the current merger create synergy in the insurance industry or not?
In my opinion, the merger should create synergy. It will surely minimize unhealthy competition in the market. Today we have to look at the needs of the market. Are all 20 companies really necessary in the Nepali market? That’s the question.
In terms of penetration, this area has always been seen as a ‘green area’. Are the insurance companies alone responsible for penetration? No, not at all. It is definitely the economy. Today, why the market size has increased because the Government made it mandatory for third party insurance. Agricultural insurance has been subsidized which has also contributed for market growth.
After the merger, unhealthy competition will decrease and the size of business will definitely increase. As capital increases, the ability to bear risk too will increase. More premiums will be retained by insurers as soon as their risk bearing capacity increase. As the insurance industry grows, the employees will better salary and benefits.
