In the General Insurance Industry, ICICI Lombard has proved itself to be one of the biggest players in the market. Similar to other top-notch general insurers, ICICI Lombard has developed its business model in a way which allows the insurer to raise liabilities at a very low cost while ensuring a high quality underwriting process. ICICI Lombard’s cost of funds are around 0.6% (FY20 data).
Risk Averse Philosophy:
ICICI Lombard has seen growth in its premium income at a higher than industry rate while increasing profitability despite other insurers witnessing a degrowth in the business. The Risk Averse Philosophy adopted by the insurer has helped the company to prevent venturing into segments which might witness high loss ratios.
Flexible Production Portfolio:
Due to its extensive distributed network, ICICI Lombard possesses the flexibility to change its Product Portfolio to target safer and more profitable segments. With the help of its distribution network it can quickly change its product portfolio if any changes to regulations, preferences and riskiness occur. Additionally, in these broad segments open to insurers ICICI Lombard has pinpointed every specific niche in these broad segments that will provide a higher profitability with the least level of risk.
Superior Underwriting process:
To ensure a high asset quality holding in the insurer’s books, the insurer must develop a sound underwriting process that can effectively search for high quality loans. ICICI Lombard has been successful in developing an effective underwriting model. This is evident when we look at their initial loss estimates and how rarely or negligibly they are revised over long periods of time. For example: In Year (AY 2012) initial loss estimate was ₹ 22.53 billions and six years later they were revised to ₹ 21.83 billions.
Check out the firm’s latest result here.