HDFC Ergo General Insurance, a major player in the non-life insurance sector, is strategically positioned for growth as it navigates the complexities of international markets, particularly focusing on India.
In an exclusive interview with the Times of India, Oliver Willmes, chairman of Ergo International AG, elaborated on the company’s international growth strategies and the pivotal role India plays in their future plans.
Strategic Focus on High-Growth Markets
Willmes highlighted that while Ergo’s core business is rooted in Germany, the market’s maturity limits growth potential. He stated, “Germany offers less growth potential, so Ergo must expand into higher-growth markets.”
In contrast, India has emerged as a standout, contributing significantly to Ergo’s international portfolio. “India is the fastest-growing market. HDFC Ergo is a roughly €2 billion company,” he noted, adding that India is already profitable for the group.
Investment in Technology and Talent
Ergo’s strategy includes establishing tech hubs to leverage India’s skilled workforce. “We have two tech hubs. One is in Poland, and the newer tech hub is here in India,” said Willmes.
The Indian hub has already employed around 550 professionals, underscoring the company’s commitment to harnessing local talent for innovation and operational efficiency.
Exploring Life Insurance Opportunities
Willmes expressed confidence in the Indian insurance market’s potential, characterized by high growth and low penetration. “We are committed to this market,” he stated.
While there are no immediate plans to venture into life insurance, he emphasized that they remain open to exploring opportunities as they arise, stating, “If there are new opportunities on the life side, we will look at them.”
Future Prospects and International Business Growth
Discussing the trajectory of HDFC Ergo, Willmes noted the expectation that the international segment could eventually match the size of its domestic counterpart. He projected that the share of international business could rise to 40-45% in the near future, driven by India and other high-growth markets.
Post-Pandemic Trends in Insurance
The pandemic underscored the importance of insurance and increased awareness among consumers. Willmes remarked, “While awareness of insurance has grown, the fundamental aspects of the business, such as understanding and pricing risks, remain unchanged.”
He highlighted the increased emphasis on digitalization, noting that in India, HDFC Ergo issues 96% of its policies through straight-through processing, enhancing efficiency in operations.
Health Insurance Demand and Innovation
Health insurance has gained traction in the company’s portfolio, driven by rising demand for well-serviced products. “We are seeing an increase in demand for health insurance across markets,” Willmes shared. He pointed out that Ergo’s approach is to tailor health insurance offerings to local market needs while leveraging cross-border synergies to improve service delivery.
