Chennai, Mar 5 (IANS): Private general insurer Cholamandalam MS General Insurance Company Ltd (Chola MS) plans to infuse fresh capital of around Rs.50 crore next fiscal, increase the individual agency force to 20,000 and sign up couple of bancassurance deals, a top official said.

"We plan to infuse around Rs.50 crore next fiscal. We are confident of closing the current fiscal with a premium income of around Rs.1,620 crore and the target for next fiscal is Rs.2,500 crore," Chola MS managing director S.S. Gopalarathnam told IANS.

The Rs.292-crore equity-based Chola MS is a 74:26 joint venture between the $4.4-billion Murugappa Group and the Mitsui Sumitomo Insurance Group of Japan.

According to Gopalarathnam, the company is confident of signing with couple of banks to sell its insurance policies and also ramp up its individual agent's base to 20,000 from the current 6,000.

Gopalarathnam said while the growth in the corporate premium may not be great due to competitive pressures, the increase in motor third party premium and the company's focus on retail business like the health insurance and the expansion of distributor network would give necessary volumes to achieve the next year's target.

He said the yield on investment will also come down next fiscal owing the reduction in interest rates and the company's focus will on managing the claims cost.

"We plan to increase the percentage of compromise settlement of motor third party claims to 60 percent from the current 40 percent. Going for compromise settlement reduces the litigation cost as well as interest pay out on the compensation awarded by the courts," Gopalarathnam said.

"There is around 30 percent savings in claims outgo in case of compromise settlements," he added.

According to him, vehicle spare parts and medical inflation are the two major worries of non-life insurers.

"We see 20 percent increase in cost of vehicle spare parts which impacts our bottomline. While the vehicle makers are not able to increase the sale price of new vehicles the cost of spare parts is going up. On one hand, we are not able to book correct premium for new vehicles but have to pay higher sum at the time of vehicle damage claims," Gopalarathnam said.

According to him, 65 percent of the company's premium is accounted under motor insurance portfolio, 20 percent under health and the balance is from fire, transit and other lines of business.

For the current year, Chola MS is hopeful of having an operational profit of around Rs.100 crore.