``Rapid technology growth compelling pragmatic shift in India's risk mitigation landscape''
Insurtech has already arrived in India and is disrupting the traditional value chain of the insurance industry. The industry is fundamentally changing because of the impact of technology such as Artificial Intelligence, Internet of Things, blockchain, big data, and Robotic Process Automation. The insurtech universe can be segmented into four broad categories - Product & Distribution, Business Process Enhancement, Data & Analytics, and Claims Management.
How do you see the developments in the Indian re/insurance market in next five years?
The Indian insurance industry is at an inflection point from where it is poised to grow manifold on the back of robust economic growth and higher disposable income. The industry has been spurred by product innovation, vibrant distribution channels and targeted communications campaigns by the insurers to create awareness, leading to increased penetration levels.
The government’s policy of insuring the uninsured has gradually enhanced these levels further and helped in proliferation of insurance schemes. The sector is also expected to attract further investment owing to the presence of friendly government policies and adynamic regulator facilitating how the industry conducts its business and engages with its customers.
Favorable demographics, backed by an increased internet and mobile penetration will necessitate a major rejig in the business models of all the stakeholders. Insurtech is increasingly becoming a major discussion point amongst the CXOs and as such,a wave of positive disruption is already on the anvil. Overall, it an interesting time for the industry wherein all stakeholders have an opportunity to rise to a whole new level.
These are also exciting times for us at Willis Towers Watson as we combine our global knowledge and local expertise in helping clients address emerging challenges and maximize opportunities. Alongside, we are partnering with the other stakeholders in the larger ecosystem to bring the very best to our clients. For example: Willis Towers Watson has partnered with IBM to address the risk related to cybersecurity, while providing clients a more integrated and holistic view of their cyber risk, enabling an effective risk transfer and overall capital allocation strategy.
Do you think we have adequate numbers of players and products to serve the Indian customers?
Earlier, the approach towards risk and the buying behavior of customers was not incentivizing insurers to look beyond traditional offerings. The current number of insurers in life, non-life as well as health care catering to the market,but with low penetration levels. Perhaps, this was one of the reasons for consolidation in the Indian insurance sector. However, the situation is pretty different now with the insurance industry delivering a double digit y-o-y growth across different segments. There are newer risks such as cyber, title, extended warranty, POSH etc.which have also emerged.
With the tech invasions in our daily lives, customer needs are also changing dramatically, compelling a relook into how existing risks are mitigated. With increased awareness around insurance, demand for different products from newer customer segments is on the rise, mandating a shift in the traditional business models of insurers.
Bite sized insurance products, micro insurance and long tenure products in non- life are an outcome of such demand.This dynamic nature of the industry is resulting is introduction of a lot of interesting products regularly. All this is also contributing towards a positive factor around more investments in the insurance sector; leadingt o advent of newer players in the digital insurance category, health insurance and other specialized forms.
Do you think the Indian insurance customers are increasingly accepting various aspects of `risk management’ where brokers can play a role in this matter?
Barring a few large risks in the natural resources sector, risk management as a concept is still at a nascent stage in India. Traditionally, the process of buying insurance for a business has been commoditised without adequate effort to understand the risks within a specific sector.
However, lately, we are seeing a growing awareness and interest by corporates in risk management concepts. There are more conversations around risk now between the clients and us, extending to non-traditional covers such as cyber and title.
At Willis Towers Watson, risk and analytics are the foundation of the solutions we offer to our customers. Our state of art risk analytical platforms in property, cyber and liability covers are already adding a lot of value to our clients.Additionally, India Inc. has also shown keen interest on our “Strategic Risk Consulting” offering. In fact, our clients are extensively applying our sector specific risk indices.
But even with this increased awareness, decision makers and corporate risk managers still need to be equipped and enabled with actionable insights and information. Keeping this need in mind, we have planned a Risk Lab, a joint educational initiative launched by Willis Towers Watson and PARIMA for people with responsibility for risk and insurance in the Asia-Pacific Region. Topics to be covered by the Risk Lab Series would be tailored according to the needs of the risk community based on the feedback received from PARIMA Conferences.
On the retail side as well,with the aid of insurtech, insurers are exploring ways to educate customers about risk management. For example, they are creating awareness about use oftelematics in motor or wellness indices in health and life insurance. These are all sure signs of a positive risk culture in the making for the Indian insurance industry.
Is the Corporate insurance market shrinking as insurers are focusing more on the retail market?
It is true that most of the growth in the Indian insurance industry is driven by the retail market. An increased awareness amongst masses around risk and growing action around government sponsored insurance schemes in health, life, andcrop, are driving the demand for retail products.
On the corporate insurance side, rates continue to be soft resulting in low growth. There haven’t been many greenfield/brownfield investments in the past few years, further limiting the growth in corporate premium. Although, there has been a spike in the corporate health premium portfolio, it is still quite low in comparison to the overall growth of the industry. Consequently, the balance of scale on growth of market share is easily tilted in favor of retail.
Do you think Indian customers face problems in getting their claims and is apathetic attitude of insurers responsible for this?
It would be absolutely unfair to say that the insurers are indifferent towards claims and are biased in their view. Generally, we have observed that in mostof the large complex claims, the clients are not equipped with proper advocacy or support of an expert, thus limiting their ability to smoothly navigate the claims process.However, in our experience, Willis Towers Watson has managed to earn the trust of our clients having handheld them through the whole claims process while receiving full cooperation and support from insurers. As a broker, we believe that a claim situation is the litmus test of our commitment to clients and we have been able to consistently deliver positive results on that account.
One must also note that on the insurers’ side, some of the processes are still bureaucratic and manually handled, leading to a longer turnaround time. But, the application of technology can substantially improve the situation. In fact,on retail claims, most of the insurers are offering near real time settlemen taided with latest state of the art processes and systems.
Does the presence of the foreign reinsurance players make any difference in the industry?
The Indian government has responded to the need for opening the Indian market for reinsurers and the presence of foreign reinsurers is a step in the right direction. It will helptofurther build confidence in the Indian insurance industry and attract a larger pool of capital. As it is still early days for all these reinsurers,their full presence is yet to be felt by the industry.
Currently, these players are probably evaluating the market closely and considering their participation selectively. Once they are fully operational, the industry should expect some significant value addition from the presence of the eventual risk bearer in the same market. At this point, the reinsurers also need to note that in terms of product requirements and risk landscape, the industry in India is changing quite rapidly. This may warrant a more calibrated approach from there insurers to be sustainable in the long run.
Why is broking not picking up the way it plays its role in the developed countries?
For most parts, the insurance industry in India has been moving in a traditional way and customers are also accustomed to acknowledging insurers and their agents. Consequently, the business of “broking” as a concept is yet to paveits way into the mind sof customers. With the primary target segment in commercial risk, corporate clients are taking their time to warm up to the role played by a broker. Historically, these clients have been working closely with insurers or their agents and there seems a bit of inertia towards any kind of change. In the past,apart from price discovery, brokers werenot being able to demonstrate any significant value addition, but in the last couple of years, the role of brokers has been significant in mitigating large and complex risks.
In India, most multinationals are already working with brokers (withglobal experience), and now some of the government owned companies have also begun showing interest. The growing dynamism and complexity of the Indian risk market will need a greater role and participation from insurance brokers in India. At Willis Towers Watson, we are genuinely excited about the many possibilities of being the risk mitigating partners for India Inc.
Do you think Indian insurance industry is opening up toglobal InsurTech trends?
Insurtech has already arrived in India and is disrupting the traditional value chain of the insurance industry. The industry is fundamentally changing because of the impact of technology such as Artificial Intelligence, Internet of Things, blockchain, big data, and Robotic Process Automation. The insurtech universe can be segmented into four broad categories - Product & Distribution, Business Process Enhancement, Data & Analytics, and Claims Management. Some of the trends that we have observed are as follows:
• Globally, a strong shift from ‘phygital’(physical+digital) to ‘digital’ is being seen. For e.g. Insurtechs leveraging IOT to monitor health indicators, AI for medical insurance, home insurers collaborating with home automating companies to digitise prevention solutions, commercial carriers using RPA, workplace drones and AI being used to improve operational efficiencies and customer experience, or for that matter, auto insurers using vehicle telematics data to adjust premium. The latest Quarterly InsurTech Briefing from Willis Towers Watson, finds that globally, insurtech companies are developing tools to harness data from wearable sensors in order to create insightful information that can be used to enhance life and health insurance products.
• Insurtech initiatives in India have taken place mainly in the areas of Product & Distribution, and Claims Management i.e theclient facing processes. Further, the regulator’s recent steps in forming working groups to explore insurtech applications as well as adopting a sandbox approach are early steps in the right direction.
On our part, Willis Towers Watson offers proven, connected insurance technology solutions to prepare insurers for the future. We support insurers with the following:
Enhance customer experiences. We seamlessly connect insurer and broker technologies so that agents, brokers, insurers, and most importantly consumers exchange data in a more modern and meaningful way.
Harness advanced analytics. We implement game-changing predictive modelling solutions, including machine learning that improve performance with more accurate fraud detection, pricing, claims and underwriting.
Automate processes to reduce risk. We use process automation and governance software to automate data and analytical workflows, enabling insurers to streamline their business and reduce costs.
Adapt IT to improve performance. We bring a range of Software as a Service solutions that help insurance companies of all sizes reduce IT complexities and improve software performance.
What are the regulatory concerns of the Indian broking industry?
The insurance industry is currently experiencing a lot of developments and as a result, the regulatory requirements are getting aligned to the changing landscape. Understandably, the regulations around insurance brokers in India are also evolving. However, sometimes, these appear to quite heavy on compliance. Therefore, a lot of bandwidth is spent in incorporating such requirements. Further, some of the proposed changes around Order of Preference in reinsurance also appear to give a feeling of anti-competition and protectionism. Considering the pace of change that the insurance industry is experiencing, regulations around ownership and investments could also be reevaluated. Also, the guidelines around strategic partnerships in insurtech can help in devising the right approach to participate in this new revolution in the insurance space.
Would you like 100 % FDI in broking?
A 100% FDI could encourage more investment in the Indian insurance market. With greater autonomy and ownership, it could bring more solutions backed by technology and experience thus sophisticating the approach towards commercial risk management and mitigation.
What are Willis Towers Watson’s plans for the Indian markets? What kind of innovations and specialized products is it bringing in the Indian market?
With roots dating back to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance.
In terms of insurance and risk, Willis Towers Watson offers exceptional risk analytical capabilities backed by state of the art technology platforms, capable of revolutionizing the way clients approach risk. We endeavor to redefine the entire approach to insurance broking by transforming the local broking nuances from being a “transactional” to a “solution led” mindset for large commercial risks.
On the insurance broking side, apart from the standard product bouquet of motor, health, fire & allied perils, life insurance etc., we offer expertise in some of the niche categories such as warranty, title, cyber, political risk, and rep & warranty too. We also aim to bring ART (Alternate Risk Transfer) solutions for some definite category of risks. On the industry front, we cater to all types of sectors including manufacturing, aviation, BFSI, construction, technology, media, telecom and natural resources.
As the new age ‘analytical broker’,Willis Towers Watsonis focused on blending experience with technology to simplify the risk mitigation mechanism for our clients. Overall, we are looking at the insurance industrythrough a lens that goes beyond ‘protection’ andincludes ‘prevention’ as well as ‘assistance’.
Are you dealing with Cyber and other liability products? Are they growing?
At Willis Towers Watson, we offer solutions to manage and mitigate all types of risks, including cyber risk. Owing to the large-scale cyberattacks in recent years, the awareness as well as the need around cyber risk has grown significantly. There is demandfor cyber solutions across client segments. Willis Towers Watson’s solutions encompassa 360degreeapproach covering quantification, transfer as well asprevention.Using proprietary tools, we assess, protect and help clients recover from a cyber incident by evaluating the vulnerabilities within people, capital and technology. Those assessments are then merged with deep data from companies to produce a detailed risk profile and, ultimately, a more cyber-savvy workforce and resilient organization.
Recently, Willis Towers Watson announced an expansion of the company’s global advisory services aimed at addressing risk related to cybersecurity. As part of the broader service offering, Willis Towers Watson will be integrating IBM Security’s suite of services – from security testing and technical assessments to incident response and cyber resiliency services – to help clients assess, protect and recover from cybersecurity threats. This collaboration will provide clients a more integrated and holistic view of their cyber risk, enabling an effective risk transfer and overall capital allocation strategy.
Have you seen the rates going up in India in renewals?
Although,globally there have been some large claims in the last couple of years,but the insurance markets continue to grow slower. Consequently, the pricing around large commercial risks in India have also not firmed up for renewals.
Owing to competition to capture market share, compared to last year,some of the insurers continued cutting the corners to offer discounts. However, there has been increase in motor premium due to mandatory guidelines laid by the regulator around third party risk pricing. Also, in the group health segment, renewals have seen an increase due to continual bleeding of this portfolio where the claim ratio is in excess of unity.