How do you expect the developments in the India re/insurance market in next five years?
New business premium underwritten in the Life Insurance market in FY 2017-2018 was Rs 1,93,900 Crore (USD 29 billion) with a compounded average growth rate (CAGR) of 23 per cent since FY 2004-2005.
Non-Life Insurance market had gross direct premium of Rs 1,50,700 crore (USD 22.5 billion) in FY 2017-2018 with a CAGR of 18 per cent since FY 2004-2005. New India Assurance Company Ltd. leads the market with 15% market share.
Insurance penetration in India is around 3.4 per cent , far below global average of 6.2 per cent . Emerging economies in Asia like Malaysia (4.8 per cent), Thailand (5.5 per cent), China (4.8 per cent) have higher penetration.
India’s Life insurance penetration was 2.7 per cent and Non-Life insurance penetration was 0.8 per cent(global benchmarks – 3.5 per cent for Life and 2.9 per cent for Non-Life).
We expect continued government impetus to Crop Insurance, Universal Health Insurance. Rising private income, spiraling healthcare costs, coupled with rise in lifestyle diseases, will lead to growth in motor and health insurance. Upswing in capex cycle will lead to growth in property and marine insurance.
Expect insurance market to grow at 15-20 per cent over next 5 years, across all verticals.
Do you think we have adequate numbers of players and products to serve the Indian customers?
The Indian market is heavily under-penetrated and there is space for more players who can provide relevant products and service to customers, delivered using innovative technology solutions. We have seen many new products being filed with IRDAI, and this is an encouraging trend which will serve to benefit the customer.
Do you think Indian insurance customers are increasingly accepting various aspects ‘risk management’ where brokers can play a role in this matter?
Customers are open to multiple value-adds related to Risk Management and they cooperate and participate in all such activities.
However, when it comes to decisions regarding placement, most of them tilt towards L1 quotes.
All such add-ons are specific knowledge-based and hence are at a cost, making it difficult to be provided free with L1 quotes.
We, one of the long term players in this market, have a firm belief that such activities related to ‘Risk Management’ are a crucial and integral part of overall policies for Corporates and Small and Medium Enterprises.
We also understand, however, that these activities can take some more time to attain the status of decision-driving, influencing factors for placement of insurance, and hence we continue to operate with a clear philosophy of adding relevant and professional services and building a differentiated offering.
Is the Corporate insurance market shrinking as insurers are more focusing on retail market?
If you look at the overall numbers in comparison to each other you may get an impression of a shrinking corporate insurance market.
Retail market is growing rapidly, thanks to the Government push for Insurance schemes initiated to support specific segments of society that are primarily retail focused.
The Series of ‘Pradhan Mantri’ schemes, as launched during the past 2-3 years, has contributed substantially to the increase in retail premium. Due to this sharp increase in retail numbers, the impression of a shrinking Corporate business is natural. Specific numbers for Corporate business, however, have not gone down, and are, in fact, increasing. We are of the opinion that this growth is going to pick up further, with uptake in infrastructure and industrial economy related activities.
Do you think Indian customers face problems in getting their claims and apathetic attitude of insurers are responsible for this?
Claims are, in general, being settled though more so with respect to Corporate customers, as these customers are better able to submit the necessary documentation through Insurance Professionals working as their employees and/or advisors, or through their Brokers / Consultants.
There are some issues as regards to retail customers, wherein they are sometimes denied a claim because of their lack of awareness of the terms and conditions of the policies and their interpretations.
However, there is a stringent regulatory framework for grievance redressal that helps customers in case of any claim denial or delay.
Our business is retail-dominated and we are committed to assisting customers in servicing claims and providing full end-to-end support during the claims process.
We also have created a separate ‘Claims Cell’ with presence at multiple locations all across the country to provide full functional and technical support on all aspects of claims. We also offer claims consultancy services and help corporates with long outstanding claims settlement from insurance companies.
Why broking is not picking up the way it plays its role in the developed countries?
Brokers, as an insurance intermediary, have been contributing largely in the Non-Life insurance industry in India but are only slowly gaining recognition as a professional entity. Various factors could be contributing to this, e.g. issuance of multiple Broker Mandates by clients working out to reduce their premium outgo, inclination by insurers to get direct business from customers as against through intermediaries, lack of awareness of or trust in the role of the broker, etc.
Professionalism, increasing awareness, building up trust, can make brokers more visible in terms of value add beyond pricing so as to reach developed countries levels.
Do you think Indian insurance industry is opening up for global insurtech trends?
We have seen many insurtech trends and many start-ups working on various models that can bring value to customers. This is expected to expand rapidly especially in terms of providing better consumer experience in purchasing and servicing.
Fraud detection & prevention, vehicle telemetry and wearables are certain areas where insurtech can add value.
What are your plans for Indian markets? What kind of innovations and specialised products it is bringing about in Indian market?
We have vertical-wise strategies in place for Corporate, Retail and Reinsurance businesses.In addition to our existing service offerings, we are working towards providing new, need-based solutions for various Corporates, e.g.
Title Insurance and design defect policies to Real Estate Companies, Cyber security covers to certain Institutions, Drone Insurance, etc. Similarly for Retail customers too, we are designing customized package policies with the help of various insurance companies. We have initiated a new vertical for ‘Strategic Alliances’ and are initiating partnerships with various organizations having a large customer base.
We have also initiated and launched a ‘Sachet Insurance’ concept and are taking the same forward and giving solutions based on the needs of specific customer segments. Our primary focus in Retail remains in designing and developing solutions for the under-penetrated markets and under-served customers in the rural markets in India.
We have been able to reach insurance solutions to customers in over 2,00,000 villages in India. This, we believe, will help in increasing insurance penetration.
Which are the segments you are prominently present in India?
We are present in all segments – Retail, Corporate as well as Reinsurance. In FY2017-2018 alone, we serviced over 2 million Retail policies, and have serviced over 10 million cases since inception.
We have 1000+ Corporate customers,and serve insurance and reinsurance companies in over 40 countries.
Are you dealing with Cyber and other liability products? Are the demands for these products growing?
Yes, this is an emerging line of risk for Corporates and we are in active discussion with many. Earlier there was a limited understanding and acceptance of these products, but the way the market has opened up, and with clients engaging in cross border businesses, these are very real risks that can no longer be ignored.
If not addressed appropriately, these risks can have a significant impact on an organisation’s balance sheet and brand reputation.
We have been engaging closely with both, clients and underwriters, to offer customised solutions.
You seem to have done well in rural areas? How you have managed it?
Rural and semi-urban customers are our core. We focus on analyzing and understanding the specific needs of these customers, based on which, along with insurance companies, we design solutions that best suit them, e.g. Loan Suraksha and Arogya Suraksha (exclusion of medical examination and pre-existing diseases).
Our widespread presence in over 400 locations across India also helps to serve this customer base better especially for claims management.
We hire people from the local markets, and train them. This not only provides them employment but they are able to utilize their local knowledge about customers, culture, language, etc. to serve the customer better.
In addition, we nurture our employees as is evident by MIBL ranking amongst the Top 100 Best Companies to Work For in the Great Place to Work® surveys conducted in 2016 and 2018. We believe that happy employees make happy customers.
Equipped with the right training, appropriate technology and a focused customer-centric approach, our employees have been successfully serving these customers across 200,000 villages and have serviced more than 10 million policies till date.
Who are your shareholders and how much they hold? How much premium income you generate in the country?
80% Mahindra & Mahindra Financial Services Ltd. and 20% by Inclusion Resources Private Ltd. (a 100% subsidiary of XL Catlin). Gross Premium placed in FY 2017-2018: Rs 20 Bn.
Have you seen the rates going up in India in Apr 1 renewals?
While we may not have seen a significant upward trend in the premium rates during April 1st renewals, we have seen some level of correction, especially for portfolios such as Health.