``Traditional products will become simpler and standardized,the demand will be more for innovative products to cover emerging risks''
SN Rajeswari,General Manager, New India Assurance, has recently been selected to become the CMD of Delhi based Oriental Insurance Company.. In an exclusive interview with Asia Insurnace Post, she said technology will continue to disrupt the Industry.Customers have evolved significantly and rely on technology for information and feedback. Therefore traditional marketing and communication strategies are not going to help customer retention,without the support of technology. Web aggregators supported by digital have emerged as a distribution channel in the insurance value chain. Technology supported by human interface will take forward customer service and retention to a long way,she said. Edited Excerpts"
How do you see the broad trends in the Indian general insurance industry?
The Industry has been growing at a CAGR of around 15% since 2002 to date, despite challenges like detariffing, motor TP pool etc. in the interim.The trend of growth should continue in the coming years too.
How the domestic general industry is getting ready to support a $ 5 trillion economy in matter of few years?
Consumption, investments and government spending is expected to drive growth. As disposable income increases retail segment (like Motor and Health) is expected to grow. Increased investments will mean more asset creation which will require insurance and hence prove to be growth driver of property lines. General insurance industry has played an important role in government initiatives like crop insurance, health insurance etc. and will continue to do so.
Do you think the functioning of the general insurers in terms of vital financial parameters have improved and profitability has improved for the industry?
Though the nonlife sector is recording a double digit growth, there has not been much profit generated so far for various reasons. The Industry had been focusing on growth but over a period of time profitability is also expected to improve.
What are the sectors, you think, will lead the growth in the Indian general insurance industry?
The penetration of Nonlife industry in India has now reached only 0.9% from 0.6% .This under penetration level and increasing awareness on insurance among the people will lead to the growth of the Industry. Retail health, motor and personal lines of insurance will drive the growth of the Industry.
Does India have scope for more players and industry has adequate number of products to serve the growing segments of economy and consumers?
Indian industry growth is driven by increasing awareness,innovative products and more distribution channels due to explosion of technology. Prior to nationalisation, there were more than hundred players.
Now the business has multiplied manifold and certainly there will be more players entering into the market soon.Traditional products will become simpler and standardized,the demand will be more for innovative products to cover emerging risks. Increased adoption of digital solutions and simplified customized personalized products are expected to evolve due to embracing of IT systems.
Do you think the demands for the liability products particularly cyber products are increasing?
In FY 19, the industry has seen a growth rate of about 19% in liability line of business. Demand for liability products are increasing considering the nuances of the businesses and the emerging risks.
Cyber insurance, title insurance, Inherent defects insurance, intellectual property insurance, protection & indemnity cover for ocean going/coastal vessels are now available in the market. Cyber insurance will emerge as a sizeable business in the coming years. After amendment of companies Act 2013, the demand for D & O insurance is seen on the increasing trend. The offtake of professional indemnity insurance is also seeing an uptick.
How technology driven Indian general insurers have been and do you think Indian consumers more shifting towards the tech platforms for choosing and buying insurance products?
Digital is a game changer.Indian Insurance Industry is no exception to the digital revolution and technology will continue to disrupt the Industry.Customers have evolved significantly and rely on technology for information and feedback.Therefore traditional marketing and communication strategies are not going to help customer retention, without the support of technology. Web aggregators supported by digital have emerged as a distribution channel in the insurance value chain. Technology supported by human interface will take forward customer service and retention to a long way.
With the presence 10 global reinsurers along with GIC Re in India, do you think, Indian general insurance industry benefitted in terms of capacity and innovative products?
Reinsurers play a significant role in providing additional underwriting capacity and for balance sheet protection to risks written by insurers. They play a major role in supporting complex and emerging lines like Cyber insurance. They share their knowledge and expertise which helps the insurers to follow sound underwriting practices and to improve the quality of the business written.
How to develop a reinsurance hub in India?
India has the advantages of strategic location and connectivity in the globe. It is one of the fastest growing economies with a stable government at the Centre. Availability of skilled manpower is another advantage.Indian Insurance Industry is under penetrated. India is an eminent player in the Reinsurance market.The industry is supported by the Regulator and the Government. India can very soon evolve as as RI hub.
What kind of reinsurance portfolio New India currently has?
AT New India, Reinsurance Protection is taken by way of a combination of Proportional and Non Proportional arrangements. Proportional arrangements provide capacity to write new business and manage the exposure whereas event losses and high risk losses are covered by Non Proportional arrangements which provide balance sheet protection.
In percentage terms, are you reinsuring more or retaining more, year over year? What are the portfolios you reinsure more?
Retail line of business are retained more in the books of New India. Whereas Risks that are volatile in nature like Crop, Marine Hull, large property and engineering, credit and aviation are retained to a much lesser extent in the company.