Page 28 - Digital Edition SIRC Supplement

MARKET REPORT - INDIA
Adapting to tap the enormous
potential
Mr K Sanath Kumar, CMD, GIC Re, shares about the enormous potential in India
market, and the need for the (re)insurance industry to adapt to the changing
landscape.
The India Story is not yet complete. It is still being
written. The Indian economic landscape currently
offers a very optimistic picture, occasional hiccups
due to various global issues notwithstanding. The overall
sentiment is very positive. It could be a harbinger of more
realistic and balanced growth and development.
Enormous potential
The Indian insurance industry, however, has a long way to travel
in terms of providing some kind of insurance cover to every
citizen of our country. Yes, the potential is enormous. The
sector has registered a growth rate in double digits y-o-y ever
since 2000 when the sector was opened up for private players.
However, something somewhere is not clicking.
During 2014-15, we wrote a gross general insurance
premium of INR86,000 crore (US$13 billion) and for 2015-16,
we are optimistic of touching the magical figure of INR1 lac
crore ($15 billion). However, almost 70% of these impressive
figures is contributed by motor and health portfolios, much of
which is mandatory or corporate driven. The track record of
house-holders’ policies, products for the small and medium
enterprises which can be a real determinant of insurance
penetration and Nat CAT protection and much more, is very
unsatisfactory.
Reaching customers at the last mile
The challenge ahead of us is to continue to grow at this rate or
do even better and reach out to the person at the last mile. It is
not that the Indian insurance industry does not have products to
offer to the various sections of the society. If I recall correctly who are planning to start their innings here. But this would
even before liberalisation of the industry we had over 500-odd
general insurance products. The awareness about these was
however, totally lacking.
During the last decade and a half since 2000 when the
foreign direct investment (FDI) in the sector was limited to
26%, we have had 28 companies operating in the non-life
insurance sector. Now with the limit for FDI raised to 49%,
the number of players is bound to go up further.
Also, with the growth of Indian economy, living standards
have gone up, incomes have risen, health awareness has
increased and people are investing more. But all this progress
has not translated into actual growth in the general insurance
penetration in India. It is not that we do not have customers or
the potential customers do not have the wherewithal to provide
enough business for the players in the market. The essentials
for a very pulsating and vibrating insurance industry exist, but
in isolation, and they need the proverbial Big Bang to collate
into a live molecule.
Simple products and administration
To achieve that Eldorado, the industry needs to develop
products that are easy to understand, simple to administer,
and if the need arises, easy to claim and then reach out to the
potential customer. We would be only fooling ourselves if
26 SIRC Supplement • November 2015 • www.asiainsurancereview.com
we expect the customer to walk over to our offices and buy
insurance off the shelf so to say. In an emerging market like
India where insurance awareness and penetration is still far
below the global benchmarks, the focus should be the customer
and the customer should be one who is at the bottom of the
pyramid.
The new players, to build up their customer base and wiser
from the experiences of their seniors in the field, will offer
simple and conveniently-administered products in the market.
This will also boost the insurance penetration in the country.
Growing awareness about natural catastrophes that are growing
in frequency and ferocity due to climate change will also spur
insurance penetration.
Over the last year, the Government of India has taken
up our role. It has introduced a limited variety of simple yet
very effective general insurance products for the masses. It
has created an ecosystem that can enable a quick jump in the
insurance penetration in the country. I am sure we can pick up
a thought or two from these schemes.
Our guiding principle should be that India needs insurance
and that Indian people need insurance, and we need to provide
them this in the most acceptable form. Hence, the success of
these government-initiated schemes, though these are in the
very initial stages of their life cycle, should be an eye opener
for the existing players and a lesson to keep in mind for those
complete just half the run. The other half would be complete
only when we are able to reach out to the customer at their place.
“Marrying” insurance and tech
The online retail industry, the telecom operators and various
other online aggregators have embraced technology whole-
heartedly but for variety of reasons insurance and technology
are yet to “marry”. The Indian insurers need to develop
innovative and cost-effective IT-enabled delivery systems to
reach out to customers at Tier II, III cities and villages. The
mobile-based payment systems, the new breed of payment
banks, the Digital India Initiative of the Government of India
and social media all need to be exploited. Out of 310 million
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