The three wise men: Srivastava, Blanc, Carnegie-Brown

The opening sessions of the India Rendezvous 2020 saw three industry luminaries challenge perceptions, offer solutions and illuminate the road ahead.

By Paul McNamara

“We are the first generation to have felt the impact of climate change and we may be the last generation that is in a position to do something about it.” This was the stark message delivered by GIC Re chairman-cum-managing director Devesh Srivastava in his welcome address at the India Rendezvous 2020.

Mr Srivastava also provided a comprehensive overview of the insurance scene in India in 2019 where he made the point that, “You can’t let a top-line goal undermine a long-term strategy.” Growth opportunities, he said, remain in areas like agriculture and health but the biggest opportunity lies in the application of technology.

Indian insurance is at the point where it needs to spend more time understanding what customers want – and be ready and willing to pay claims. Regulation, said Mr Srivastava, is 100% focused on the policyholder while good corporate governance is more about aligning the interests of all stakeholders.

This year’s model

In his keynote address, SCOR CEO of reinsurance Michel Blanc proceeded to outline the new insurance model for India and how it will drive P&C reinsurance offers over the next five years.
The main drivers shaping India P&C reinsurance models, he said, are regulatory changes (like risk-based capital and IFRS17), market changes, government schemes and big loss events (such as the Chennai floods).

While the main lines of business are fire, agriculture, marine and engineering, he said, “We need sustainable profitability,” in the face of new emerging risks.

These new risks include cyber, the increase in Nat CAT and the high protection gap. But the industry also needs to look towards changing health needs, the growing dependence on technology, changes in policy and regulation. These four forces will shape the outlook of insurance for the next five to 10 years, Mr Blanc said.

Demand management

Lloyd’s chairman Bruce Carnegie-Brown opened his international keynote address by acknowledging that, “The future of the sector in India is surely very promising,” before looking at some of the challenges facing the sector.

“Our customers are not buying enough of our products,” he said, pointing to the $27bn insurance gap in India. “Why don’t they buy more?” Mr Carnegie-Brown said – and pointed the three main impediments to growth of confidence, relevance and cost.

In terms of addressing relevance, Mr Carnegie-Brown said that we should be using data and data analytics to make products that are more closely related to customers’ needs and more relevant for them.

Products are also too expensive and this is because acquisition costs and administration costs are too high – and the industry needs to modernise its systems and use technology like drones and blockchain to improve performance. “It is imperative to have an innovative culture within the organisation,” he said. “We must make it easier for new capital to enter the market.”

Mr Carnegie-Brown ended by highlighting the emerging risks which he enumerated as climate change, data and data analytics – and looked at what part the industry should play in the transition to a low-carbon world. “It will be a hard transition. Insurers who embrace innovation will be the best placed to thrive,” Mr Carnegie-Brown said. “Risk will continue to be commoditised. The best way to predict the future is to create it.”

CEOs need a strategic vision

By Anoop Khanna

The technical sessions of IR2020 began with an address about ‘Vision 2020 for the Indian market: Taking insurance to new heights’ by Bajaj Allianz General Insurance MD and CEO Tapan Singhel.

Mr Singhel elaborated on the challenges of penetration, distribution, underinsurance, pricing, the growing threat of Nat CAT and climate change, talent grooming and technology adoption as the threats the industry faces today.

SureClaim India co-founder and CEO Anuj Jindal focused on the funding of medical treatment. Collating the data of the National Sample Survey Organisation and the data from Insurance Regulatory and Development Authority of India, Mr Jindal said that medical insurance holders spend $20bn on hospitalisation, whereas only $5bn is paid back by the health insurers. He discussed the reasons behind this - and how this money is lost.

He said that it is important to build intelligence into claims using data and technology so that claims can deliver experience. Claims should be seen as a sales event while an approach to build customer centricity into the business will reshape the industry.

The second panel discussion of the day dwelt upon the opportunities for insurance/reinsurance players in India’s first International Financial Services Centre at Gandhinagar in Gujarat.

The panel was chaired by Gujarat International Finance Tec (GIFT) City head of IFSC department Dipesh Shah and discussed the opportunities that the international and national (re)insurers have in the IFSC Gujarat.

GIFT IFSC aims to create a centralised platform for exchange of financial services including insurance, tax, regulatory and infrastructural benefits for global insurers and reinsurers in GIFT City.

The panellists in the Gift IFSC included IRDAI executive director Suresh Mathur, Marsh India Insurance Brokers country head and CEO Sanjay Kedia, GIC Re general manager Madhulika Bhaskar and Khaitan Legal Associates partner Satyendra Shrivastava.

Mr Shrivastava said the Indian insurance industry has crossed $100bn in annual premium and cedes a premium of around $1.2bn annually with foreign reinsurers. Global reinsurance premium is around $220bn.

The final presentation of the day was focussed on the theme ‘Is India a broker driven market?’ by Anviti Insurance Brokers national head sales and services Sudhir Singh.

Mr Singh’s presentation focused on the Indian insurance industry landscape, its growth drivers and the Indian broking community. He said the volume of broker driven insurance distribution has grown substantially during the last decade. During 2011-12 the gross domestic premium written through Indian brokers was INR99.2bn and in 2018-19 it went up to INR412.8bn, growth of almost 400%.

Panel discussion: Opportunities for insurance /reinsurance players in IFSC in India
L-R: Messrs Dipesh Shah, Suresh Mathur, Ms Madhulika Bhaskar, Messrs Sanjay Kedia and Satyendra Shrivastava

InsurTechs have much to contribute to industry growth

By Jimmy John

Panel Discussion: What can InsurTechs do and what they can’t
L-R: Messrs Kapil Mehta, Benjamin Serra, Tarun Mathur, Prayat Shah, Aparajit Bhattacharya, Kulin Shah and Amit Salunkhe

A high-level panel discussion with some top domain experts deliberated on the critical role of InsurTech in the Indian market place.

Moody’s Investor Services senior vice president insurance EMEA Benjamin Serra said that InsurTechs today are efficient at handling insurance buying and claims processes and so people were increasingly attracted to them.

PolicyBazaar co-founder and chief business officer Tarun Mathur said that his firm had to build its brand from scratch. “Pricing the product right is critical,” he said.

Acko General Insurance vice president Kulin Shah said that people are not aware of the different products insurers offer. “Technology is enabling us to reach out to a larger section of the rural market and bridge the gap with relevant products,” he said.

InsureFirst managing partner Aparajit Bhattacharya said that there are major product gaps in the market. “Through technology and big data we are able to reach out across the country where traditional players will not venture,” he said.

Wealthy Therapeutics co-founder and vice president Prayat Shah said that health insurance is moving towards a model where pricing risks is seen as not viable. “Access to technology and services are helping customers stay healthy and live longer and our goal is to improve health outcomes,” he said.

Cropln Technology agriculture expert Amit Salunkhe said that lack of data has resulted in many companies exiting the agriculture space. “As a technology company we feel that companies have taken the risk but have not taken steps to mitigate them,” he said.

The session was moderated by SecureNow insurance brokers co-founder Kapil Mehta.

Taking insurance education from India to the world

The 65-year old Insurance Institute of India is a major centre for insurance learning and professional training in India and attracts students from around the world. The Insurance Institute of India secretary general Deepak Godbole gives us a glimpse into the various activities of the institute and its future, especially in the reinsurance space.

By Jimmy John

The Insurance Institute of India (III) works in a unique ‘federation of insurance institutes’ not only in insurance education but also in spreading insurance awareness. Historically, there have been several associated institutes across the country, involved in spreading insurance knowledge and awareness.

“We see our associated institutes as connectors between insurers and prospective buyers in the interior of India and also as emissaries of III,” said Mr Godbole. Through its many courses the institute promotes understanding of the need and utility of insurance and the products available to take care of risks.

Building local talent

III also promotes career opportunities in insurance and insurance related industries to younger generations. The insurance industry faces the challenges of a trust deficit, competition from other financial services, ever-changing technology, rising consumer expectations and evolving regulation. The institute helps the insurance industry by training new manpower qualified through passing examinations.

Through the College of Insurance (CoI), it conducts classroom training programmes and organises workshops and seminars. “III both creates interest in risk management and insurance studies for college students and insurance industry officials and also encourages them to appear for insurance examinations. Through CoI activities, we take care of the continuous professional development of insurance industry officials,” said Mr Godbole.

Going global

III offers its examinations and training support globally. The III examinations are now conducted in UAE, Nepal, Bhutan, Bangladesh, Sri Lanka and Myanmar. “The institute has entered into cooperation MoUs with the counterparts in these countries for offering support in examinations and trainings, with the ultimate aim of developing their own capacity in the near future,” said Mr Godbole. The institute recently signed a cooperation agreement with the Insurance Institute of Nepal.

Aligning examinations with training

Rapidly changing technology teaches the insurance industry that ‘change is the only constant’. Driverless cars, drones used for accident surveys, satellite imagery for estimation of flood/ agriculture losses, data analytics, and unconventional distributors selling insurance are some of the examples of disruptors in the insurance operating environment.

“Realising this, we decided to look at more frequent content updating in the area of examinations and we have added new topics in our calendar of training programmes and also introduced mobile app-based training for intermediaries,” said Mr Godbole.

Apart from its post-graduate diploma course in health insurance and insurance marketing, the institute has introduced the certified insurance anti-fraud professional course. It conducts seminars on ERM, insurance fraud investigation, deposit insurance and Aayushman Bharat- the mass heath scheme introduced by the government of India. “All of these courses are conducted with the aim of keeping industry participants updated,” said Mr Godbole.

Training reinsurance professionals

The institute’s annual calendar takes care of specific programmes on reinsurance. “For those who have already gone through the basic reinsurance appreciation programme, CoI offers more detailed programmes focusing on operational areas like reinsurance treaty, reinsurance accounting, reinsurance programme design,” said Mr Godbole. For this course, the institute arranges faculty with long years of working experience in the field of reinsurance. The institute is also gearing up to launch a specialised diploma in reinsurance.

Mr Godbole believes there is plenty of room for growth. “India and its neighbours have lots in common,” He said. “These are among the least-penetrated insurance markets with scope for growth of life, non-life and reinsurance. Many foreign insurers are already here through joint ventures. Branches of many foreign reinsurers and Lloyds have also set up offices in India.

“When demand is growing and supply is strengthening, the insurance industry is going to keep growing at an impressive pace. There will be opportunities for insurance professionals with knowledge of actuarial science, underwriting and claims. Added to that, to take care of changing operating environment, there will be exciting opportunities for experts in the fields of IT, data analytics, surveys and loss assessing. III is ready to assist to cope up with the demands of the industry.”