Best days are ahead

The final day of the India Rendezvous 2020 got off to a strong start with an expert session that posed the question: Whither insurance in India?

By Paul McNamara

“We believe the industry’s best days are ahead,” said New India Assurance’s general manager and CFO Ms S Rajeswari in her opening address on the final day of the India Rendezvous for 2020.

“Even cyber, which is a threat, will be an opportunity for insurers,” she said as she looked at the vibrant non-life insurance scene in the nation and its incredible growth story of the last few years.

She went on to say, “We expect double digit growth in the next five years.” This growth will be enabled by new distribution methods and new companies, she said, while government schemes have been creating greater awareness of insurance. This has also led to an improved penetration rate, “Especially for those living below the poverty line,” Ms Rajeswari said.

Regulation too

“The regulator is playing a very active role in encouraging the industry,” she said, with the removal of foreign ownership limits seen as helping development. Meanwhile the introduction of risk-based capital is seen to be a good thing – together with the impending launch of new insurance development sandboxes.

Turning to the big issue of climate change and its detrimental effects on the entire Indian nation Ms Rajeswari offered a potential suggestion.“Perhaps we should establish a pool to help cope with future Nat CAT events,” she said.

Other developments that Ms Rajeswari pointed to that are helping the development and growth of the industry is the Insurance Regulatory and Development Authority’s effort in promoting the standardisation of policy documents – coupled with the postponement of the implementation date for IFRS17 – which are both seen as being very positive. “We are very optimistic that non-life insurance will grow strongly,” she said.

Is cyber risk an abyss?

Cyber risk protection depends largely on creating cyber awareness.

by Anoop Khanna

Panel Discussion: Is cyber risk an abyss?
L-R: Mr Anil Arora, Dr Prashant Mali, Mr Amber Gupta, Mr Sashi Rajagopal

The first panel discussion of the day began with a focus on cyber risk: is cyber risk an abyss?  The discussion was moderated by ACE Insurance Brokers director and co-founder Anil Arora.

The panellists included Cyber Law Consulting president and founder Dr Prashant Mali, Aditya Birla Sun Life Insurance head legal and company secretary Amber Gupta and DXC Technology insurance industry SW and services offerings leader Asia Mr Sashi Rajagopal.

The panel started with a discussion about the robustness of an organisation’s IT systems to withstand the cyber aggression. The fact that the internal systems may be very good, however, things can go awry as the external environment with which the  organisation’s systems interact, may not have the same degree of robustness.

The panel said only enhanced cyber risk awareness and cyber preparedness can be a solution to the problem. Plus one needs to focus on developing the capability of being able to attribute the cyber-crime to the perpetrator and developing a cyber resilient system which can stand up to the demands of cyber security. Usually, that does not happen.

Dr Mali said that the laws dealing with cyber-crimes in India are different from other countries and only lodging a report to the police would be the only legal remedy for those struck by cybercrimes. Private investigators do not have any recognition under the Indian cyber act.

The panel discussed the fact that today the organisations rather than developing cyber resilience and putting in place a strong cyber security system and policies, have started budgeting for cyber-ransoms, which sets a dangerous precedent. The insurers need to step up their cyber literacy programmes.

He advocated that organisations should have multi-pronged policies to establish a cyber security culture to achieve the highest level of cyber safety in the company.

Reskill to stay relevant

By Jimmy John

In his presentation National Insurance Academy director G Srinivasan said that the Indian insurance market is growing phenomenally and there is an urgent need to nurture existing talent and also attract new ones. " The industry needs to spend money to develop talent and to reskill them," he said. He highlighted the need for the industry to make their staff up to date on insurance domain expertise. "The industry needs to develop technology skills among its staff and inculcate an analytical approach in them," he said. The Indian regulatory environment was changing fast with compliance and corporate governance getting increasing attention." Understanding the emerging insurance landscape and regulatory environment is critical to meeting customer aspirations," he said.

Calling for a strong industry academia connect, Mr Srinivasan called for the development of a focused industry relevant curriculum. " The insurance industry should be a career preference of youngsters and there should be increasing focus on research," he said. He also spoke on the need to introduce insurance as a subject in the school level. "The industry must attract the younger generation and also get the right people who can take it forward,"he said.

Climate change can make risks uninsurable

Climate change is not a hype, it is happening, it is escalating, and the impact makes risks deteriorate.

By Anoop Khanna

Panel Discussion: Climate change, insurance and urban resilience
L-R: Mr Youssef Fassi-Fihri, Dr Makarand Kulkarni, Dr Kishor Dhore, Ms Kuhu Mohapatra

The second panel of the day was focussed on climate change, insurance and urban resilience. The panel was moderated well by Insurance Institute of India secretary general Mr Deepak Godbole. The panel also included Société Centrale de Reassurance (SCR) CEO Mr Youssef Fassi-Fihri, Skymet Weather Services chief product planning and quality Dr Makarand Kulkarni, New India Assurance deputy general manager Kuhu Mohapatra and Swiss Re assistant vice president and specialist- flood Kishore Dhore.

The discussion began with a brief presentation about National Cat risk Insurance programme of Morocco by Mr Fassi-Fihri. The Morocco’s National Catastrophe Risk Insurance Program became effective from 01 January 2020. It sets up a dual mechanism against natural and man-made disasters.

Next focus was on whether climate change is a hype or the whole truth. The panel was of the opinion that climate change is happening, it is escalating, and the impact is deteriorating. Speaking about the models to better understand the climate change impact. However, the models to be effective need to have more data and in much more granularity.

The panel said that it is essential to have the right data for the models to be effective. In fact insurance underwriting can be effective only when the granular data input is effective. It is important, especially for the purpose of insurance to ensure risk differentiation based on impact of climate change.

The insurers should be cautious while accepting risks and should avoid taking risks that are more susceptible.

To ensure that the climate change does not make majority of risks uninsurable even as the risks are increasing, understanding of risks is important.

Fatal attraction

Many worry that the insurance sector is not an attractive first choice of careers for today’s youth – but they can take heart from a panel of today’s young Indian insurance professionals.

Paul McNamara

Panel Discussion: Tomorrow’s Indian insurance leaders: Expectations and hopes
L-R: Mr Paul McNamara, Mr Aditya Ubgade, Mr Rohit Babel, Ms Hemlata Hajong, Mr Lakshya Gupta

A good cross section of budding insurance professionals gathered for a panel discussion on the final day of this year’s India Rendezvous to debate the subject of ‘tomorrow’s Indian insurance leaders: Expectations and hopes’.

Bajaj Allianz General Insurance deputy manager Aditya Ubgade, GIC Re deputy manager Rohit Babel, Tata AIG General Insurance manager (reinsurance) Hemlata Hajong and Digit Insurance management trainee Lakshya Gupta took part in a lively discussion that held many important insights for today’s insurance employers.

Mr Ubgade set the tone when he said, “What attracted me most about the industry is the potential growth of the sector – and the fact that there is not a lot of red tape,” in an industry that does a lot of societal good.

Ms Hajong concurred and said that insurance was a “resilient industry that has huge potential,” and that was why she first considered working in it.

Mr Babel was candid about the industry being “slow to adapt to change,” but hoped that was in the process of changing. Mr Ubgade followed through by saying that there was a misconception that insurance “was about having to sell – and having to lie.” Mr Babel countered this by saying that at the end of the day “you know you’ve helped people.”

All of the panel agreed that the long-term solution to the perception problems that the industry has lies in “catching them young”. There is a burning need for broad financial education to begin in schools – while the importance of social media in educating tomorrow’s insurance industry intake is paramount.

In addition to lack of awareness, the other major impediment to growth lies in lack of trust, according to the panel, and the fact that many people think insurance doesn’t offer a ‘dream career’ in terms of financial remuneration.

The reality is that today’s younger employees in the sector are the best advertisement for more new recruits – and savvy employers will recognise this and start working on new recruitment drives.

What you can measure, you can improve

Health insurance is already being revolutionised. Some people just don’t know it yet.

by Paul McNamara

The future is already here – and dacadoo’s president, CEO and chairman Peter Ohnemus has been preaching the message for a little while now.

Mr Ohnemus gave a pithy and insightful closing anchor address on the last day of India Rendezvous 2020 where he walked delegates through the innovative dacadoo offering – which combines health scoring with AI to deliver, “Great health and life to everyone.”

Quoting Karl Pearson, Mr Ohnemus said, “What you can measure, you can improve.” And that is what dacadoo is in the process of doing. He made the point that health insurers need to “have a modern product and engage with your clients.” And he cautioned, “The future of risk will be calculated in real time.”

What health scoring has helped do is show – at a societal level – that many people just do not look after themselves enough. “America is running out of normal healthy people. The world is running out of normal healthy people,” he said. And this is a very big concern – for if the ‘solidarity system’ where the healthy subsidise the unhealthy ceases to work because the balance has tipped in favour of the unhealthy – then health insurers will face a large systemic risk to their business.

India, said Mr Ohnemus, is the most exciting market in the world – and could be the ideal testing group for micro-services where insurance policies are offered to clients on the basis of captured data – such as being offered insurance for golf clubs when a GPS tracker indicates that the client is on the golf course, or travel insurance if the client is at the airport.

“Machine learning provides predictions and prescriptions,” Mr Ohnemus said – and we are rapidly entering a world of “pay as you live” – with on-demand life and health insurance in a “something for something economy.”

The future has arrived.