- Date : 12/08/2015
- Read: 5 mins
Customers today see a lot of value in insurance products which not only provide financial cover for their risks but also put forward solutions to reduce those risks, says Sanjay Datta, Chief, Underwriting, Reinsurance & Claim, ICICI Lombard GIC Ltd.
In an exclusive interview with Sanjeev Sinha, Datta shares his views on the impact of the economic slowdown on India's general insurance industry and talks about changing customer behavior and preferences. He also discusses his business outlook.
What has been the impact of the economic slowdown on India's general insurance industry? How is the industry coping with it?
The general insurance industry did witness some impact of the economic slowdown as growth slowed to single digits in FY 2015. However, the recent quarter has seen a revival with growth returning to the double digit trajectory. Given the low penetration across segments, including health, home etc, the industry is set to maintain a robust growth rate as awareness and realization of the need for risk mitigation increases amongst India's aspiring and young population.
The industry is also said to be burdened with widening underwriting losses because of the claim ratios being well above international benchmarks. Your comments ?
Insurance requires a healthy mix of customers to avoid problems of anti-selection. With the current levels of penetration, the industry is facing an underwriting loss issue. However, as demand grows, one would see companies being able to build larger risk pools which would be able to serve the needs of the overall pool in an effective manner.
Despite times being turbulent, retail lines have seen strong growth in the recent past. What are the reasons?
The Indian general insurance industry has evolved beyond merely offering financial protection against risks to life and personal assets. Today, it plays a far more comprehensive role of managing risks through preventive and pro-active measures. For example, a health insurance cover is not limited to hospitalisation expenses. It offers a host of value added services like free health check-ups, wellness programs, consultation with doctors, OPD etc. Similarly, various additional services and solutions are also offered with other general insurance products like motor and travel insurance. Customers today see a lot of value in those products which not only provide financial cover for their risks, but also put forward solutions to reduce those risks. Along with this, awareness drives and increased tax incentives provided by the government have given a fillip to the overall purchase of insurance through retail lines.
Have you also noticed any changes in the customer behavior and preferences?
Today's customers are more perceptive and aware of their needs. They are not persuaded by the age-old product-driven attitude of companies. Be it fast-moving consumer goods, electronic equipment or financial services, customers today look for an integrated approach in all products they intend to purchase. When it comes to general insurance products, quality of services and past experience - specifically in the area of claim settlement - have emerged as the two most critical factors driving purchase behavior of today's customers.
Has your company come out with any new product in recent times to meet the changing customer requirement?
Risk faced by every individual is different. A customer today prefers customised options catering to his or her distinctive requirements. Keeping the unique needs in mind, ICICI Lombard has already developed a comprehensive basket of risk insurance products that can be customised to the requirements of customers. ICICI Lombard's complete health insurance plans offer a range of sum insured and add-on covers which can be added to a basic health insurance policy to tailor it to the specific needs of a customer. Similarly, a customer can choose from a host of travel insurance plans provided by the company which suit his or her travel requirements. We also provide a lot of add-on covers, such as a road side assistance cover in motor insurance, to reach out to the customer in his/her moment of need.
Insurers these days are fast increasing their online presence. What are the reasons? Is this move also going to benefit customers going ahead?
In a rapidly-changing world, customers require instant solutions. They look for products where the delivery of benefits is fast, convenient and consistent from end to end. Given the fast rate of adoption of the online medium and its capabilities, insurers are focusing on strengthening their online presence to reach out to and service customers faster. This cost-effective platform is in fact being harnessed for multiple stakeholders, including customers, agents and employees.
For customers as well it is a win-win situation since they can cover themselves against various risks on the go and at the click of a button. Insurers have ensured that the online facility is available across devices, including PCs, mobiles and tablets. For example, ICICI Lombard offers a mobile app (Insure) to enable customers to purchase/renew their health/ travel/ motor insurance policy, intimate and track claims, locate the nearest garage/ hospital etc.
How do you see the future of the general insurance industry in India?
The Indian general insurance industry has witnessed GDPI (Gross Direct Premium Income) growth at a CAGR of 17.5% in the last 5 years. While it continues to grow at this robust pace, low penetration levels offer enormous opportunity and scope to expand. To augment further development of the industry and increase customer interest, the regulator has been facilitating introduction of new segments such as long duration products as well as introducing customer-oriented regulations. FDI relaxation is another positive step by the government to help the insurance industry increase penetration and strengthen capabilities to bring more people under the umbrella of insurance.
What are your plans to beat the growing competition?
The general insurance sector in India is still at a nascent stage. There is immense scope to grow in this hugely under-penetrated market. To tread the growth path, ICICI Lombard has been focusing on better understanding customer needs and thereby offering innovative services and solution-oriented products. The company also believes that simplification of the product delivery and distribution model is important to reach out to customers and increase product penetration.
ICICI Lombard has been using technology as a business enabler to set up robust processes and thus ensure enhanced customer experience. To provide insurance solutions to more, the company has been reaching out to customers through alternate distribution channels and has intensively used analytics to improve mapping of customer needs and experiences.