Indian non-life insurance industry will probably have premium income worth R10 lakh crore by 2030, according to G Srinivasan, chairman and managing director of The New India Assurance. In an exclusive interview with Chirag Madia, he also says that under the National Health Protection Scheme (NHPS), or Modicare, right pricing will ensure the annual premium per family at around Rs 2,500, which will differ from state to state. Excerpts:
How will you sum up your three-and-half-decade-old journey in the insurance industry?
It has been a very interesting journey as I have seen the industry evolve over the period of time. I joined the industry in the late 1970s when the industry just came out of nationalisation. In 1971-72, 107 companies were merged into four companies and they started functioning as the four subsidiaries of GIC. There was competition among the companies based on services as there was tariff system in markets. But industry has come a long way after liberalization happened in 2000 and subsequently lot of new and multinational players came into the market.
The market evolved and the Insurance Regulatory and Development Authority of India (Irdai) came into existence. There was detariffing in 2007 which opened up some of the major lines. After that a lot of new companies, foreign branches in reinsurance were set up. Indian insurance industry has gone through a lot of phases. But the key focus areas remain the same — increasing penetration levels and spreading insurance awareness.
It is a major job for the industry and other stake holders too. Giving quality service to the customer still continues to remain the focus, there has been a lot of product innovation. Technology is playing a very important role now. Overall, the industry has grown and reached the take-off point and it is a matter of decade before India can match global standards of insurance reach. Probably by 2030, the domestic general insurance industry will even reach `10 lakh crore of premiums income. Overall, it has been a satisfying and interesting journey.
Is there any unfinished task in the decade you headed the NIA?
In a very dynamic environment one can never say that every task is finished. There will always be some unfinished agenda. I would say that increase in insurance penetration, introduction of more technology, improvement in service levels, and more product innovation make an organisation very vibrant. It is work in progress and the company will continue to remain a dominant player in the market.
How do you see the merger of three general insurance companies impacting the overall industry?
We will have a company which is big in size and it is good to have big companies in the Indian market because of the huge size of the market. Secondly, it reduces the competitive intensity as instead of three players there is one player which can help us in improving the rates. Thirdly, all three companies have solvency issues and it will help them list and raise capital. Indian insurance industry is going to grow at 18-20% in the next 10 years. Therefore, one needs capital to fund the growth. The merger will also help them to take care of growth opportunities in the markets.
NHPS will be one of the biggest health schemes. Is it viable to run the new government health scheme at `1,000-1,200 per family?
Every insurer will quote a viable price because it is a big scheme and if they don’t quote viable price it will hurt them. So, even in the health scheme we would be doing business at right price. Even the government has decided that it will give the right price, which will be decided by the tender mechanism. State governments will float the tender and 10-12 insurance companies will be enrolled by the Centre based on criteria like experience and size, among other things.
These companies have to quote a price and whoever quotes the lowest price will win the tender and run the scheme. Premium rates will differ from state to state. We cannot have a uniform pricing across the country, but on an average, the annual premium per family it can be around `2,500. We are looking at around `20,000 crore as a new business from this scheme for the industry.
Other government schemes such as Pradhan Mantri Suraksha Bima Yojana (PMSBY) are making underwriting losses. How long will it take to make it profitable for the insurance companies?
Yes it is a slight loss-making business, but we actually use it as a measure to increase awareness. To make this business profitable, price correction is required and may be it will happen next year. This is what the government has told us.
Technology is playing an vital role in the global insurance market. How do you see it disrupting the industry in the next few years?
Technology is a major disruptor in the insurance industry. Today a lot of things are happening on the distribution side. Currently, 25% of our agents use digital portals and 15% of of our policies are now issued online, our technology is also very solid. Having said that, our next focus is on claims automation which is currently in progress. Probably in next six months to one year we will see a situation where people do not have to use documents as we will completely digitise our claims process.
