Online media will grow at a faster pace!
7^th Jan 2010

How would you predict the future of insurance industry?

The future is very bright unless you put some serious road blocks.

Turning to non-life, it traditionally had very low penetration except in auto where it is perceived to be compulsory. Do you see non-life in personal line ever be a large part of the insurance business. Worldwide, non-life premiums in many countries are more than life. Do you ever see that happening in India? What will be the factors which will drive it?

According to me it will happen, slowly and steadily. It will happen by two important initiatives by the industry. Non-life industry will have to work like Life – individual driven distribution network and it will have to create greater awareness about the boons and benefits of householders policy and other personal lines of business. When the income level increases, the capacity of the individuals to spend goes up and the personal acquisitions grow. When there is compulsion from the acquisition side with capacities from the surplus moneys and there is education, a pyramid will get erected, which will boost the business.

The corporate business has been seriously impacted because of de- tarriffing. The bulk business is becoming near non-profitable. Hence the option for the companies to survive and thrive is to market and mop up personal lines of business, which is quite profitable. House holder policy is profitable. Health can be managed very profitably. In health, individual health is profitable, though group health is not.

The general perception of consumer about the auto and health (the two most important personal lines), these have been structured in such a manner that it denies the claims on flimsy grounds. How can that be avoided?

Though there are structures, but people are trying to take undue benefit even within that. These are institutions of Ombudsman, Regulatory Authority, Board and then the Claim Review Committee to help the customers. So it is not that simple to deny Claims. But there is sometimes collusion amongst customers, surveyors, hospitals and even TPAs, which is unethical and harmful to all concerned.

Coming to the role of IRDA – what are the challenges before IRDA?

IRDA has few fundamental challenges as industry is expanding very fast that too in multiple - dimensions, and to be able to keep track of that kind of development and manage efficaciously is a great challenge. IRDA has been in existence for about ten years which is short time for the regulator to mature. Hence, the Regulator is on the learning curve. Though, in global markets, regulators have been there for long but their experience can’t be replicated entirely in the Indian market.

India is very large nation with young population, negligible social security, rising economy and most of the companies have global tie-ups with top 30 players of the world. They are here with deep pockets, long- term view and are aiming very large size of the cake. Therefore the development, which are taking place in Indian markets are faster and far greater than any other evolving markets. This makes scene quite challenging.

What radical changes you recommend for the industry?

I have nothing very radical to offer for the industry. All I would like to recommend the Managers of the industry is to promote products and practices that will help customers find solutions to their problems. The financial services industry, which includes insurance has necessarily to move from sellers of products to customers of solutions for the issues and problems that a customer faces and/or is going to face in times ahead. While doing so the industry Managers have also to insure value optimization.

What role does Online media can play in the insurance segment?

It may not take off immediately but, surely it will take off. However, in India, online media will grow at a faster pace as we have young population who are more techno savvy. Europe has more of ageing population and is less susceptible to technology. In India Internet is spreading at an amazing pace.

“We already have full product basket, the need is only to bundle and unbundled that,” concludes Mr. Bajpai.