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Merchants’ Chamberof Commerce & Industry

A Report

In Association with

Present

MCCIINSURANCEFORUM 2018Indian Insurance Industry:the next Wave of Growth

The ‘MCCI Insurance Forum 2018’ was

organised with prominent

Policymakers, Industry Leaders, and

Regulators with an aim to trigger meaningful

deliberations on the Insurance sector. The outlook and growth

prospects for the Insurance sector were also deliberated upon.

MCCI Insurance Forum 2018 1

MCCI Insurance Forum 2018‘Indian Insurance Industry: the next Wave of Growth’Thursday, 13 December 2018 at 10.30 am at The Lalit Great Eastern, Kolkata

Inaugural Session: ‘Road Map for Vision 2025: Challenges, Opportunities & Way Forward’The speakers at the Inaugural Session were

• WelcomeAddress:ShriAnupamShah,PastPresident,MCCI

• ThemeAddressbyConferenceChairman:ShriSidharthPradhan,Director&GM,NationalInsuranceCo.Ltd.

• Address by Special Guest: Smt. Jayashree Ranade,DGM,GICofIndiaLtd.

• AddressbySpecialGuest:ShriJoydeepK.Roy,Partner&Leader,Insurance&AlliedBusinesses,PwCIndia

• AddressbySpecialGuest:ShriPraveenGupta,MD&

Lighting of the lamp (L to R) Praveen Gupta, MD & CEO, Raheja QBE General Insurance Co. Ltd., Jayashree Ranade, DGM, GIC of India Ltd., Sidharth Pradhan, Director & GM, National Insurance Co. Ltd., Nilesh Sathe, Member-Life, Insurance Regulatory and Development Authority of India (IRDAI), Anupam Shah, Past President, MCCI, Subodh Kumar Agrawal, Chairman, Standing Committee on Capital Market & Insurance, MCCI, Joydeep K. Roy, Partner & Leader, Insurance & Allied Businesses, PwC India and

Ashish Kumar Srivastava, MD & CEO, PNB MetLife India Insurance Co. Ltd.

CEO,RahejaQBEGeneralInsuranceCo.Ltd.

• Address by Special Guest: Shri Ashish KumarSrivastava,MD&CEO,PNBMetLifeIndiaInsuranceCo.Ltd.

• KeynoteAddressbytheChiefGuest:ShriNileshSathe,Member-Life, Insurance Regulatory and DevelopmentAuthorityofIndia(IRDAI)

• VoteofThanks:ShriSubodhKumarAgrawal,Chairman,StandingCommitteeonCapitalMarket&Insurance,MCCI

Shri Anupam Shah, Past President, MCCI in hiswelcome address said that post-liberalisation, theinsurance industry in India has recorded significantgrowth.TheIndianinsuranceindustryisexpectedtogrowtoUSD280billionbyFY20,owingtothesolideconomicgrowth and higher personal disposable incomes in thecountry. Overall insurance penetration in India reached3.69p.c.in2017from2.71p.c.in2001.


GrosspremiumswritteninIndiareachedRs5.53trillion(USD94.48billion) inFY18,withRs4.58trillion(USD71.1billion)fromlifeinsuranceandRs1.51trillion(USD23.38billion)fromnon-lifeinsurance.

Over FY12–FY18, premium from new businessoflifeinsurancecompaniesinIndiahaveincreasedata14.44p.c.CAGRtoreachRs1.94trillion(USD30.1billion)and non-life insurance premiums (in Rs) increased ataCAGRof16.65p.c. InFY19 (up toSeptember2018),premium from new life insurance business increased1.10p.c.year-on-yeartoRs.920.65billion(USD13.12billion).Lifeinsuranceindustryinthecountryisexpectedgrow12-15p.c.annuallyforthenextthreetofiveyears.InFY19(uptoSeptember2018),grossdirectpremiumsofnon-lifeinsurersreachedRs818.25billion(USD11.66billion),showingayear-on-yeargrowthrateof12.79p.c.

Today,thereare24lifeinsuranceand33non-lifeinsurancecompaniesintheIndianmarketwhocompeteonpriceandservicestoattractcustomers.Therearetworeinsurancecompanies.Thisindustryhasbeenspurredbyproductinnovation,vibrantdistributionchannels,coupledwithtargetedpublicityandpromotionalcampaignsbytheinsurers.Themarketshareofprivatesectorcompaniesinthenon-lifeinsurancemarketrosefrom13.12p.c.inFY03to50.01p.c.inFY19(uptoSeptember2018).Inlifeinsurancesegment,privateplayershadamarketshareof31.80p.c.innewbusinessinFY19(uptoSeptember2018). The Government has approved the ordinanceto increase Foreign Direct Investment (FDI) limit inInsurance sector from 26 p.c. to 49 p.c. which wouldfurther help attract investments in the sector. In 2017,

insurancesectorinIndiasaw10mergerandacquisition(M&A)dealsworthUSD903million.EnrolmentsunderthePradhanMantriSurakshaBimaYojana(PMSBY)reached130.41millionin2017-18.

The National Health Protection Scheme wasannouncedunderBudget2018-19asapartofAyushmanBharat. TheSchemewill provide insurance cover of upto Rs. 500,000 (USD 7,723) to more than 100 millionvulnerablefamiliesinIndia.

Technologicaladvancesaretransformingdifferentindustries at an ever-increasing pace. Going forward,technologywill play a key role in shaping the future oftheInsuranceIndustry.Theseadvanceswillbealotmorepotentastheywillhavewidespreadapplicationsacrossdifferentaspectsoftheinsurancebusinessincludingsales,underwriting, claims and customer service. In the lastfewyears,onlineinsuranceaggregators,emailandsocialmarketing,searchenginemarketingandwebsite+tele-assistbaseddirectsaleshaveestablishedthemselvesaskey digitalmarketing and distribution channels. Growthwitnessed in these channels leaves no doubt abouttheir potential. By leveraging analytics and advancesin technology and digital infrastructure, direct digitalinteractionsandmarketingtothecustomerswillbecomehighlypersonalized,moreengagingandautomatedusingnaturallanguageprocessing.However,therearestillmanycustomersegments thatareunderserved, forexample,theHigh-Networth-Individuals(HNWI)andmassmarketfromalifeinsuranceperspective,andtheSMEandmassmarketsegmentsfromanon-lifeinsuranceperspective.ItistruethatInsurershavetraditionallyfounditdifficulttotargetlow-incomecustomersegmentsorsemi-urban,ruralcustomersegmentsviably.

Regulatory requirements as well as governmentschemes such as Pradhan Mantri Jeevan Jyoti BimaYojana (PMJJBY) or Pradhan Mantri Fasal Bima Yojana(PMFBY) have surely nudged insurers to target suchsegments but they have barely scratched the surface.The headroom for growth has always been there butlackofawarenessamongcustomersandlowviabilityofdistributioninfrastructuredidnottranslatetheheadroominto an addressable opportunity. The stars are nowaligningandanumberofdriversareset tochangethispicture.Ecosystemsandpartnershipswillenableinsurersto embed insurance offering in customer journeys.

Anupam Shah, Past President, MCCI


Aadhaar linked biometric authentication will ease theburdenoffulfillingKYCrequirements.Digitaldistribution,integration with ecosystems and partners will makeinsurancebite-sizedandaffordable.DemonetizationandPradhanMantriJanDhanYojana(PMJDY)havebolsteredfinancialsavingsandagoodpartofitwillfinditswaytoinsuranceproducts.Bancassurancepartners,whichareaggressively targeting fee-income, will increase branchactivation and use data and analytics to find the righttargets.Byanyestimation,the‘opportunity’islargeanditwillplayoutgradually.Thiswillallowinsurerstofindtheir sweet spots, fine tune their businessmodels andtargetsignificantgrowthforyearstocome.

Shri Sidharth Pradhan, Director & GM, NationalInsurance Co. Ltd. said that the insurance industry isgrowing in scale and diversity. The limit for FDI in theinsurance sector has been increased to 49 p.c. Thegrowth for general insurance industrywas almost 17.5p.c. in the lastfinancial year. The industry is burdenedbyunderwritinglosses.Generalinsuranceisexpectedtobecomeinclusive,progressiveandhighperforming.

Sidharth Pradhan, Director & GM, National Insurance Co. Ltd.

Anupam Shah, Past President, MCCI delivering the welcome address. Seated (L to R) Souvik Banerjee, DG, MCCI, Praveen Gupta, MD & CEO, Raheja QBE General Insurance Co. Ltd., Ashish Kumar Srivastava, MD & CEO, PNB MetLife India Insurance Co. Ltd., Nilesh Sathe, Member-Life, Insurance Regulatory and Development Authority of India (IRDAI), Sidharth Pradhan, Director & GM, National Insurance Co. Ltd., Joydeep K. Roy, Partner & Leader, Insurance & Allied Businesses, PwC India, Jayashree Ranade, DGM,

GIC of India Ltd. and Subodh Kumar Agrawal, Chairman, Standing Committee on Capital Market & Insurance, MCCI

Theinsuranceindustryisatthecuspofchange.Thepenetrationof insurance is low in Indiabutpenetrationwill increaseduetoGovernmentprogrammeswhicharelinked to bank accounts. The Government of India haslaunched several flagship schemes, such as PradhanMantriSurakshaBimaYojana(PMSBY),PradhanMantriJeevan JyotiBimaYojana (PMJJBY)andPradhanMantri


FasalBimaYojana(PMFBY)toensuregreaterpenetration.AyushmanBharataimstoprovideinsurancecoverofuptoRs.500,000tomorethan100millionvulnerablefamiliesinIndia.RuralIndiahas70p.c.ofIndia’spopulationyetitislargelyuntappedbyinsurancecompanies.TheSMEsectorwhichemploys111millionpeopleandcontributesto31p.c.ofGDPisimportant.

Many companies have transferred data to cloudandcybercrimeisincreasing.Databreacheshavetakenplace and the range of crime is huge. Therefore, cyberinsurance is gaining importance and it is expected toregisterthehighestgrowthrateinfuture.

IRDAI ismigratingtoriskbasedcapitalbyMarch2021.Currentsolvencyrulesdonotallowanassessmentofwhethercapitalheldisadequate.Ashiftinregimewasnecessary as the present system is not transparent toassessthefinancialconditionoftheinsurer.

Technologywillbeakeycompetitivedifferentiatorinadigitalfuture.Theinsurancebusinessisbeingdrivenby innovation and disruptive companies are takingmarket share. Big Data, SocialMedia, etc.will allow amoresophisticatedbusinessmodel to emerge inwhichtechnologywillplaythekeyrole.Cumbersomebusinessmodels of insurance companies may be simplified byharvesting Big Data with third party help. InsurancecompaniesmayteamupwithInsureTechfirms.Customerswillgainconfidenceinasimplifiedenvironment.

Among other issues, the changing customerbehaviour is important. There is a blurring of on-lineand off-linemodels. Enabling policies will complementthe industry. The industry needs better pricingmodels.Health,motor,cropandcyberinsurancewilldrivegrowthingeneral insuranceinfuture.Thequestionishowwellpreparedarewetomeetthechallengesofthefuture?

Smt. Jayashree Ranade, DGM, GIC of India Ltd.saidthatthreeinsurancecompanieshaverecentlylistedin the stock exchange. More insurance companies areexpectedtoapproachthecapitalmarkets.GICisthe10thlargestreinsurerintheworld.

WithrespecttoPradhanMantriFasalBimaYojana(PMFBY), Smt. Ranade said that agriculture has aninherentcatastrophicnature.Insurancecompanieshavetomanagethisrisk.

Theprevalenceoflifestylediseases,suchasbloodpressureandcancerhasincreasedinrecentyears.Yet,

healthinsurancehaslowpenetrationinIndia.

Driverless cars, drones and Artificial Intelligencearenowareality.Digitisation is leading toanexplosionofdata. There isapressingneed for general insurancecompanies to innovate. Insurance companies arestrategically adopting technological infrastructure thatmeets customers’ needs. The insurance industry ismodernisingasNewAgecustomerswantsimplerpolicyterms, transparent underwriting, easy to comprehendbenefit structure and low human interaction. Theleveragingoflowcostdistributionchannelscanplayabigroleinincreasingpenetrationrates.

Someofthelimitingfactorsforgrowtharelackofawarenessaboutinsurance,lackofaffordableinsuranceand a lack of actuarial talent. However, all efforts arebeingmadetoplug thegaps.Riskbasedcapitalnormsarebeingadoptedtobeonparwithglobalstandards.Theleveragingoflowcostdistributionchannelswillincreasepenetration.

The insurance industry may be deemed to besuccessfulwheninsurancecompaniespayoutclaimstovictimsofaccidentsandtheGovernmentdoesnothavetocompensatevictims.

ShriJoydeepK.Roy,Partner&Leader,Insurance&AlliedBusinesses,PwCIndiasaidthattheinsurancesectorhasleadingissuesandlaggingissues.Figuresarealaggingindicatorbutfiguresareimportantforprediction.Insuranceis not a gratification product. Long term life insurancepolicies sell due to tax benefits. All figures suggest thatsomethingisholdingbacktheinsuranceindustry.

Jayashree Ranade, DGM, GIC of India Ltd.


Joydeep K. Roy, Partner & Leader, Insurance & Allied Businesses, PwC India

Praveen Gupta, MD & CEO, Raheja QBE General Insurance Co. Ltd.

Theinsuranceindustry ismarkedbymismatchesand asymmetry of data. If everyone knew what wouldhappen, then the world would not need an insuranceindustry.TheinsuranceindustryisalsomarkedbyAsset–Liabilitymismatchasclaimscanhappenatanytime.Inotherwords,liabilitiesareforanuncertainperiodoftime.So,weneedactuarialexpertise.

Thebiggestmismatch is inpeople’sexpectationsof insurance. Most people see acquiring insurance astimeconsuminganddifficult.Whilepeopledonothesitatetosignlongbankaccountapplicationforms,theyhesitatetosigninsurancepoliciesandtheygetirritatedwhentheyhavetodoso.Thereisabehaviouralissuethatwedonotconsiderinsuranceassomethingthatweneedtodo.Forexample,weoftendonotinsurehouseholditems.

Insteadoffocusingonpenetrationratestomeasuretheindustry,wemaylookatgrowthofinsurance.Wecanalsolookatthesignificantgrowthofsuminsured.

LifeinsurancecompaniesgetleadsontheInternetbuttheystruggletosellontheInternet.Indiansingeneralprefernottobuyterminsurance.Someothersegments,suchas travel insuranceare suitable for selling on theInternet.

Two thirds of LIC’s business is single premiuminsuranceandcustomersarehappytocommittoawelldefined liability.Whenwe lookat the regular insurancepremiummarket share, then the private sector has 56p.c.marketshare.

Theinsuranceindustryfacesaproblemaspeoplehesitatetotakelongtermdecisionsregardinginsurance.

Anotherproblemisthatpeoplebelievein‘karma’,sotheybelieve that they do not need insurance as no disasterwillhurtthem.Inordertoincreasepenetration,weneedtostudybehaviourandnotkeeplaunchingnewproductsthat may not sell. India is an under insured countrywhereasJapanandKoreaareoverinsured.

Insurance companies are caught between theexpectationofdistributors,theexpectationofcustomers,the expectation of regulators and for those who list,the expectation of analysts. Often, one or two of theseexpectationshavetobesacrificed.

ThecostofclientacquisitioninIndiaisoneofthehighestintheworld.Insurancecompaniesrelyonhumandecision making to sell policies and it is not uniform.Thelendingmarket,ontheotherhand,dependsonpureanalyticsandaloanapplicantgetsthesamescorefromeverylenderwhentheyapplyforaloan.Inotherwords,BalanceSheetsof loanapplicantsareanalysedusingacommonsoftware.

ShriPraveenGupta,MD&CEO,RahejaQBEGeneralInsurance Co. Ltd. said that Kolkata representsmissedopportunities. Shri Gupta was reading a book ‘TheGorasandDesis’whichhadnames ofmany insurancecompaniesin1830inDalhousie,Kolkata.Kolkataatthattimeepitomisedgrowthanditwasamagnetforeveryoneseekinga fortunewith robust industriessuchascottonand tea. In fact,Kolkatacouldhavecompetedwith thehuge insurance industry of London. Instead, Kolkatamissed out on opportunities and the insurance sectormayalsomissoutonopportunitiesinasimilarmanner.


Whatcanwelearnfrommissedopportunities?Theinsurancebusinessremainslinearinoutlookanditissiloorientedwhenitshouldnotbeso.Diversityandinclusionare happening, the question is whether the industry isinclusiveenough?

Many projections are based on past trends.However,itisexpectedthatfossilfuelbasedcarswillbereplaced by electric cars and driverless cars in future.WhatwillhappentocarsifGenerationXandGenerationYbelievethatthereisnopointinbuyingcars?Whatwillhappentomotorinsurance,whichisasmuchas40p.c.oftoplineofmanygeneralinsurancecompanies?

Significant changes are coming in health caredeliveryandhowwearetreated.Thiscouldevenaffecthowlongwelive.So,weshouldnotgetcarriedawaybytalkaboutgrowthofmotorandhealthinsurance.Inotherwords,alotofthingsneedtobeaddressedintheinsurancesector.JustasKolkatahasmissedopportunities,similarlyinsurancesectormaymissopportunities.

Shri Ashish Kumar Srivastava, MD & CEO, PNBMetLife India InsuranceCo. Ltd. said thatdestiny isnotamatter of chance, it isamatter of choice.We live inexciting timesand theTopic for the InsuranceForum istopical.

The insurance sector offers vast opportunitieskeepinginmindthatpenetrationislowat2.8p.c.inIndia.The global average is 3.3 p.c. Japan has an insurancepenetration of 6.3 p.c. and Korea is at 6.6 p.c. ThepenetrationinChinais2.7p.c.to2.8p.c.So,peopletalkaboutopportunitiesinIndiaandChina.MetLifeoperatesinboth IndiaandChina.Since Indiansdonotbuy term

policies,thereisahugeprotectiongapinthisarea.

Theeconomyisexpectedtogrowatover8p.c.perannum. Indiahasa favourabledemographic profile.By2030,Indiawillhavethehighestpopulationintheworldwithabout1.4billionpeople.By2025,theaverageageofIndianswillonlybe30yearsorso.Thosewithphysicalandfinancialhealthcanbuyfinancialproducts,includinginsuranceproducts.

Technology will change the way we work and itwill create opportunities. Non traditional players willdisrupt.Forexample,Amazonwillsellgeneralinsurance.Insurance companies are advised to adopt technologyandbecomemoreefficient.Theremaybeopportunitiestosimplifyproductsinadigitalworld.

Finally, general awareness about insurance isimportant. For example, the ‘Mutual Fund sahi hai’campaign is helping to attract USD 1 billion of inflowsintoMutualFundseachmonth.Similarly, the insuranceindustryneedstolaunchanawarenesscampaign.

Amongotherissues,insurancecompaniesshouldlookatpensionasthisisabigopportunity.Today,thereisalotofengagementbetweenregulatorsandinsurancecompanies.

Nilesh Sathe, Member-Life, Insurance Regulatory and Development Authority of India (IRDAI)


ShriNileshSathe,Member-Life,InsuranceRegulatoryandDevelopmentAuthorityofIndia(IRDAI)saidthatbothpenetration and density of insurance have increasedand consequently premium collected by insurancecompanies has also gone up due to higher disposableincome. Although both penetration level and insurancedensity have increased in the country, the proportion of


SumAssured toGDP isstill less than50p.c.,comparedtodevelopednations,whereitismorethan2–3timesofGDP.Thismeansthatthereisahugeprotectiongapthatneedstobebridged.

Government sponsored insurance programmessuch as Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY), Pradhan Mantri Fasal Bima Yojana (PMFBY)andPradhanMantriSurakshaBimaYojana(PMSBJ)havedonewellonaccountoftheiraffordabilityandseamlesstransactions.

ShriSathefeltthattheinsurancesectorwillgrowby leaps and bounds, however, policy interventions arerequired,toassureaffordability,inclusionandseamlesstransactions.Thenumberofinsurancecompaniesshouldbe doubled in India. Distribution costs are high and inparticular, high management costs should be lowered.Managementcostswillcomedownduetotechnology.

The sale of online insurance products is rapidlyincreasing. When the cost of distribution comes down,moreclientswillbeadded.

TheUniqueSellingProposition(USP)forinsurancecompaniesistheirriskcoverageandnotthereturnsoninsurance.

Risk based capital and risk based supervisionwillcomeintotheinsurancesectorintheyearstocome.Currently, the same formula is being used to measuresolvencyacrosssectors.Insurerswithriskyassetsmayneed more capital but other segments may need lesscapital. In a country as big and diverse as India, whyshouldwehavesamerulesforallinsurancecompanies?

More insurancecompaniesmayenter themarketif capital requirements come down. The recent listingsof insurance companies in the stock exchange permitsthe unlocking of capital of insurance companies andpromoters’ sharewill come down. Thiswill allowmoreentrepreneurstoentertheinsurancebusiness.

IndiahasagrowingmiddleclassandcontributiontoMutualFundshasincreased.IndiahasbeenafavouritedestinationforForeignInstitutionalInvestors(FII)whichispositive.Therecenttrendtostayinvestedinfinancial

Subodh Kumar Agrawal, Chairman, Standing Committee on Capital Market & Insurance, MCCI

assetsratherthannonfinancialassetsisagoodsignal.Volatility is less in Insurancesector,as60–65p.c. isinvested inGovernment securities. Returnsmay not beveryhighbutreturnsareassuredininsurancesector.

80 p.c. of insurance products fail in themarket.However, the 80-20 rule holds true in other sectors aswell. Despite the failure of many products, insurancecompaniesshouldcontinuetoinnovateandcomeupwithnewproducts. IRDAI isadoptinga ‘sand-box’approachwhere by insurance companies can experiment withnew products for six months or so without regulatoryrequirements.Iftheproductflopsinthemarket,itcanbewithdrawnbythecompany.

The expectations of clients from the industryare increasing. Any industry which matches higherexpectationswill dowell. Insurance is bought from theheartandnotfromthehead.

Shri Subodh Kumar Agrawal, Chairman, StandingCommittee on Capital Market & Insurance, MCCI brieflysummedupwhat each speaker had said.He offered aheartyvoteofthanks.


Panel Discussion I: ‘Creating Value and Capturing Opportunities in the Emerging Digital Insurance Ecosystem’The speakers and their topics at the Session were

Abhishek Rungta, MD & CEO, Indus Net Technologies addressing the gathering. Seated (L to R) Sandip Chakraborty, CTO, Edelweiss General Insurance Co. Ltd, Vijay Kumar, CEO & Principal Officer, Go Digit General Insurance Ltd., S. V. Ramanan, CEO, CAMS Insurance Repository Services Ltd. and Ashish Kumar Srivastava, MD & CEO, PNB

MetLife India Insurance Co. Ltd.

Speaker Topic

Moderator and Speaker - Shri S. V. Ramanan, CEO, CAMS Insurance Repository Services Ltd.

ShriVijayKumar,CEO&PrincipalOfficer, DigitalInsurance:RidingaTech-Powered GoDigitGeneralInsuranceLtd. Revolution

ShriSandipChakraborty,CTO, DigitisingCustomerJourneysandthe EdelweissGeneralInsuranceCo.Ltd NewInsuranceModel

ShriAshishKumarSrivastava,MD&CEO, Roleofdigitizationanddisruptive PNBMetLifeIndiaInsuranceCo.Ltd. innovationinLifeInsuranceIndustry

ShriAbhishekRungta,MD&CEO, DeliveringTransformativeCustomer IndusNetTechnologies experiencethroughDigitizationin Insurance


ShriS.V.Ramanan,CEO,CAMSInsuranceRepositoryServicesLtd.saidthatthecommonunderlyingthemeinpopular insuranceproductsiseaseofpurchase.This istruefortheinsuranceschemesfloatedbytheGovernmentofIndia.

Earlier,apersonhadtosubmit‘KnowYourCustomer’(KYC)detailsrepeatedly.Today,thissubmissionhastobedoneonlyonceonaccountofrepository.

Digitalinsuranceinvolvesasystemofinterface.Agoodinterfacemakesthesystemintuitiveforthedigitallyliteratecustomer.Italsohasasystemofrecordkeeping(throughrepository).Thirdly,ithasasystemofintelligence(thespeedatwhichthetransactioniscompleted).

S. V. Ramanan, CEO, CAMS Insurance Repository Services Ltd.

Vijay Kumar, CEO & Principal Officer, Go Digit General Insurance Ltd.

has touched 11 lac customers. The Company hasachievedthisscalebyusingtechnology.

ShriKumarsaidthatnonlifeinsurancepenetrationis 0.9 p.c. in India compared to 1.93 p.c. in Asia. ThedamageintherecentfloodsinKeralawasestimatedatRs. 20,000 crores. But insurance companies paid outclaims of only Rs. 4,500 crores which suggests underinsurance.

80p.c.ofnonlifeinsuranceconsistsofjustthreesectorsinIndia,namelymotor,healthandcrop.So,thefocusoftheindustryislessoninsuranceoutsidemotor,healthandcrop.Thereasonsarecomplexityofproductsduetowhichonlyafewpeopleunderstandtheoffering,poor communication as the distribution takes placethrough an intermediary in non life and complexity ofprocesswithmanyquestionsraisedbytheunderwriter.

Itistodayeasytoreceivefundsfromaninsurancecompany even on a motor claim. In motor claims, theentiretransactioncanbedonewithoutmanualorphysicalinvolvement. It is simple for insurance companies tocredit a bank account. Insurance companies are usingtechnologytoserviceclaimsandreducefraud.

Insurance companies can grow their businesseitherbypublicisingthroughmediahousesorbyinsuringsmall ticket sized products and gradually building theirbrand to grow the business. Such brand building ispossible only by using technology. Mobile insurance isasmall ticket sizedproduct. Travel insurancewouldbedifficulttoservicewithouttechnology.

Among other issues, cyber security is gainingimportance in the insurancefieldas fraud is becomingmore sophisticated. Last year, six companies madeunderwritingprofitinnonlifebusiness.

Shri Sandip Chakraborty, CTO, Edelweiss GeneralInsuranceCo.Ltd.spokeon‘DigitisingCustomerJourneysandtheNewInsuranceITModel.’

Digital insurance involves a system of interface,asystemofrecordkeepingandasystemofintelligencewherebymore andmore facilities can be given by theinsurertothecustomer.

Shri VijayKumar,CEO&PrincipalOfficer,GoDigitGeneralInsuranceLtd.spokeon‘DigitalInsurance:RidingaTech-PoweredRevolution’.GoDigitGeneral Insurance


The question today is how do insurers minglecomplexpiecesintothecustomer’sjourney?First,comesdigital capability, which is followed by transactionalcapability and omni channel experience whereby theinsurance company offers the product throughmultiplechannels. In the optimisation stage, the insurancecompany does predictive analysis. Once technologyandprocesswork inaseamlessmanner, the insurancecompanycangoforimplementation.

Mostinsurancecompaniesputinalotofeffortinsales.Thetimehascometofocusonservice.

If an insurance company does a good job inservicingapolicy,thenthecustomerwillfrequentlyvisitthewebsiteofthatcompany.Thiswillreducesubsequentcostofsalesfortheinsurer.

Shri Ashish Kumar Srivastava, MD & CEO, PNBMetLife India Insurance Co. Ltd. spoke on ‘Role ofdigitization and disruptive innovation in Life InsuranceIndustry.’Globally,insuranceisaUSD5trillionindustry.

ShriSrivastavashowedavideoon‘Khushi’whichisIndia’sfirstArtificialIntelligencebasedinsuranceapp.The Khushi app provides services to the customers ofPNBMetLifeat theconvenienceof thecustomerand itrecognisesbothvoiceandtext.Inaddition,PNBMetLifehasdeployedarobotservicewhichisdoingtransactionworkmoreefficiently.

Bain&CompanyandGooglehaveidentifiedsevenfactors that will impact insurance companies. These

Sandip Chakraborty, CTO, Edelweiss General Insurance Co. Ltd.


factorsincludeinfrastructure&productivity,on-linesalestechnology, advancedanalytics, virtual reality, Internet ofThings,machinelearninganddistributedledger.

5 p.c. to 10 p.c. of all insurance claims arefraudulentinnature.Hopefully,technologywillhelpdetectfraudmoreefficiently.

OneinsurancecompanyinSouthAfricaisofferinginsurance to diabetic and HIV patients. The companyis saying that it will enable patients to live longerlives. This company is causing disruption. Under theirwellness programmes, some insurance companies aretellingcustomerstowearadevicewhichwilllowertheirinsurancepremium.

The three things to be kept in mind in order toprepare for the future are data, digital and disruption.With regard to data, life insurance companies have alargevolumeofdataontheirclients.Thecompaniespaya storage company to store the data. PNBMetLife hasrealisedthatthisdataisvaluable.Itisusingthedataandgettinggoodresults.

To sum up, we can expect better service frominsurance companies and greater efficiency. Riskassessment by insurers will become better with lowerfraud. Penetration will improve due to greater use oftechnology.

Shri Abhishek Rungta, MD & CEO, Indus NetTechnologies spoke on ‘Delivering TransformativeCustomerexperiencethroughDigitizationinInsurance’.


Abhishek Rungta, MD & CEO, Indus Net Technologies

ShriRungtasaidthateverydigitalinnovationbringsdisruption.Most of the innovation thatwe see today isincrementalinnovationandtheproductisfundamentallyunchanged.

Panel Discussion II: “Next gen Operations, Customer Service & New avenues for Growth”

Insurance companies compensate whenthings go wrong. Companies are in different stages ofdigital adoption. In the insurance and banking sector,companies are today processing data and so they arebecomingcommoditisedwithfallingpricesasthereisnodifferentiation.

In aggregation, the aggregatormakesmoney butnotthemanufacturer,whoinfactlosesmoney.Insurancecompanies need to search for a prevention and curemodelinsteadofthecompensationmodel.

The time has come for insurance companies totransform themselves to become wellness companies,travelcompanies,etc.Inanycase,wellnesscompanieswill enter the insurance business. Also, technologycompanies will disrupt by hiring insurance expertsand competing with insurance companies. To sum up,insurance companies must convert to a protectionbusinessratherthanacompensationbusiness.

(L to R) Anjum Babaiah, Head – Fraud Products, Experian, Debasis Sanyal, National Head, Retail & Agency Business, Magma HDI General Insurance Co. Ltd., Amit Roy, Director, PwC India, Subramanyam Brahmajosyula, Head-Underwriting & Reinsurance, SBI General Insurance Co. Ltd. and Sunita Chowdhurie, Dy. VP – Corporate, Tata Motors Insurance Broking

& Advisory Services Ltd.


Subramanyam Brahmajosyula, Head-Underwriting & Reinsurance, SBI General Insurance Co. Ltd.

Speaker Topic

Moderator and Speaker - Shri Amit Roy, Director,PwCIndia

ShriSubramanyamBrahmajosyula, HealthInsurance:AChangingParadigm Head-Underwriting&Reinsurance, SBIGeneralInsuranceCo.Ltd.

ShriDebasisSanyal,NationalHead, MotorInsurance:TheChangingFaceof Retail&AgencyBusiness,MagmaHDI MotorInsuranceinIndia General Insurance Co. Ltd.

Smt.AnjumBabaiah, FraudDetection&Solutionforsmoother Head–FraudProducts,Experian DigitalInsurance

Smt.SunitaChowdhurie, RoleofInsuranceIntermediaries Dy.VP–Corporate,TataMotorsInsurance Broking&AdvisoryServicesLtd.

Shri Amit Roy, Director, PwC India started theproceedings by saying that next gen operations shouldsimplifytheinsurancebusiness.

Shri Subramanyam Brahmajosyula, Head-Underwriting&Reinsurance,SBIGeneralInsuranceCo.Ltd.spokeon ‘Health Insurance:AChangingParadigm’.TheGeneral InsurancebusinesshasrevenueofRs150,000croresofwhich25p.c.isfromhealthinsurancewhichisgrowingat15to20p.c.perannum.Healthinsuranceisthesecondlargestsegmentofnonlifeinsurance.About60 p.c. to 80 p.c. of health expenses are borne out ofpocket.Health insuranceremainsoutof reach formost

Indians. Now that the Government of India is involvedwithhealthinsurance,thepenetrationwillimprove.

Some sophisticated customers want to handleall health insurance related matters, including claimsprocessing, on-line. Other customers,who do not haveon-line skillswant a simple policy, affordable premiumand simple claims processing. In health insurance, thevastmajorityofproductsaresoldas indemnitypoliciesandnotmuchattentionisgiventobenefitpolicies.

The insurance business should be proactive andnotreactive.Inmotorinsurance,theinsurancecompanycanrejectapersonforsubmittingtoomanyclaims.But,inhealthinsurance,theinsurercannotcancelapolicyonaccountoftoomanyclaims.

ShriAmitRoy,Director,PwCIndiasaidthat5p.c.to10p.c.ofclaimsarefalse.

Smt. Anjum Babaiah, Head – Fraud Products,Experian spoke on ‘Fraud Detection & Solution forsmoother Digital Insurance’. Smt. Babaiah describedthreekindsoffraud:

• Opportunity or soft fraud which many people haveeither committed or they know someone who hascommitted. It can be inflating claims or reducing yourweightbyafewkilograms.

• Deliberatefraudwherethefraudstermay,forexamplehavecolludedwithahospitaltopresentafalseclaim.

The speakers and their topics at the Session were


Debasis Sanyal, National Head, Retail & Agency Business, Magma HDI General Insurance Co. Ltd.

Anjum Babaiah, Head – Fraud Products, Experian

Amit Roy, Director, PwC India

• Misrepresentationwheretheinsuredpersondoesnotstateallthefacts.

Thebiggerproblemisthecommonlyheldviewthatinsurancecompaniesdonotdeservesympathyforfraudcommittedonthem.Intheend,honestcustomersendupsubsidisingthosewhocommitfraud.

As the insurance industrymoves towards digitalinsurance and instant insurance, companies will beplaguedbymorefraud.

Sophisticated technology including deviceintelligence, facial recognitionsoftwareandbehaviouralbiometrics can curtail fraud. Technology can identify agoodinsurancepolicyfromafraudcase.Weneedamultilayeredapproachtodealwithfraud.

Shri Debasis Sanyal, National Head, Retail &Agency Business, Magma HDI General Insurance Co.Ltd. spoke on ‘Motor Insurance: The Changing Face ofMotorInsuranceinIndia’.PremiumfrommotorinsuranceamountstoRs60,000croresanditisgrowingat15p.c.to16p.c.perannum,outoftotalgeneralinsurancepremiumofRs150,000crores.Indiahasthefourthlargestvehiclemarketintheworld.Eachday,1,200peopledieinroadaccidentsinIndia.About66p.c.ofvehiclesontheroadareuninsured.

Long termpoliciesof threeyears fornewprivatecarsandfiveyearsfortwowheelershavebeenintroduced.Therearerecentchangesontheregulatoryfrontaswell

and Compulsory Personal Accident up to Rs 15 lacs ismandatoryforownerdriver.

Shri Amit Roy, Director, PwC India enquired if itwouldbecheaperifheboughtamotorpolicyfor3yearsto5yearsandtheanswerwasintheaffirmative.ShriRoypointedoutthatduetointermediaries,forthefirsttime,onecanseedataonclaimssettlementratios,grievances,etc.Inotherwords,intermediarieshaveaddedvalueforcustomerswiththeiraccesstodataandstronganalyticsteams.

Smt.SunitaChowdhurie,Dy.VP-Corporate,TataMotorsInsuranceBroking&AdvisoryServicesLtd.spokeon ‘Role of Insurance Intermediaries’. She said thatagents,brokers,webaggregators,etc.areintermediaries.Premium in general insurance amounts to Rs 150,000crores,ofwhich23p.c.to25p.c.wasplacedbybrokers


whosebusinessisgrowingataCAGRof28p.c.to30p.c.,whichmayincreasetoagrowthrateof40p.c.perannuminfuture.

The insurance business is skewed towardsbroking as brokers bring price discovery and their riskmanagementleadstobettermanagementofcostaswellasbetterclaimsmanagement.

ShriAmitRoy,Director,PwC Indiaenquired if Indiacanhavestandaloneinsuranceproductforjobloss.Hewastold that pricing of the policywill be a problem due toabsenceofdata.

Key Take Aways

• OverallinsurancepenetrationinIndiareached3.69p.c.in2017from2.71p.c.in2001.PenetrationislowinIndiabut it isexpected to increasepartlydue toGovernmentprogrammeswhicharelinkedtobankaccounts.

• EnrolmentsunderthePradhanMantriSurakshaBimaYojana(PMSBY)reached130.41millionin2017-18.

• TheNationalHealthProtectionSchemewasannouncedunderBudget2018-19asapartofAyushmanBharat.TheSchemewillprovideinsurancecoverofuptoRs.500,000(USD7,723)tomorethan100millionvulnerablefamiliesinIndia.

• IRDAI is migrating to risk based capital. Currentsolvency rules do not allow an assessment of whethercapitalheldisadequate.Ashiftinregimewasnecessaryas thepresentsystem isnot transparent toassess the

Sunita Chowdhurie, Dy. VP – Corporate, Tata Motors Insurance Broking & Advisory Services Ltd.

financialconditionoftheinsurer.

• Technologywillbeakeycompetitivedifferentiatorinadigitalfuture.

• Threeinsurancecompanieshaverecentlylistedinthestockexchange.Moreinsurancecompaniesareexpectedtoapproachthecapitalmarkets.

• Theprevalence of lifestyle diseasesand cancer hasincreasedinrecentyears.Yet,healthinsurancehaslowpenetrationinIndia.

• Insurance companies are strategically adoptingtechnologythatmeetscustomers’needs.Theinsuranceindustry is modernising as New Age customers wantsimpler policy terms, transparent underwriting, easy tocomprehendbenefitstructureandlowhumaninteraction.Theleveragingoflowcostdistributionchannelscanplayabigroleinincreasingpenetrationrates.

• Some of the limiting factors for growth are lack ofawarenessaboutinsurance,lackofaffordableinsuranceandalackofactuarialtalent.

• Insurance is not a gratification product. Long termlifeinsurancepoliciessellduetotaxbenefits.Allfiguressuggest that something is holding back the insuranceindustry.

• LifeinsurancecompaniesgetleadsontheInternetbuttheystruggle tosell on the Internet. Ingeneral, Indiansprefernottobuyterminsurance.Someothersegments,suchas travel insuranceare suitable for selling on theInternet.

• Insurance companies are caught between theexpectationofdistributors,theexpectationofcustomers,the expectation of regulators and for those who list,the expectation of analysts. Often, one or two of theseexpectationshavetobesacrificed.

• The cost of client acquisition in India is one of thehighestintheworld.Insurancecompaniesrelyonhumandecisionmakingtosellpolicies.

• Indiahasafavourabledemographicprofile.By2030,Indiawillhave thehighestpopulation in theworldwithabout 1.4 billion people. By 2025, the average age ofIndianswillonlybe30yearsorso.Thosewithphysicalandfinancialhealthcanbuyinsuranceproducts.


• Technologywill change thewaywework and it willcreateopportunities.Nontraditionalplayerswilldisrupt.Forexample,Amazonwillsellgeneralinsurance.

• Generalawarenessaboutinsuranceisimportant.Forexample,the‘MutualFundsahihai’campaignishelpingtoattractUSD1billionofinflowsintoMutualFundseachmonth.Similarly,theinsuranceindustryneedstolaunchanawarenesscampaign.

• Most insurance companies put in a lot of effort insales.Thetimehascometofocusonservice.

• Althoughbothpenetrationlevelandinsurancedensityhave increased in the country, the proportion of SumAssured to GDP is still less than 50 p.c., compared todevelopednations,whereitisatleast2–3timesofGDP.Thismeansthatthereisahugeprotectiongapthatneedstobebridged.

• Theinsurancesectorwillgrowbyleapsandbounds.However, policy interventions are required, to assureaffordability, inclusion and seamless transactions. Thenumber of insurance companies should be doubled inIndia.Distributioncostsarehighand inparticular,highmanagement costs should be lowered. Managementcostswillcomedownduetotechnology.

• The sale of online insurance products is rapidlyincreasing. When the cost of distribution comes down,moreclientswillbeadded.

• The Unique Selling Proposition (USP) for insurancecompaniesistheirriskcoverageandnotthereturnsoninsurance.

• 80 p.c. of insurance products fail in the market.However,the80-20ruleistrueinotherindustriesaswell.

• The commonunderlying theme in popular insuranceproductsiseaseofpurchase.ThisistruefortheinsuranceschemesfloatedbytheGovernmentofIndia.

• Digital insurance involves a system of interface. Agoodinterfacemakesthesystemintuitiveforthedigitallyliteratecustomer.Italsohasasystemofrecordkeeping

(throughrepository).Thirdly,ithasasystemofintelligence(thespeedatwhichthetransactioniscompleted).

• 80 p.c. of non life insurance consists of just threesectorsinIndia,namelymotor,healthandcrop.So,thefocusoftheindustryislessoninsuranceoutsidemotor,healthandcrop.Thereasonsarecomplexityofproductsduetowhichonlyafewpeopleunderstandtheoffering,poor communication as the distribution takes placethrough an intermediary in non life and complexity ofprocesswithmanyquestionsraisedbytheunderwriter.

• Bain & Company and Google have identified sevenfactors that will impact insurance companies. Thesefactorsincludeinfrastructure&productivity,on-linesalestechnology,advancedanalytics,virtualreality,InternetofThings,machinelearninganddistributedledger.

• Insurance companies must convert to a protectionbusinessratherthanacompensationbusiness.Nextgenoperationsshouldsimplifytheinsurancebusiness.

• About60p.c.to80p.c.ofhealthexpensesareborneoutofpocket.HealthinsuranceremainsoutofreachformostIndians.NowthattheGovernmentofIndiaisinvolvedwithhealthinsurance,thepenetrationwillimprove.

• 5 p.c. to 10 p.c. of claimsare fraudulent in nature.Fraud will increase with digitisation. Sophisticatedtechnologyincludingdeviceintelligence,facialrecognitionsoftware and behavioural biometrics can curtail fraudand cut underwriting losses. Technology can identify agoodinsurancepolicyfromafraudcase.Weneedamultilayeredapproachtodealwithfraud.

• Longtermpoliciesofthreeyearsfornewprivatecarsand five years for twowheelers have been introduced.Therearerecentchangesontheregulatoryfrontaswelland Compulsory Personal Accident up to Rs 15 lacs ismandatoryforownerdriver.

• Theinsurancebusinessisskewedtowardsbrokingasbrokersbringpricediscoveryandtheirriskmanagementleads to better management of cost as well as betterclaimsmanagement.

ReportwrittenandcompiledbyShriRajivMukerji,DeputySecretary,MCCI


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