Touchless and contactless have become the new buzzwords in the light of the Covid-19 pandemic. Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance tells Business Today how the insurer plans to create more digital means of servicing policyholders along with future plans and challenges faced by the industry.
BT: What will be the growth drivers for the company in FY 2022-23?
Sanjeev Mantri (SM): In FY 2023, the company will continue to pursue its growth momentum by maintaining the right balance between top-line growth and return on equity (ROE). While there may be a short-term weakening of new auto sales, the company will focus on increasing the commercial vehicle (CV) mix, increasing motor own damage (OD) and third party (TP) prices, continued investments in health and digital, and a larger focus on sales distribution to assist higher than industry growth. The Company has also initiated various process improvement initiatives aimed at enhancing operational effectiveness by reducing overall lead times and improving quality control.
The company would continue to emphasize the importance of balancing growth and returns on investment by using its synergies from acquisitions to boost distribution through agency acquisitions, bancassurance, and digital channels. Through continued competition in Motor OD and old vehicle segments operated by competitors, the Company will aim to maintain the momentum for growth in FY 2023 while keeping the loss ratio elevated; Motor loss ratios should be higher despite small price hikes on the Motor OD book and TP increase due to regulatory adjustments in May.
In the next two-three years, the health insurance industry is expected to grow substantially, thanks to the growing penetration of health insurance in India.
BT: Will an increase in fire incidents impact the premium rates for electric vehicles? What are the challenges?
SM: The increase in the occurrence of fire in electric vehicles is a matter of concern for insurance companies. We are closely monitoring the situation as concerns about the safety of these vehicles have an impact on the premiums. When compared with the number of EVs plying on roads nationwide, the number of reported incidents of EV vehicles is very small. The EV insurance premiums are not affected by reported incidents currently. A risk-based approach must be considered and taken as and when facts of incidents and probable control measures around them become clear.
BT: What are some of the challenges the industry is facing?
SM: In the backdrop of a changing macroeconomic environment and the threat of pandemic reduction, financial market volatility, inflation, and geopolitical tensions pose challenges to economic growth and business in general. We have seen that there is a reduction in demand for motor insurance on private cars. Short-term headwinds such as supply-side challenges are a poised challenge for new vehicle sales on the private car side which is expected to impede progress for motor insurance. Motor TP price hike to come in May is not sufficient to make up for inflation and no price revision for two years.
BT: What kind of innovation in terms of product and distribution can one expect in the future?
SM: With the emergence of new risks, the insurance industry is going through an epoch of transformation. To thrive, life insurers must redefine themselves and continue on the path of transformation. When you look at the top companies today, in comparison to 20 years ago, only organizations that have been able to reinvent themselves continue to be among the top ones. This is true for any industry, but especially for an industry like insurance, which continues to see new types of risks emerge, such as pandemics, climate change, privacy and data protection, and even hybrid working. Likewise, change is visible in traditional products like motor insurance, where organizations have started using telematics to analyse driving behaviour to price risk.
On the health front, advances in genetics and understanding of the human genome could pave way for extremely personalized underwriting. Individuals at higher risk of certain diseases could not only get appropriate cover for the same but also work on reducing their premiums by maintaining a certain lifestyle. Data for the same could be provided to insurers through sensors built into wearable devices. For instance; our ILTakeCare app helps in understanding customer behavior in terms of maintaining their health and diet regularly.
In today’s world, risk inspection of commercial locations is done physically. But it won’t be long before technology helps in the real-time inspection of risk driven by drones and satellites. Drone-based risk inspections were tried and proved to be quite effective during natural disasters and calamities such as floods and earthquakes, as well as in accessing remote locations.
As many organizations, including ours, experiment with AI/ML solutions across distribution and claim management, it won't be long before we see a smart underwriter - an algorithm that combines video, audio, and image files to settle a claim in minutes, rather than in days.
BT: How can the claim process become more seamless for policyholders?
SM: The insurance sector is seeing numerous new trends and possibilities, including the use of digital technologies to assist with day-to-day operating activities. Today’s tech-savvy customers are increasingly seeking greater convenience, faster turnaround time, and more self-service options—expectations that insurers are attempting to meet with mobile apps, virtual appraisals, and straight-through processing of more routine claims, among other innovations.
An efficient and timely settlement of claims can lead to a positive experience for the customer and help the insurer engender trust. Digitisation can help enable this in several ways. However, in the digital age, a truly robust claims value proposition needs to go beyond the traditional after-the-event claims management exercise. It needs to be holistic and foster an end-to-end partnership with the customer. For example, we use AI/ML to handle cashless claims authorization requests from hospitals to sanction authorizations in under 90 seconds. This is currently being done for approximately 60% of corporate health claims, mainly those that are simple cases while doctors can spend time on more complex cases.
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