From data-driven premium calculation for the motor insurance sector to on-demand insurance products, the insurance industry has seen a gamut of innovations. Anup Rau, Managing Director and CEO of Future Generali India Insurance in conversation with Business Today, talks about how the general insurance market's emerging segments, such as home insurance, lifestyle insurance, and travel insurance, are picking up demand.
BT: How has the company performed in the last two years since the outbreak of COVID-19?
Anup Rau: The past two years have been phenomenal—we have notched impressive returns in this timespan. We registered a growth of 19 per cent during FY 2022 with a total Gross Written Premium (GWP) of Rs 4,210 crore. One of the important factors has been a steady pick-up in demand and ramping up of our distribution network.
The motor insurance segment contributed nearly 38 per cent of our overall premium collection during FY 2021-22 with a GWP of Rs. 1,617 crore. Segments like corporate insurance and non-motor retail have contributed extensively to the company’s growth, with each of these segments accounting for around 20 per cent of our total GWP.
The company’s growth after the pandemic can also be testified by the fact that our total agency strength is more than 21,500 currently and this figure has almost doubled during the last three years. The company’s combined ratio during the previous fiscal year stood at 108 per cent whereas the solvency ratio improved to 166 per cent in FY22 from 161 per cent last financial year.
Our attention to detail, particularly in customer service, has ensured that our NPS scores are best in class, and at 59.4, are not only comparable but even ahead of renowned global giants.
BT: What will be key drivers for growth?
Anup Rau: With changing external environment, increase in demand and changing customer demographics, the private general insurance sector is expected to continue with its growth momentum in India. At FGII, we anticipate registering a double-digit growth, led by these factors along with our focus on strengthening our distribution network. Motor is our largest contributor, accounting for 65 per cent of our retail portfolio. Our health insurance vertical is expected to grow at a faster rate. In the long term, the share of motor insurance in the overall business will keep going down. Non-motor product demand will rise as markets and customers mature.
Our customer-centric approach, multi-channel and multi-location architecture, diversified portfolio, digital advancement, and most importantly, our diverse and experienced workforce will be the growth drivers for our company going forward. Our focus is on providing customers with seamless omni-channel experiences, leveraging technology while ensuring product construct simplification to drive penetration. With customer-centricity deeply embedded in our culture, we will continue to leverage technology to provide customers with more tailored products, such as sachet products, on-demand insurance, event-based insurance, purchase covers, and so on. We are focusing on improving our distribution presence, and deeper partnerships, including newer bancassurance tie-ups, to ramp up distribution. By benchmarking, redesigning, and re-engineering processes, we intend to increase our operational efficiency. We hope to maintain our growth momentum and gain market share in a capital-efficient manner.
BT: What are some of the concerns for the industry and the company?
Anup Rau: Indian insurance market is underpenetrated, and it offers a host of opportunities across segments. Given the exciting journey ahead, one can look at enhancements in certain areas. For example, fraudulent claims are a serious problem that requires immediate attention, especially in certain geographies and products. Collaboration among industry players and sharing of common databases can aid businesses in fighting fraud more effectively.
Motor Third Party price increases can be commensurate with inflation. Establishing a standardised process to use when determining Motor TP price increases year over year would be helpful for the industry.
FDI in insurance can be increased to 100 per cent. This will enable more foreign investment in the sector to fuel growth expected over the next 3-5 years and bring the best international practices to India. Also, customer KYC is currently not mandatory for general insurance. Hence, the contact detail of customers are not necessarily available with the insurer. However, the good news is that the regulator is keen on addressing the customer contractability issue.
BT: With health and motor stabilizing, what will be the fastest growing segments for the company and the industry?
Anup Rau: The demand for general insurance is increasing, thanks to an ever-growing population in need of insurance as well as increased awareness. In order to leverage this demand, we need to explore new segments, new channels, and new product categories. While motor insurance remains the largest contributor, accounting for nearly 39 per cent of the Gross Direct Premium Income (GDPI), sectors such as crop insurance, corporate insurance, and non-motor retail insurance have also emerged as major winners, accounting for 20 per cent each of the company’s total GDPI. SMEs are open to more insurance. Household insurance, lifestyle insurance, travel insurance is expected to pick up. Therefore, we are building strong franchise in the non-motor, non-health space to meet the growing demand.
The overall non-life insurance industry in India has also witnessed a similar kind of growth. According to the ‘Global Economic and Insurance Outlook’ report published by the Swiss Re Institute, India is expected to become the sixth largest insurance market in the world by 2032. Apart from health and motor insurance, some fast-growing segments in the Indian insurance industry include corporate, crop, fire, home, and cyber insurance.
BT: How will dematerialisation of policies help policyholders?
Anup Rau: Dematerialization will bring a host of benefits for policyholders. It will ensure that all policies are available and stored in digital format, making it easier for policyholders to purchase and manage multiple insurance policies. Policy renewals, modifications, porting, and claims processing will become more convenient and faster. Apart from this, operational costs will also reduce for insurance companies, which will enable them to offer policies to customers at lower price points.
BT: What innovations one can expect in the insurance space?
Anup Rau: Apart from digitalisation and customized products, we can see the insurance industry benefitting from a gamut of innovations in the coming days. For example, the data-driven premium calculation for the motor insurance sector, which has been there on the horizon for a few years now, has started getting several takers in the industry.
Another innovation that is driving the growth of the industry is the availability of on-demand insurance products. Most insurance companies have started providing unique policies for the specific requirements of their customers. For example, areas like pet insurance (which is in its nascent stage currently) is catching up very fast with consumers.
Innovations to strengthen and streamline processes will also play an important role going forward. In the future, machine learning will breathe new life into procedures like Workflow automation, Claims processing, Fraud detection, and conversational interfaces like Chatbot.
The use of a cloud-based insurance lifecycle, financial planning bots, and telematics, which uses data analytics to track policyholder behaviour and foresee risks, will all permeate industry practices over the next ten years.
BT: How optimistic are you about the emerging EV segment?
Anup Rau: The EV space is still evolving, so we need to keep an eye on it. However, trends are encouraging, early days yet, but loss experience from an insurance standpoint is not bad currently. It’s a segment we cannot ignore, it will see rapid growth over the next decade.
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