As general insurance industry is in a nascent stage in India, many foreign players are looking for opportunities to expand their operations in the country. K.G. Krishnamoorthy Rao, Managing Director and Chief Executive Officer, Future Generali India Insurance Company spoke to The Hindu on various issues, including awareness campaigns of the general insurance industry for retail consumers and the launch of a cyber-insurance product. Excerpts:
With the increase in the FDI cap to 49 per cent, are you expecting Generali group to increase their stake in your company?
Generali is quite bullish on Asia and considers India as an important market. The shareholders are in discussion about the stake increase. However, we are still awaiting the final guidelines from the regulator IRDAI. They are to clarify the finer details of aspects like management control etc. And once that is done, we believe that the shareholders will take the discussion forward.
Insurance penetration has always been a concern and is expected to get a boost from social security schemes. How are you planning to deepen the penetration of products?
First and foremost, people need to be aware of the significance of insurance products. Unfortunately in India, insurance is still considered as an expense rather than a necessity to secure financial stability. But an adequate insurance cover can protect you from a financial loss caused by a crisis situation. To aid in creating awareness, General Insurance Council had launched a series of TV commercials to educate people about the need for insurance products such as home insurance, health insurance etc. Also the insurance companies are planning to introduce insurance awareness programmes in different segments.
We conduct region specific insurance awareness activities as per the need of the consumers in that area. For instance, in earthquake/flood prone areas, we organise camps explaining people of the adverse effects of natural calamities and how an insurance cover can protect them from losses arising due to such calamities. We plan to associate with educational institutes across cities to generate interest and create awareness about insurance among students to make the future generation understand the need of such products.
In rural market, we are trying to tie-up with NGOs and micro finance institutions to educate consumers on products suitable for them like health insurance, rural insurance etc. The initiatives have to be continued for a long time in order to achieve the desired outcome for insurance penetration. The insurance schemes announced by Government will certainly help in creating more awareness about insurance and will help insurance companies sell other insurance products especially in rural areas.
Even after the entry of private players, public sector general insurers are still dominating the sector. What are the plans to widen your market share?
General insurance sector is cluttered with 28 companies and being a second generation entrant poses a tough challenge to account for a larger market share. However, we are ramping up our distribution channels. We plan to add 2,000 new agents by the end of this fiscal to boost the existing agency network of 6,000 agents. We are also firming up our bancassurance channel. We are in talks with more private and public banks to push our products. Especially the licensing of new payment banks and small banks gives us a huge opportunity to make the most of this channel. Also we are looking forward to an open architecture model in bancassurance, which will help us in creating more partnerships with banks. We believe that by increasing the size of the market through deeper penetration, every player can garner more insurance premium.
Are there any products in the pipeline? Do you expect to witness an upsurge in the awareness of HNI specific insurance products?
There are few products in the filing and approval stage. We are planning to come out with a comprehensive health cover for consumers. Also we are looking at a cyber-insurance product as data protection has become the need of the hour for corporate India these days. We believe that we need to have products catering to the needs of different customer segments. HNI products may not account for higher volume but may have higher ticket size.
How do you see the potential for online products?
Online policy buying is gradually becoming popular in our country. Today consumers are pressed for time and hence it becomes more convenient for them to buy a policy online. Furthermore, the millennials will form the major base of our customers in future. They are a tech-savvy generation that prefers to do things at the click of the mouse. We definitely foresee a surge in online policy buying and in the next five years this may occupy significant percentage of total insurance sales pie.
What are Future Generali India’s growth plans for this financial year and next five years?
We are looking at 25 per cent growth this year with a focus on retail channel. The growth is expected from diverse segments, especially motor insurance, retail health and personal accident portfolio. Going forward, retail will account for nearly 70 per cent of our business from current 65 per cent. By 2020, we want to see ourselves as a top retail player in the general insurance sector.
Product wise, our focus will be to grow profitable segments of business in order to ensure the equilibrium of our bottom-line. These would include Marine Cargo, Liability insurance, Individual Health and Personal Accident policy. Another major thrust this year will be on the rural insurance portfolio. With the rapidly changing landscape of the rural economy along with heightened awareness about financial inclusion owing to the current government’s schemes, this is an area that we would like to tap. We plan to drive the sale of our policies ranging from micro-insurance products to standard personal line products.
There are talks about India Vision 2020. What changes do you expect to see in the industry by the year 2020?
We believe that by 2020, the penetration of general insurance should exceed one per cent of GDP. We hope that the market will become more stable with players resorting to pricing driven by underwriting considerations. This will lead to healthy development of the general insurance market.
The usual perception is that claims are rejected on the ground of non-inclusion. However, the claims ratio numbers say a different story. What is your take on this and what is Future Generali India doing to resolve this issue?
That is a wrong impression of the industry. Rather the actual rejection of claims is minuscule. If you take the example of health insurance, the problem in many cases is pre-existing diseases not being disclosed at the time of taking the policy. Or the buyer has not understood some clauses like the ones on co-payment or sub-limits for expenses. In many other cases, the fine print hasn’t been read by the insured, which causes disappointment while making claims.
Globally, Generali’s strategy has been to provide ‘simple and smart’ insurance solutions and we too are working towards making our policy wordings as simple as possible.
While there are regulatory constraints for motor insurance wordings as these need to be standard, we are working on simplifying certain terms in health and personal accident covers.
It is vital that the buyer of the policy clearly understands the exclusions before buying a policy. Hence, we are planning to provide a summary of the coverage and the exclusions as a separate document with the policy document.
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