develop our agencies over the next few years.
The penetration of the general insurance industry in India is abysmally low. What is required to improve this?
The primary sales need to be increased because we, as a secondary industry, benefit from better sales. We must look at distribution reforms in terms of the agency. We have about 4-4.5 lakh agents as an industry. The norms which govern the life insurance industry cannot be used to govern the non-life insurance industry. This is one important factor.
On the product side, what sells is the base category. The average ticket size in the industry is R5,000, which includes complex corporate policies. Agent attrition is not really an issue for us, but agency growth is.
The problem is how to incentivise agents to sell a small value policy. The agents obviously do not make enough selling this and you as a company need to ensure that they earn the basic minimum. This can happen in only by one of two ways, either you increase the agency commission, but as an industry we do not make enough to afford that. Then the only thing you can do to improve this is by increasing the ticket size.
Now you cannot do that at the cost of the customer. The way to do it is by allowing multi-year policies. Or you can also improve the scope of the policy, by covering more things and bundling options.
How do you view web as a distribution channel?
Our philosophy is to offer online platform as a services and sales portal, getting people familiar with that. We keep looking at our web presence from all these perspectives as to how easy it is to transact and renew policies, or the information available on it. Today, over 99% of the business happens physically and only the remaining online. But it will change and when that happens, it will be a huge point for the industry, so we need to be ready for it.