India has come a long way over the last two decades as far as the insurance industry is concerned, but more needs to be done in terms of customer engagement and involvement as penetration remains low in the country, Reliance General Insurance (RGI) CEO Rakesh Jain said.
The subsidiary of insolvency-bound Reliance Capital group, which awaits the change of ownership, has been doing good with a strong bottomline, Jain said.
“I think the insurance industry has come a long way in the last two decades but still the penetration is really low. If you compare it with Russia, South Africa, and Brazil, we are half in penetration, forget China and other developed countries. So, I think somewhere we have to shift gears. General insurance is a long-term game, it will grow well and every insurer has an opportunity to do new things.
“In my view, the general insurance industry can roughly grow at twice the growth of the GDP (gross domestic product). And if the conditions are extremely good, the government is doing well, good policy initiatives…I think it can grow even at 3 times (of the GDP growth),” Jain said in an interaction.
Insurance penetration, measured as the percentage of insurance premium to GDP, is one of the metrics used to assess the level of development of the insurance sector in a country. In India, it increased from 3.76 per cent in FY20 to 4.20 per cent in FY21.
Jain said people now better understand the risks. Natural phenomena like cyclones were thought to be hitting specific geographies only, but now with unplanned and rampant infrastructure building, flood-like situations can be seen every year in some or the other city or state.
“So, structurally speaking, customer engagement and involvement is very much required. However, this phenomenon is increasing because we no longer are fully physical, we now have become phygital.” With this, the ability to interact, disseminate and transparency need has increased a lot, he noted.
The official said the Insurance Regulatory and Development Authority of India (Irdai) has been a key enabler in helping the overall insurance industry grow.
Introduction of innovative products based on a regulatory sandbox, as well as tweaking the existing guidelines, such as in the ‘file and use’ recently, are some very wonderful ways to innovate and customise insurance products.
The regulatory sandbox is an environment that provides a testing ground for new business models, processes and applications, which may not necessarily be covered fully or are not fully compliant with existing regulations.
Earlier this month, Irdai extended the ‘use and file’ procedure for most of the life insurance products, thereby allowing insurers to launch new products without prior approval of the regulator.
He also said the Reliance General Insurance will focus on the retail sector where its footing is not that strong.
“We have focussed a lot of health products, however, we are behind from others in the retail business. Retail health is 15 per cent of the overall industry. For us, it is just about 1 per cent. So, we have the tremendous opportunity also to build a health portfolio, grow meaningfully and also to catch up.
“So, health continues to be a big exciting thing for us we have added a lot of distribution people, we have added close to about 1,000 plus people in the last 6-8 months,” the official added.
Among others, he said, the advent of technology has brought more accountability, both on the parts of the insurers as well as customers, besides aiding in transparency.
“As a company, we spend close to Rs 100 crore on technology every year now. And we want to apply technology in such a manner so that more and more customers can use it. The other dimension of technology is that it has to be simple and easy to use.” For the information which you can take automatically, don’t ask the customers. For example, if you want to have insurance details of a car, one can have it from Vahan and get information about the old policy on that car or other details.
So, many of such things which technology can provide us will leave minimum requirements from the end of the customers, Jain said.
Customisation of insurance policies as well as selling it over Whatsapp are other technological advents, which are helping the industry as well as customers.
Further, India is becoming far more globalised than earlier and the rural-urban divide in the industry can be filled through awareness and financial literacy. However, Covid in the last two years has created enough awareness, he said, adding people living in rural areas should be given discounts while buying health insurance.
“We advocate for a discount to the rural people in buying health insurance as the hospitals in the rural areas are cheaper than in the urban areas. Here the point is, that even if the treatment is the same, the claim cost will be down. If that person comes to the urban centre, then this will be loaded to that extent. So, people should be made to understand these types of differences,” Jain said.
On the company’s listing plans, for which the DRHP was also approved by Sebi but the process couldn’t be taken forward because of insolvency issues of the parent company Reliance Capital, Jain said: “I think the companies should list now”.
“We had tried but we got meddled in the group issues, otherwise our DRHP (draft red herring prospectus) was approved. Listing creates additional value in the eyes of the customer,” the official said, adding it will go ahead with the listing plans once the change in ownership is completed through the insolvency process.