Putting in place effective distribution tie-ups for micro insurance products is the need of the hour, feels K G Krishnamoorthy Rao, MD and CEO, Future Generali. He is fairly hopeful that revised third party premiums and other regulatory measures would turn out positive for the industry. Can you throw some light on the latest trend in the general insurance space?
Last year, the general insurance industry grew 25%. This year, we expect a slower growth rate due to sluggishness in the global economy and other domestic factors. This is affecting sectors like automobile and others. Hence, it will have a spillover effect on the motor insurance industry, too. With positive regulatory changes and revised third party premium, we feel it should result in a better bottomline for insurers.
What is your take on provisioning norms specified by the regulator?
The regulator wants every insurance company to provide for pool losses from 2007 at the ultimate loss ratio that has been fixed as per actuarial estimates. Now, the insurance watchdog has given a choice to defer the provision over three years. Depending on each company’s outlook, they can provision accordingly. Our company will be doing it over three years.
Despite several attempts by insurance companies, the health insurance penetration remains very low. Your comments.
The growth rate of health business came down a bit last year as against previous years. In the past two years, there were many states enrolled under the government-initiated health schemes, which translated into a significant growth for the health insurance business. This year, we have not witnessed much rush on that side. Hence, there was no increase in the premium collection. Group health premiums contributed remarkably to health segment in the past few years. Due to various reasons, we did not see much increase in the premium from group policies, too. But individual health business is growing, which is a positive sign for the industry. Entry of new players and product innovations will help health segment grow more.
There has been a significant regulatory overhaul in health space. Your take.
Standard and simplified wordings of policy documents will help the policy holders understand these better. The regulator’s initiative in this direction is to benefit consumers. They have taken steps in the right direction to help policy holders.
What are the major challenges in micro insurance space?
Most of the general insurers have micro insurance products. The main challenge lies in selling and promoting these products. Getting proper distribution tie-ups in rural areas poses a challenge.
What are the main challenges for non-life sector, going ahead?
Non-life companies traditionally have been more cost conscious. The margins in non-life business are much less. Most of them have not gone for too much of big structures or offices and manpower. But general insurers have to see how they can improve loss ratios and margins. Also, they need to look into underwriting and get out of loss-making segments to make their portfolio healthy.
How is the demand for non-traditional products?
Distribution of those policies like wedding, event management and other similar products remains a key test. Agents are not keen on selling these as the commission is low. The attempt is to make these products simpler. People do not realise their importance. Awareness on this is still very low.
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By Aswathy Varughese & Nupur Anand | Agency: DNA
