Merchants' Chamber of Commerce & Industrymcciorg.com/wp-content/uploads/2020/02/Insurance-19-18th-Dec-2019.pdfDec 18, 2019 · insurance or insurtech. Insurance providers have witnessed

Merchants' Chamberof Commerce & Industry

in Association with

Presents

MCCI Insurance Forum 2019Indian Insurance Industry: Navigating the Changing Landscape

Wednesday, 18 December 2019 I at Hotel Hindusthan International, Kolkata

Executive SummaryDespite phenomenal growth, with premium for the general insurance industry

rising from Rs. 11,800 crore in 2002 to more than Rs. 1,70,000 crore in 2019, growing at a CAGR of 15 per cent, the Indian insurance industry continues to be under penetrated with a penetration of 3.69 per cent which is below the world average of 6 per cent. The penetration rate, which is the ratio of premium underwritten in a particular year to the GDP is 2.76 per cent for life insurance and 0.93 per cent for non life insurance. The low penetration rate in India is a matter of concern, as the social security benefits are inadequate in the country. Only 36 per cent of Indians have any form of health insurance.

The per capita life insurance premium is only USD 55 in India compared with USD 225 for China. The protection gap is the difference between economic losses and insured losses and it is high at 92 per cent in India.

India with 17 per cent of the world’s population accounts for just about 2 per cent of the global insurance business. Thus, there is scope for rapid growth in the Indian insurance industry. If there is rapid growth in the Indian insurance industry then it must be fuelled by Gen Z (those below 22 years of age who form 46 per cent of the total population) and the rural population, which constitutes two-thirds of the Indian population.

Digital insurance is gaining ground. Insurers are moving toward offering solutions. Moving ahead, technology and Big Data will continue to play an important role in the metamorphosis of the Indian insurance industry.

The MCCI Insurance Forum 2019 was organized with prominent leaders from the insurance industry and regulators with an aim to trigger meaningful deliberations on the insurance sector. The current trends and outlook for the insurance sector were also deliberated upon.

MCCI Insurance Forum 2019 1

A Report

MCCI Insurance Forum 2019 ‘Indian Insurance Industry: Navigating the Changing Landscape’ 18 December 2019 at Hotel Hindusthan International, Kolkata

Merchants’ Chamber of Commerce & Industry

The speakers at the Opening Session were

• Welcome Address: Shri Vishal Jhajharia, President, MCCI

• ThemeAddressbyConferenceChairperson:Smt. Tajinder Mukherjee, CMD, National Insurance Co. Ltd.

• Shri Sajja Praveen Chowdary, VP, Policybazaar.com

• Smt. Jayashree Ranade, DGM, General Insurance Corporation of India

• Shri Rushabh Gandhi, Dy. CEO, IndiaFirst Life Insurance Co. Ltd.

• Shri Ashish Kumar Srivastava, MD & CEO, PNB MetLife India Insurance Co. Ltd.

• KeyNoteAddressby theChiefGuest:Shri K. Ganesh, Member (Life), Insurance Regulatory and Development Authority of India (IRDAI)

• VoteofThanks:Shri Subodh Kumar Agrawal, Chairman, Standing Committee on Capital Market & Insurance, MCCI

Opening Session: ‘Changing Face of Indian Insurance Industry’

(L to R) Subodh Kumar Agrawal, Chairman, Standing Committee on Capital Market & Insurance, MCCI, Jayashree Ranade, DGM, General Insurance Corporation of India, Tajinder Mukherjee, CMD, National Insurance Co. Ltd., Vishal Jhajharia, President, MCCI, K. Ganesh, Member (Life), Insurance Regulatory and Development Authority of India (IRDAI), Sajja Praveen Chowdary, VP, Policybazaar.com, Ashish

Kumar Srivastava, MD & CEO, PNB MetLife India Insurance Co. Ltd. and Rushabh Gandhi, Dy. CEO, IndiaFirst Life Insurance Co. Ltd.

MCCI Insurance Forum 20192

Shri Vishal Jhajharia, President, MCCI inhiswelcomeaddresssaidthatpost-liberalisation,the insurance industry in India has recordedsignificantgrowth.TheIndianinsuranceindustryisexpectedtogrowtoRs.19,56,920crore(USD280billion)byFY20,owingtothesolideconomicgrowth and higher personal disposable incomesin the country. Overall insurance penetration inIndiareached3.69percent in2017from2.71percentin2001.GrosspremiumswritteninIndiareachedRs.5,78,000crore(USD82.8billion)in

FY19,withRs.4,08,000crore(USD58.5billion)fromlifeinsuranceandRs.1,69,000crore(USD24.3billion)fromnon-lifeinsurance.Today,thereare 24 life insurance and 33 non-life insurancecompaniesintheIndianmarketwhocompeteonpriceandservicestoattractcustomers.Therearetworeinsurancecompanies.Theindustryhasbeenspurredbyproductinnovation,vibrantdistributionchannels, coupled with targeted publicity andpromotional campaigns by the insurers. Themarket share of private sector companies in thenon-life insurance market rose from 13.12 percentinFY03to55.7percentinFY20(uptoApril2019).Inlifeinsurancesegment,privateplayershad a market share of 25.29 per cent in newbusinessinFY19.

ItisencouragingtonotethattheGovernmentofIndiahastakenanumberofinitiativestoboostthe insurance industry.Someof thesepro-activemeasures include: the launchingof theNationalHealth Protection Scheme under ‘AyushmanBharat’ in September 2018 to provide coverageofuptoRs.500,000(USD7,723)tomorethan100millionvulnerablefamilies;therollingoutofthePradhanMantriFasalBimaYojana (PMFBY)which benefitted over 47.9 million farmers in2017-18, etc. The National Health Protection

Tajinder Mukherjee, CMD, National Insurance Co. Ltd. addressing the gathering. Seated (L to R) Souvik Banerjee, DG, MCCI, Rushabh Gandhi, Dy. CEO, IndiaFirst Life Insurance Co. Ltd., Vishal Jhajharia, President, MCCI, K. Ganesh, Member (Life), Insurance Regulatory and Development Authority of India (IRDAI), Ashish Kumar Srivastava, MD & CEO, PNB MetLife India Insurance Co. Ltd., Sajja Praveen Chowdary, VP, Policybazaar.com, Jayashree Ranade, DGM, General Insurance Corporation of India and Subodh Kumar Agrawal,

Chairman, Standing Committee on Capital Market & Insurance, MCCI

Shri Vishal Jhajharia


Scheme is expected to increase penetration ofhealthinsuranceinIndiafrom34percentto50percent.

Also, the IRDAI plans to issue re-designedinitialpublicoffering(IPO)guidelinesforinsurancecompanies in India, which are looking to divestequitythroughtheIPOroute.IRDAIhasallowedinsurerstoinvestupto10percentinadditionaltier1(AT1)bondsthatareissuedbybankstoaugmenttheirtier1capital,inordertoexpandthepoolofeligible investors for thebanks.GovernmenthasapprovedtheordinancetoincreaseForeignDirectInvestment(FDI)limitinInsurancesectorfrom26percentto49percentwhichwouldfurtherhelpattract investments in the sector. As per UnionBudget 2019-20, 100 per cent foreign directinvestment (FDI)will bepermitted for insuranceintermediaries.In2017,insurancesectorinIndiasaw10mergerandacquisition(M&A)dealsworthUSD903million.

However, despite these positivedevelopments, insurance penetration in Indiacontinuestobeoneofthelowestintheworldat3.69percent,accordingtotheannualreportbyIRDAI. During the first decade of the insurancesector liberalisation, the sector reported aconsistentincreaseininsurancepenetrationfrom2.71percentin2001to5.20percentin2009.Since then, the level of penetration has beendeclininganddroppedtoalevelof3.30percentin2014.However,itstartedincreasingfrom2015andshowinganincreasingtrendonwardsviz. in2015 (3.44per cent), in2016 (3.49per cent)andin2017(3.69percent).

It is without any doubt that technologywill be able to enhance the sector’s reach andgrowth, and it is heartening to note that nowwe are steadily moving into the era of digitalinsuranceor insurtech. Insuranceprovidershavewitnessedthechangesthatnewtechnologycouldbring toother industries. Indianconsumershaveaccepted the ideaofonlineshopping inunderadecade, for instance.Thesebehaviouralchangestell us that Indian customers are now ready forinsurtech. Hence, we are seeing giants such asAmazon committing investments into a range ofdigital tech—bots, AI,ML and IoT—to create astrong foundation as they move toward digital

transformation.Today, insuranceproviders,alongwith other stakeholders of the ecosystem, aremakingwell-thought-outinvestmentsinleveragingtechnology to drive better customer experience,faster closure of claims and ease of buyinginsurancepolicies.

It isnowacommontrendtoseeinsurancecompanies launch mobile apps for providinground-the-clock support to customers and toolsthatallowforbetterandswifterengagementwiththecompany. It is true that the insurancesectorhasbeenalateadopteroftechnology,butitisnowwitnessingdisruption.With theuseof chatbotsandAI, insurancecompaniesareabletoprovidesupporttotheircustomers,agentsandotherthird-party service providers.With the customer databeingcollected,theaccuracyofthedataishelpingcompanies understand market dynamics betterandlaunchmoreuser-friendlyproductswitheasypremiumoptions.Additionally,theacceptanceoftechby insurancecompanieshasalsogivenrisetomanynewstart-upsinthefintechspacewhichhavealreadyattainedunicornstatus.Theadoptionoftech,includingIoT,roboticprocessautomation,advancedanalytics,AI,andblockchaintonameafew is having far-reaching effects on establishedbusinessandgivingbirthtonewbusinessmodelsand potentially sustainable, scalable businessideas.

Smt. Tajinder Mukherjee

Smt. Tajinder Mukherjee, CMD, NationalInsurance Co. Ltd. said that MCCI has brought


togetherdifferentplayersfromtheindustryandithassuccessfullygivenavoicetotheindustry.ThethemefortheForumisaptaschangeistheonlyconstantandtheindustryhasrecentlyundergonetremendouschange.Changeinthelastfewyearsoutpaceschangeinearlierdecades.

Thereachoftheinsurancesectormustbeenhanced, distribution costs need to be loweredand there needs to be ‘ultra customisation’ ofproductsandservices.

TheinsuranceindustrywasopenedupandIRDAIwasset-upin2004.Thus,thepoliciesoftheindustrycameunderthescrutinyofregulators.De-tariffingofmajorlinesofbusinesstookplacein2007.The industryhas transformed fromsevenPSUinsurersto69playersandfourorfivemorecompaniesareundertheconsiderationofIRDAI.

The penetration rate of the insuranceindustryislowat3.69percent,whichisbelowtheworldaverageof6percent.Thepenetrationoflifeinsuranceis2.76percentwhileitis0.93percentfornonlifeinsurance.

Premium from general insurance rosefromRs.11,800crorein2002tomorethanRs.1,70,000crore in2019,growingataCAGRof15per cent,which is a remarkable feat for anyindustry.

The need for general insurance arises inareas such as property, machinery, health andmotor liability. Each of these segments is facingdisruption which can lead to changes of theparadigm.Protectiongapisthedifferencebetweeneconomic lossesand insured losses in theeventof a calamity. India suffers from a significantprotectiongapwhichneedstobeaddressed.TheprotectiongapishighlightedasIndiaispronetonaturaldisasters.Manystepshavebeentakentoensure that there are enough intermediaries tocovertheuninsured.

Delivery of service can be effective only ifit is driven by technology. Technology will bea game changer and it is altering delivery ofservice. Technology must be used to reach outto theuninsured forminimumhealth cover.Thehealthstatusofbeneficiariescanbecheckedbyusingtechnologysothatlowriskbeneficiariespaylower premium. Insurtech is a radical idea and

technology will allow at your place sales. Everydisruptionbringsopportunitiesandchallenges.

Claims settlement will be revolutionisedby AI, block chain and algorithms. Algorithmsare changing marketing practices of insurancecompaniesandalgorithmswill reducemarketingcost of insurance companies for getting newbusiness.Thecostof insurancewill comedownduetotechnology.

Worriesremainaboutusingtheelectronicplatform due to hacking, identity theft, etc. So,cybersecuritywillbeafocusarea.

Just 9 per cent of the Indian population(individual and corporate) has voluntarilypurchased health insurance and 27 per centis covered under various government schemes.Hence,36percentofthepopulationhasanyformofhealthinsurance.

Shri Sajja Praveen Chowdary, VP,Policybazaar.com spoke about the rise of digitalinsurance. Digital insurance is growing due toconvenienceandinstantpolicies.Digitalinsuranceisbeingdrivenby

• comparison• pricesavings• transparency. In this regard, when online

whatyousee iswhatyougetwhich isnotthecaseinthephysicalworld

Therightproductsfordigitalinsuranceinclude

• termlifeinsurance• motorthirdparty

Shri Sajja Praveen Chowdary


Shri Rushabh Gandhi• retailhealthinsurance

Thesellerofinsuranceproductstodaymustsurviveonlowpremium.Onlineallowsinsurerstosurvivewith low margins on policies. When insuranceproductsareboughtbyunderstandingthepolicy,therenewalratesarehigh.

Theevolutionofcustomersismarkedby

• riseintheirawareness• rise in their expectations. In this regard,

consumersdonotunderstandtheneedforalotofformsandpaperwork

• buying insurance as insurance for death,diseaseanddisability

• e-Commerce is changing the ways peoplethink about delivery, refunds, claims andKYC.KYChasimplicationsoncostofpolicy

The evolving value chain and role of webaggregatorsismarkedby

• pushing the limits of customer experience.Being a direct to customer platform,Policybazaar.com will continue to push forthelimits

• risk and experimentation with betterpricing versus risk and best channel forexperimentation

• technologyadvancementssuchasselfvideoinspection for claims and driver score. Infact,oneinsurancecompanyispayingmotorclaims up to Rs. 30,000 based simply onphotographs of the dented vehicle and thewordofthecustomer

• ability to disrupt - creating an eco systemthatdidnotexist.Withtheirpresence,webaggregatorsareadisruptiveforce

In traditional insurance, it ishard tofigureoutwhenthecustomerhasarrived.Thisisknownon the online channel and so pricing is better.Insurance companies can experiment a lot withonlineinsurance.

Emerging trends indicate thatbothonlineand direct insurancewill grow. In future, losseswillnotbeentirelybornebyinsurancecompaniesandasinWesterncountries,apartoftheriskwillbebornebyintermediaries.Also,asdatabasesinIndia stabilise, insurerswill studymore data forpricingpolicies.Infact,thesocialmediabehaviourofapersoncanhelpdeterminethetermsfortheirinsurance.

Shri Rushabh Gandhi, Dy. CEO, IndiaFirstLife Insurance Co. Ltd. said that life insurancepenetrationisonly3percentinIndiaandIndiaisanunderpenetratedmarket.Secondly,technologywillbekeyinfuture.Thirdly,thisistheageofultracustomisationofproducts.

The per capita life insurance premium isamong the lowest in India comparedwith othercountries.ItwasonlyUSD55forIndiain2017comparedwithUSD6,756forHongKong,USD2,411 for Japan and USD 225 for China. Theprotectiongapishighat92percentinIndia,88percentinChinaand78percentinThailand.

ThelifeinsuranceindustryisataninflectionpointinIndiaanditwillprobablyexperiencehighgrowthrateinthecomingdecade.Growthwillbedrivenbydemographics, as70per cent of130croreIndiansarebelow38yearsand46percentareGenZ,meaningthattheyareunder22yearsofage.LifeexpectancyofIndianswillincreasefrom67.6yearsin2015to75yearsin2055andthiswillimpacttheinsuranceindustry.66percentofIndiansliveinruralareasand34percentliveinurbanareas.So,ifthereisunprecedentedgrowthin the Indian insurance industry, then it will bedrivenbyGenZandruralIndia.

Therearemultiplemarketdriverssuchas

• productinnovationforoptimumcoverage• technologicalinnovationforcustomerdelight• HRinnovationsforemployeesatisfaction• buildingrobustdistribution• marketinginnovationforbrandbuilding


GenerationZbehaviouraltraitsinclude

• freedomtochoosewhentheywanttopayforinsurance

• productsthatarenotone-size-fits-all• wanttopursuetheirdreams• freedomtocustomizetheexistinginsurance

withchanginglifestyle• hasslefreeprocesses

The solutions to Generation Z behaviouraltraits are

• on&offcover,micro-durationcoverandpayperusecover

• dynamicpricingbasisforhealthinsurance–IoTwearablesandfitnessappsforreal-timehealthmonitoring

• premiumholidays• prototype insurance profile to customize at

will• access to central database for detailed

customerinformation

66percentofIndiansliveinruralIndiaand34percentinurbanareas.Thepopulationdensitypersquarekmis299inruralareasand2,067inurbanareas.Financialliteracyislowinruralareasandhigh inurbanareas.Variability in income ishigh in rural areas and low in urban areas. PercapitaincomeisRs.40,772inruralareasandRs.101,313inurbanareas.

Duetoabovementionedfactors,66percentofIndianswholiveinruralareasmaybegettingignored by insurance companies. The solutionswillbeimpactedbyfactorssuchas:

• on the positive side, India has the highestdigitaldatausageintheworldpersmartphoneatanaverageof9.8GBpermonth

• India’smobilesubscriberbaseis120crore• wirelesstele-densityinruralIndiais57while

wirelesstele-densityinurbanIndiais156• easy to understand products with simple

documentation• tech enabled seamless journey for remote

customers who can use social mediaplatforms such asWhatsApp for insuranceneeds

• financial awareness and coaching foronboardingcustomers

• sachetorbitesizeinsurancetargetingmassmarket

• lapse-free products with pay-as-per-usefeature

To sum up, rural India presents a hugeopportunityforinsurancecompaniesbuttherewillbechallengesduetolowerpopulationdensityandlowerpercapitaincomeinruralareasascomparedtourbanareas.

Lifestylebenefitsincludethefollowing

• lifeexpectancytoincreasefrom68yearsto75yearsinthenext30years

• 370percentincreaseinhealthexpenditurefrom2000to2014

• 136 per cent increase in householdexpenditurepercapitafrom2000to2016

• 86percentincreaseinprimary/secondaryeducationcostfrom2005to2011

• online retail sales in India grew at 70 percentCAGRfrom2012to2017

• Ubercompleted500milliontripsinIndiainthefirstfouryearsofoperation

• 84percentparentsrelyontheirincometosupport their child’s university education,with41percenthavingnospecificeducationsavingsfundatall

Shri Ashish Kumar Srivastava

Shri Ashish Kumar Srivastava, MD &CEO,PNBMetLife India InsuranceCo.Ltd.saidthat insurance today is all about the instant.Communication has changed lives and it is allabout livingwell todayand letting insurerscarrytheburden.CharlesDarwinsaidthat‘itisnotthestrongestorthemostintelligentwhowillsurvivebutthosewhocanbestmanagechange’.Insurance


Smt. Jayashree Ranade

companies have evolved and customers are thecatalyst. In a world that is Volatile, Uncertain,Complex and Ambiguous (VUCA), the need tosurviveisforcingpeopletoinnovate.

Insurance companies are enhancing thecustomerexperiencewith

• a simplified purchase journey (end to endonline)

• improvedandfastercustomerserviceusingArtificial Intelligence,machine learning andblockchain

• advanced analytics to build propensitymodels

• customised and even personalisedcommunication

MetLife has an innovation centre inSingapore which gives help to PNB MetLife inproducts,actuarialpractices,etc.ThisinnovationcentreiscalledHumanLabanditisrunwithhelpfrom National University of Singapore. HumanLab selects 100 – 200 companies engaged ininsurance, FinTech and other areas and thesecompaniescollaboratewithPNBMetLife.

PNB MetLife is using robots which aremaking the company more efficient. While therobotmaybedisruptive,PNBMetLifeisensuringa seamless customer journey. The Companylaunched thefirst insuranceapp, ‘Khushi’whichisbothvoiceandtextenabled.

Insurance companies are moving fromcustomerstosolutionswith

• newage,affordableprotectionplans• needbasedselling• simplifiedproductswithlessdocumentation

Insurance companies are getting activeinvolvement of regulator and Government. TheGovernment is taking life insurance to the grassrootswithPradhanMantriJeevanJyotiBimaYojana(PMJJBY),PradhanMantriSurakshaBimaYojana(PMSBY)andAtalBimaYojana.Aspeoplebecomemoreawareofinsurance,theybuymoreinsurance.The regulator has created a sandbox alongwithtransparency inproducts.Thesandboxapproachmeans that the regulator will allow insurancecompanies to experiment with new products. Acustomerawarenesscampaignhasbeencreated

Smt. Jayashree Ranade, DGM, GeneralInsuranceCorporationofIndiasaidthatthetopicfortheForumisrelevant.CharlesDickenssaid‘itwasthebestoftimes,itwastheworstoftimes’anditappropriatelydescribes the insurance industry.The performance of the insurance industry hasbeenbumpyanditoperatesinaVolatile,Uncertain,Complex and Ambiguous (VUCA) environment.Tradewars, the risingpriceofoiland fall in thevalueoftheINRtoUSDareareasofconcern.

Digitisation is leading to an explosionof data. Environmental concerns and issuesregardingglobalwarmingarebecominghardertosweepundertherug.Thisyear,Indianinsurancecompanieshavepaidaheavypriceduetonaturalcatastrophic events across India. Smt. Ranadeaddedthat‘ourgreatestgloryisnotineverfalling,butinrisingaftereveryfall.’

The insurance industry is modernising asnew age customers want simpler policy terms,

inthelifeinsuranceindustry,namely‘sabsepehlelife insurance’.Newagecommunication involvessimplifiedandde-jargonisedcontent.

PNB MetLife concentrates on the 3Ds,namelyData,DigitisationandDisruption.Dataisapowerfultoolandthecompanyisusingdatatobuildpropensitymodelswhichareenabling it tobetterservecustomers.PNBMetLifeisintegratingthe back end in order to give the customer aseamlessjourney.Productsarechangingandthecompanyismovingfromproductstosolutionsandpropositions.


transparent underwriting, easy to comprehendbenefit structure and low human interaction.Newconceptssuchasdriverlesscarsaremakingtheirpresencefelt.Digitalisation is leadingtoanexplosionofdata.

The Pradhan Mantri Fasal Bima Yojana isnowinitseighthseason.Agriculturesuffersfromaninherentlycatastrophicnature.Indiawantstodoubleproductivityinagriculture.Thereisaneedforclimateresistanttechnology.GICsupportstheIndian agriculture sector and it will continue tosupportcropprotection.

Lifestyle diseases are rising in India withhigherincidenceofcancer,diabetesandhighbloodpressure.Thenumberofcasesofcancerareupby33p.c.acrosstheworld.Diabeteshasincreasedby50p.c.inIndiaand200millionIndianssufferfrom high blood pressure. The Indian non lifeinsurance market is under penetrated and theinsurancesectorhasagoodopportunitytosustainitsgrowthmomentum.

AsIndiagraduates froma lowincometoamiddleincomecountry,thereisanopportunitytoreducepovertyandtherewillbeformalisationoftheeconomy.TheinsuranceindustryinIndiaisonagrowthpathanddespitechallenges,thefutureisbright.

Shri K. Ganesh, Member (Life), InsuranceRegulatory and Development Authority of India(IRDAI)saidthatalthoughbothpenetrationleveland insurance density have increased in thecountry, there still exists a huge protection gap

Shri K. Ganesh

that needs to be bridged. As of March 2019,therewere930productsonlifeinsurancewith33crorepolicyholders,totalpremiumwasRs.5.08lakhcroreandtotalassetswereworthRs.35.33lakhcrore,whichisaroundUSD500billion.Lifeinsurance companies, in 2018-19made claimssettlementofRs.2lakhcrorewithpolicyholders.

It is important to cater to differentexpectations of younger and older peoplesimultaneously along with coping with rapidlychanging technology, environmental risks andcyberthreats.ThoughthelifeinsurancepenetrationlevelinIndiais2.7percentascomparedto2.88percentinUS,2.3percentinChinaand2.1percentinBrazil,thesocialsecuritybenefitsinthesecountriesaremuchhighercomparedtoIndia.

Indiaisalowpenetratedinsurancemarket.Earlier, Indians had guaranteed income for alifetime.Today,peopledonotwant towork thatlong, and they can be unemployed. So, howdotheypaytheirinsurancepremium?

Two thirds of all Indians live in nonMetroareas.IRDAIhasruleswhichmakeitmandatoryforinsurancecompaniestomeetruralandsocialsector obligation benchmarks. In otherwords, acertain minimum benchmark must be attainedbyinsurancecompaniesinsocialandruralareas.Thiswillensurethaturbanresidentsarenot thesolebeneficiariesofinsurance.

Mortality rates are falling and people arelivinglonger.So,policiesgetperiodicallyre-pricedto reflect greater longevity. Digitisation of datahelpstoimproveriskpoolingandcreationofBigDataleadstomoreaccurateriskpricing.

Thechallengeswillcome fromhealth riskswhich are rising and people are living longer,climatechange,changesintechnologyandcyberrisks. We should be aware of cyber risks andransomwareishappening.

TheDemographicDividend in Indiameansthat more youngsters will enter the workforce.Insurance companies realise that demand forproducts is changing, along with changingexpectations.Thereisgreaterinterestinprotectionproductsandpeoplearelookingforstandardisedproducts. In otherwords, people are looking for


plain vanilla insurance products for protectingthemselves.

Health insurance has been growing at aCAGRof20percentinlast10years.Itisexpectedtocontinuetorapidlygrow.People’sexpectationshaveincreasedfollowingAyushmanBharat.Goingforward, health insurers will place emphasis onwellness,diagnosticcenters,diseasemanagement,fitnesscentresandprimaryclinics.Betterfitnesswillleadtolowerpremiums.Wearablesandfitnessdevices will provide opportunities to improvelifestyle.Ourlifestyleswillhavetochangesothatdegradationoftheenvironmentisreduced.

Onandoff insurancewill come into vogueaswedonotneedinsuranceallthetime.Inthefuture,wewillseeusagebasedinsurancewhichwillhaveanadvantageascostwillcomedown.Also,insurersarerecognisingthatcustomerswant

simpleproducts.

IRDAImayreviewthebanonlifeinsurancecompanies from offering indemnity healthproducts, popularly known as Mediclaim orhospitalisation health plans. Now, only non-lifeinsurance companies and stand alone healthcompaniescanofferthisproduct.(Theinsuranceregulatorhadbarredalllifeinsurancecompaniesfromofferingindemnityhealthproductsin2016.)Many life insurance companies have writtento the regulator about restoration of indemnity(hospitalisation policies) health covers for lifeinsurancecompanies.IRDAIwillwritetobothlifeandgeneralinsurancecouncilstoseektheirviewsonthematteranditwilltakeacallontheissueafteritgetstheirreplies.

Shri Subodh Kumar Agrawal, Chairman,Standing Committee on Capital Market &Insurance,MCCIgaveaheartyVoteofThanks.

Panel Discussion:‘Integrating Technology & Big Data to enhance Customer Experience, Distribution Channel & Marketing Strategy’

ThespeakersatthePanelDiscussionwere

• Moderator & Panellist: Shri Amit Roy, Director, PwC India

• Shri Vikas Mittal, Dy. CEO, Magma HDI General Insurance Co. Ltd.

• Shri V. Sai Kumar, Head – Life (Vertical), Insurance Information Bureau of India (IIB)

• Shri Ankit Goenka, Head – Customer Experience, Bajaj Allianz General Insurance Co. Ltd.

• Shri R. Seshadri, Head – Operations, CAMS Insurance Repository Services Ltd.

• Smt. Jayati Chatterjee, VP, Intellect Design Arena Ltd.

Shri Amit Roy Shri Amit Roy,Director,PwCIndiasaidthataGenZpersonwillbuyacoverafterpurchasingan iPhone or a car, just in case something badhappens. This cover is similar to acquiring aninsurance cover. Insurance companies have atendency to create insurance for the massesinsteadoftailoringit.Instructureddata,theownerhasgivenconsenttocapturethedata.

Penetrationofinsuranceisimprovingthankstotechnology.Today,allmicrofinancecompaniesare selling insurance. Uber and IRCTC are techenabledandyoucanbuyinsuranceforaride.

Policymakers are closely looking atrecommendations of panels such as MCCI.Sandboxistheoutcomeofapanelinitiative.


Shri Vikas Mittal

Shri Ankit Goenka

Smt. Jayati Chatterjee

Shri Vikas Mittal, Dy. CEO, Magma HDIGeneral Insurance Co. Ltd. said that we shouldrememberthatthecustomerisfirstahumanbeingwho will compare their experience with buyinginsurancewiththeirexperiencewithbuyingotherproducts and services, such as a ride on Uber.Thecustomerexperiencebeginswiththestartofapolicyandendsatthetimewhenthepolicyisextinguished.

Structured data, or transaction data, canbe informationoncredit rating,policydata, etc.Unstructureddata iswith respect tobehaviourallandmarks.Forexample,someonemaycommenton politics in Facebook which can becomeunstructureddata.Ingeneral,unstructureddataismoreusefulthanstructureddata,asunstructureddatatellsmoreaboutthecustomer.Unstructureddata enables an insurance company to betterprofileacustomerwhichhelpsthecompanymoreaccuratelytargetcustomers.

Today, an insurance company can sell apolicy toapersonbasedon theprofileobtainedfromunstructureddata.Inotherwords,insurancecompaniesareabletooffertherightpropositionbyusingunstructureddata.So,engagementmaybebasedonstructureddatafromIIBorunstructureddata.Thereremainsanissueabouthowethicalisittouseunstructureddata?

A collaborative approach between life andnon life insurance companies would be a win-win situation for everyone. Non life insurance

penetrationislessthan1percentwhichisscary.

About 60 per cent of India’s populationresidesinruralareas.So,itisimportanttocovera farmer for loss of crop. Both crop and healthinsurance are important and problems in thesesectorswillgraduallygoaway.

Thereisenoughdigitalassetprotectionbutweneedmoredigitalinformationprotection.

Shri Ankit Goenka, Head – CustomerExperience, Bajaj Allianz General Insurance Co.Ltd.saidthatinsurersaskifthecustomerisbuyinginsuranceorasolutionforaworry.Ifinsuranceispurchasedtosolveaworry,thendistributionwillautomaticallytakeplace,asyouarenotpushingthe product,which is rather getting pulled. It isimportant tocare foracustomerandsolvehis /her worry. Trust at both ends is important. Theinsurancecompanyneeds toknow if thepersonhasrevealedalldiseases.Thecustomermusttrusttheinsurertopayclaims.

Theonesizefitsallapproachwillnolongerwork in insurance. The sandbox approach willhelp insurancecompanies to test ideas.Wecanhaverapidinnovationwiththesandboxapproach.Unstructureddatacanbeusedtogivecustomised/personalisedproductstocustomers.

Smt. Jayati Chatterjee,VP, IntellectDesignArenaLtd.saidthattherearetwopointstoconsiderfirstly, veracity of data and secondly, velocity oftransactions. Till now, most improvements have


Shri R. Seshadri

Shri V Sai Kumar

Shri R. Seshadri,Head–Operations,CAMSInsuranceRepositoryServicesLtd.saidthatthereare many insurance companies and a customercan buy policies from several companies. Theinsurance repository configures the data of the

customerwho gets aholistic viewof their data.Thus, the customer gets a consolidated view oftheirdata.Customerscanupdatetheircontactdataontheplatformoftherepository.Plus,KYCiswiththerepository.So,customercanbeonboardedina seamlessmanner.CAMSenriches thedata forinsurance companies so that insurers can betterreachouttocustomers.

Inotherwords,CAMShascreatedaplatformwherethecustomergetsdatafromall insurancecompanies. So, CAMS is integrating the wholeindustry.ExperienceisnowbasedonconsolidateddatafromCAMSandCAMScanenabletheindustrytopayclaimsontime.

Tosumup,CAMSenables thecustomer ina trustedand transparentmannerand itactsasabridgebetweenthecustomerandtheinsurancecompany.CAMShasabout2.5millioncustomers.

Shri V Sai Kumar, Head – Life (Vertical),Insurance InformationBureau of India (IIB) saidthatIIBispromotedbyIRDAIanditwassetupin 2012. IIB is a data hub that performs dataanalyticsanditpossessesavastamountofdata.Infact,IIBhasasmanyas200crorerecords.Forgeneralinsurance,namelyhealth,motor,propertyandfireinsurance,IIBhasarecordofeverypolicysold in the last fewyears.For life insurance, IIBhasdatagoingbackto2012.

Data can be of two types. Structured datais where the customer has given permission touse thedata.Datacanbeunstructured suchasinformationgleanedfromsocialmediasites.

beenonthevelocityside,whichmeansthatpaperworkisbeingdonefaster.Today,thestressisontheveracitysideorhowmuchcanthecustomerbe trusted? To gauge this, insurance companiesareusingArtificialIntelligence,BigData,etc.

Allinsurancecompaniesaretryingtoreachthe unorganised sector. The question iswhetherthe paradigm is changing for the unorganisedsectorwithrespecttoclaimsanddistribution?Thehighpenetrationofmobilephonesand the largeamount of digital data that is being consumedindicatethatthingsmaybechanging.Bankingisatransactionintensiveindustryandinsurancenotsomuch.


Today,thereisalackofcoordinationbetweenlifeandnonlifeinsurancecompanies.Inayearortwo, therewill be coordinationbetween life andnonlifeinsurancecompanies.

Key Take Aways• It isencouragingtonotethattheGovernmentofIndiahastakenanumberofinitiativestoboostthe insurance industry.Someof thesepro-activemeasures include: the launching of theNationalHealth Protection Scheme under ‘AyushmanBharat’ in September 2018 to provide coverageofuptoRs.500,000(USD7,723)tomorethan100millionvulnerablefamilies;therollingoutofthePradhanMantriFasalBimaYojana (PMFBY)which benefitted over 47.9 million farmers in2017-18, etc. The National Health ProtectionScheme is expected to increase penetration ofhealthinsuranceinIndiafrom34percentto50percent.

• InsurancepenetrationinIndiacontinuestobeoneof the lowest intheworldat3.69percent,according to the annual report by IRDAI. Thepenetrationoflifeinsuranceis2.76percentwhileitis0.93percentfornonlifeinsurance.

• PremiumfromgeneralinsurancerosefromRs.11,800crorein2002tomorethanRs.1,70,000crorein2019,growingataCAGRof15percent,whichisaremarkablefeatforanyindustry.

• Protection gap is the difference betweeneconomic lossesand insured losses in theeventof a calamity. India suffers from a significantprotectiongapwhichneedstobeaddressed.TheprotectiongapishighlightedasIndiaispronetonaturaldisasters.

• Just 9 per cent of the Indian population(individual and corporate) has voluntarilypurchased health insurance and 27 per centis covered under various government schemes.Hence,36percentofthepopulationhasanyformofhealthinsurance.

• Digitalinsuranceisgrowingduetoconvenienceandinstantpolicies.Digitalinsuranceisbeingdrivenbycomparison,pricesavingsandtransparency.

• The seller of insurance products today mustsurvive on low premium. Online allows insurersto survive with low margins on policies. Wheninsuranceproducts are bought by understandingthepolicy,therenewalratesarehigh.

• IfthereisunprecedentedgrowthintheIndian

insuranceindustry,thenitwillbedrivenbyGenZandruralIndia.

• Insurance companies are moving fromcustomers to solutionswith new age, affordableprotectionplans,needbasedsellingandsimplifiedproductswithlessdocumentation.

• LifestylediseasesarerisinginIndiawithhigherincidence of cancer, diabetes and high bloodpressure.Thenumberofcasesofcancerareupby33p.c.acrosstheworld.Diabeteshasincreasedby50p.c.inIndiaand200millionIndiansufferfrom high blood pressure. The Indian non lifeinsurance market is under penetrated and theinsurancesectorhasagoodopportunitytosustainitsgrowthmomentum.

• Though the life insurancepenetration level inIndia is 2.7 per cent as compared to 2.88 percent in US, 2.3 per cent in China and 2.1 percentinBrazil,thesocialsecuritybenefitsinthesecountriesaremuchhighercomparedtoIndia.

• People’sexpectationshaveincreasedfollowingAyushmanBharat.Goingforward,healthinsurerswill place emphasis on wellness, diagnosticcenters,diseasemanagement,fitnesscentresandprimary clinics. Better fitness will lead to lowerpremiums.

• Today,aninsurancecompanycansellapolicyto a person based on the profile obtained fromunstructured data. In other words, insurancecompaniesareabletooffertherightpropositionbyusingunstructureddata.So,engagementmaybebasedonstructureddatafromIIBorunstructureddata.

• Ifinsuranceispurchasedtosolveaworry,thendistributionwillautomaticallytakeplace.

• Therearetwopointstoconsiderfirstly,veracityofdataandsecondly,velocityoftransactions.Tillnow,mostimprovementshavebeenonthevelocityside,whichmeansthatpaperworkisbeingdonefaster.Today,thestressisontheveracitysideorhowmuchcanthecustomerbetrusted?

• CAMS has created a platform where thecustomergetsdatafromallinsurancecompanies.So,CAMSisintegratingthewholeindustry.

• IIBisadatahubthatperformsdataanalyticsanditpossessesavastamountofdata.Infact,IIBhasasmanyas200crorerecords.

Merchants' Chamber of Commerce & Industry15-B, Hemanta Basu Sarani, Kolkata - 700 001

Phone : +91 33 2248 6329 / 1502 / 3123, +91 33 2662 5070-74Fax : +91 33 2248 8657 I E-mail : [email protected]

Website : www.mcciorg.com

Report written and compiled by Rajiv Mukerji, Deputy Secretary, MCCI

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