MUMBAI, (GNI) T S Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDA), V K Sharma, Chairman, Life Insurance Corporation of India, Sanjiv Bajaj, Chairman, CII National Committee on Insurance and Pensions & Managing Director, Bajaj Finserv Ltd, Dr Saugat Mukherjee, CII Regional Director, Joydeep K Roy Partner and Leader, Insurance and Allied Businesses, PwC,
IRDA Chairman released CII-PwC Report on Insurance Sector at CII Insurance Summit: Evolving considerations for the Indian Insurance Industry : CII-PwC Report, in Mumbai — Photo by Sumant Gajinkar
Scope for small insurance firms in niche areas: IRDAI Chairman, Merge High Touch & High Tech for Insurance Distribution: IRDAI Chairman, Coverage and Penetration concept in India is skewed and some indigenization is required: LIC Chief
MUMBAI, (GNI): There is scope for existence of a lot of small insurance companies today with focus on specific geography or area of operation, said Mr TS Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDAI) at the 19th Insurance Summit organised by the Confederation of Indian Industry (CII).
Drawing attention to the shape of insurance industry just before nationalisation of the insurance industry in mid-1950s, Mr Vijayan said, “In India smaller companies do have a space. Suppose, somebody working only in Hyderabad can exist, that is in a particularly geography, or if one wants to work in a particular area, it can exist.”
“What you need is capital and cost structure to support it. If you want to float a small company you cannot pay a CEOs six digit salaries. The expenses will be limited”, Mr Vijayan added while responding to queries from participants.
Just before Life Insurance Corporation of India (LIC) was formed in 1956, there were 246 insurance companies in existence, and they were very small, explained Mr Vijayan, who was the chairman of LIC before becoming the regulator. There are 24 life insurance companies and 31 non-life insurance companies in India now.
Though Indian insurance industry is already on a fast paced growth of 20-30 per cent in various segments, the concern was coverage or penetration, the IRDA chief said, adding that, “What we have to see is how many people are taking advantage of insurance cover.”
General insurance has grown at 31 per cent last year and life insurance has posted a growth of about 25 per cent. About Rs 5lakh crore of premium was collected in a year, taking the assets under management of insurance companies up to Rs 31-32 lakh crore.
Even if technology is adopted extensively, insurance products distribution needs a “human touch”, Mr Vijayan emphasised. However, one has to understand that the agent requirement and growth depends on the company’s growth strategy.
Mr VK Sharma, Chairman of LIC said, “Only digitisation or technology cannot solve the problem of frauds. As technology advances, frauds also go up. We have to develop Technology-Human matrix capturing individual behavioural data to prevent frauds.”
Mr Sharma said that once a person takes an insurance policy his confidence and risk taking capacity increases. Mr Sharma also emphasised that only technology cannot solve the problem of fraud in Insurance. Digital and Human matrices need to be created.
Mr Sanjiv Bajaj, Chairman, CII National Committee on Insurance and Pensions and Managing Director of Bajaj Finserv Limited, said that insurance should go broader and deeper into existing and new areas of business. Mr Bajaj also expressed concern over rising costs and falling return on capital for insurers.
Referring to technology taking over the role of agents, Mr Joydeep Roy, Partner and Leader, Insurance and Allied Businesses, Price water house Coopers Pvt Ltd said, “It is not for the agents (of losing their relevance) to worry now, because people are doing research online and buying offline,”.
CII-PwC report on ‘Indian Insurance Sector: Transforming Insurance and Pensions’ was released at the summit. The report focuses three topics: Deepening penetration-Simple Products and Low Cost Distribution, Digitisation and Fraud Management and Broadening investment Horizons.ends