What is the overall scenario in the insurance market in India? 

The Indian insurance sector has completed a full circle after the opening up for private participation. The sector dominated by LlC and GIC & its subsidiaries since Nationalisation of insurance in two stages, has started looking different now. Around a dozen licenses have been issued by the regulator and some of them are already operational. While how many players would ultimately be in the arena is for anybody to guess, it is felt that there could be around two dozens players. With the entry of new players, most of them having a joint venture partner from abroad, the methods and practices in dealing with the business are also likely to under go a vast change. Internet, new distributions channels would impact the way insurance business is transacted today. The market is big. Untapped potential is huge and, therefore, existing and new players are gearing up to have a stronghold in the market.

What are the key issues faced by insurance sector today?

While State owned insurers were managing insurance business profitably, there were certain perceived lacunas in the areas of professionalism, service, issue of documents, etc. The new players are expected to set a high score in the area of service. With implementation of computerisation at a faster pace, the existing players are also trying their best to improve the service and bridge the gap between them and the technologically savvy new players. Some of the issues faced by insurers, old and new alike, however, are 

• Convergence of banking and insurance 
• Ever changing technology 
• Emergence of new distribution channels 
• Slow pace of economic acceleration
• Underwriting losses
• Changing customer perception
• Evolving regulations

Looking at the substantially low level of insurance penetration, there is no doubt that there is a huge potential for insurance in India. The existing players are fairly successful in catering to the needs of the organised sector and the general requirements of the economy. However, there appears scope in the personal lines of business. There is also scope for increasing penetrations in rural India and the up coming towns. Agricultural insurance also offers opportunities. There is a huge scope for savings linked insurance and pension business.

What are your views on the future of the Indian insurance market?

Indian Insurance scene, as stated earlier, is going to be drastically different. Things are no more static. Every day brings in change in the form of opening of a new insurance company, new products, new marketing methods/channels, mergers etc. A strong regulatory and development authority is in place to take care of the changes and ensure orderly growth of the market.
The insurance sector will see:

• Enhanced awareness through education and publicity
• Greater use of information-technology
• Better products
• Better service to customers
• Benchmarking with international standards

• Convergence with banking services
• Mergers & acquisitions.
• Bank assurance
• E-Banking & insurance
• Emergence of new finance linked products such as derivatives, catastrophe bonds, etc.

In what way is the Indian insurance industry different from that in the developed countries?

Indian market is one of the latest markets opened to competition. Naturally, it looks different from the developed markets. Indian industry is characterized  of 

• having simple products catering to basic needs
• low penetration
• more direct business and lesser dependence on intermediaries.

• a high penetration
• existence of savings linked products
• Brokers, Agents & other intermediaries playing an important role
• existence of managed healthcare & pension products.

With the opening up of the sector, Indian industry is becoming more reliant on technology. New products will be developed and intermediaries will play a more meaningful role.

What about GIC's recent activities?

Government of India has renotified GIC, which was engaged in reinsurance activities under GIBN Act, 1972 as 'Indian Reinsure' under the Insurance Act of 1938. The focus of GIC will be on accepting reinsurance business within India to assist IRDA in ensuring the objective of maximizing retention of premium within the country as also to accept business from abroad.

GIC has stopped writing direct business and has now been concentrating exclusively on the Reinsurance business. FM has expressed a wish that India becomes a reinsurance hub in the Asian region and GIC plays all important role in it. Towards achieving this goal, GIC would soon embark upon a well devised marketing strategy. GIC has set up its first representative office outside India in London. It proposes to enter into strategic agreements with large insurance companies in the targeted regions/markets. GIC aims to benchmark its standard of services and business quality with the world leaders.

What is your vision for the future ?

My vision can't be different than that of the FM's and GIC's vision. I am hopeful that the opened up sector will improve insurance penetration through further spread of insurance and availability of new products. The service will be of high quality and the customer will be the beneficial. As for GIC, I am optimistic that with the existing strengths of trained manpower, good reinsurance contacts, high reputation world wide & financial strength, GIC can emerge as a trusted name for reinsurance needs not only for Indian but for other insurers in Afro-Asian region. GIC has set an objective of emerging as the preferred reinsurer in the Afro-Asian region. The South Asian region, Middle East, SAARC, African and East European Countries including Russia and the Commonwealth of independent States have been identified as the target markets with growth potential and GIC would try acquire quality inward business to achieve its objectives.

You have been in the industry for a long time. What do you think of the insurance sector reforms everyone is talking about? Is it the right direction?

The insurance reforms aimed at reforming the State owned insurance companies and opening up the market to private competition. A strong regulatory and development authority "The Insurance Regulatory and Development Authority" (IRDA) is set up and is effectively functioning. It has issued licences within the prescribed time & some new insurance companies are already operational in the country. 

Co-existence of public sector & private sector companies is a welcome sign. Indian banking sector has done well in such a set up. There is no reason why insurance sector should not gain for the reforms. Reforms are expected to improve service quality, product availability etc. which is in the interest of the insurers as also the insured.

What is the strategy your company will be adopting to overcome the stiff competition? 

So far as the subsidiaries of GIC are concerned, they are existing, profit making companies with skilled manpower, huge net worth, dedicated clients. Though competition could affect their business in the immediate short term, through a well-defined strategy, they could maintain their leadership position even in the competitive environment. About GIC, I have already said that it is all set to excel in its role as a reinsurer.

How do you see insurance market change over the next few years in the light of the increasing competition?

The State owned general insurance companies are definitely feeling the heat as private insurance companies are making a beeline to capture corporate accounts. But the threat is working in their favour as well in so far as quick actions are being taken in the areas of training, computerisation etc. The new players have a limitation on writing business due to the capacity constraint. However, they will also build up the capacity in a few years so as to write larger business. I strongly believe that the Indian insurance sector will follow the path of the banking sector, where, forces of globalisation and technological improvements are bringing in changes which are helping the banks bridge the gaps in services offered, bringing in prudential norms and ultimately helping the customer in getting world class products and services. In addition the state owned companies can venture into untapped rural potential for which they have a very vast network of offices and trained man power.